What Insurance Should I Buy When Renting a Car

You made it through a long flight and an even longer line at the rental car agency, and now the salesperson is saying you need rental car insurance. They make a good argument, but is it really worth it?

In most cases, your own car insurance will work just fine while you drive a rental. We've reviewed the best car insurance companies on the market, and a full coverage plan from one of our top-rated providers can offer strong rental car coverage.

Do you need rental car insurance?

If you already have car insurance for a personal vehicle, you probably don't need rental car insurance. If you don't already own a car with insurance, rental companies automatically cover the bare minimum in your state. However, if you want more protection, or if you are traveling abroad or for business purposes, you might need to get rental car insurance.

Can I use my car insurance for a rental car?

Yes, you can use your own car insurance for a rental car as long as your trip is for personal travel. Your personal coverage limits and deductibles will apply. If the trip is for business, your personal auto insurance policy might not cover any type of damage or injury unless you have commercial coverage. However, your company may have a commercial auto policy that can cover the vehicle.

If you travel to Mexico or Canada, your personal insurance may or may not cover rental cars in those locations. It's a good idea to speak to your agent to find out before you go. Generally, standard auto insurance companies in the U.S. don't cover rentals abroad, so it may be wise to purchase rental car insurance in that situation.

Is rental car insurance worth it?

Rental car insurance can be expensive — it can easily double your rental costs if you purchase a full coverage package. You also technically don't need to purchase insurance since rental cars are automatically covered for the minimum requirements in their state. However, it can still be worth it in some situations.

For example, let's say you don't have insurance and you rent a car in California. Minimum car insurance in California covers up to $5,000 in property damage to other vehicles if you cause an accident, but it doesn't cover damage to your rental at all.

In fact, no state requires any level of collision or comprehensive insurance, which apply to your own vehicle's repair bills. It can be a good idea to get rental car insurance if you just have the minimum coverage in your state. This is especially true considering you will probably be driving an unfamiliar vehicle in an unfamiliar area.

One study in the Journal of Advanced Transportation found that inattention, poor driving, poor handling and aggressive driving are all associated more with rental cars than non-rental cars. You might be a great driver on your regular commute, but it can be stressful driving in a new situation.

So, should you get rental car insurance? It depends if you want peace of mind that you'll be covered in a worst-case scenario. If you want coverage, opt for the rental agency's collision damage or loss damage waiver if you don't already have full coverage insurance.

What type of rental insurance do you need?

There are four main rental car insurance options that you could be offered through your rental agency: a loss damage waiver, liability coverage, personal accident insurance and personal effects coverage.

Loss damage waiver (LDW)

This option waives your responsibility to pay for a total loss, accident damage, environmental damage, theft and vandalism. A collision damage waiver (CDW) is similar, but it doesn't protect against theft. These waivers basically act like comprehensive and collision policies for the rental. If you already have comprehensive and collision insurance, you probably don't need this. However, a loss damage waiver will not require you to pay a deductible, which is another thing to consider.

If you cause damage to your vehicle and it gets sent to the repair shop, the rental car company can charge you fees for each day the car is out of commission. The loss damage waiver will protect you from these fees, as will most full coverage insurance policies. However, some will not, so it's a good idea to look into your own policy before you rent a car.

Liability coverage

Rental car companies also sell liability car insurance. This covers other drivers' property damage and injuries resulting from an accident you cause. If you have personal liability insurance, your own policy will provide this coverage (as long as the trip isn't for business). But if you know you're going to be cruising in Miami alongside Lamborghinis and Ferraris, $10,000 in liability coverage probably isn't going to cut it, so you may want to up your policy limits.

If you are a frequent traveler but don't own a car, you can also get non-owners car insurance to cover you in all driving situations.

Personal accident insurance

This type of insurance covers medical bills for you and your passengers, regardless of who is at fault for an accident. It's similar to medical payments (MedPay) coverage and personal injury protection (PIP) that you'd get on your standard vehicle.

If you already have either of these policies, you do not need personal accident insurance. Additionally, if your personal car insurance doesn't cover your medical costs, your health insurance can cover them after you pay your health deductible. Personal accident insurance doesn't require a deductible.

Personal effects coverage

This option protects your personal items like electronics, luggage and clothing. If you have a homeowners or renters insurance policy, it will cover personal items stolen from a rental car as well.

Other options: credit card and travel insurance

Besides options from the rental car company, you might be covered through your credit card company or travel insurance plan. Premium credit cards often include primary coverage for rental cars. Primary coverage comes with high limits and can handle the entire claim, which means your own insurance company won't know about the claim (and won't raise your rates).

On the other hand, standard cards often include secondary coverage. This comes with lower limits and requires you to file a claim with your own insurance company first. In either case, you have to book the rental with the credit card to qualify for coverage.

Travel insurance programs can typically cover collision and loss of use cheaper than the rental car company as well.

How much does rental car insurance cost?

Rental car insurance costs vary depending on the vehicle and location. But, in a word, it's expensive — overall, prices range from $31 to $60 per day for rental insurance from these providers. Below are a few average prices for coverage per day from popular rental car companies.

	Loss Damage Waiver	Liability Coverage	Personal Accident Insurance and Personal Effects Coverage	Total Daily Rental Car Insurance Cost
Enterprise Rent-A-Car	$30	$17	$13	$60
Budget Rent a Car	$9	$15	$7	$31
Hertz	$27	$19	$7	$53
Alamo Rent a Car	$25	$13	$6	$44

Think about these prices for a minute. Even if you have a full coverage policy with high limits, you probably pay much less than $60 per day (which is $1,800 per month) for your personal auto insurance. In many cases, it would be cheaper to increase your own insurance limits for a year than to buy rental car insurance for a two-week vacation.

Our recommendations for auto insurance

At the end of the day, it's more economical to get a full coverage car insurance policy from a reputable provider than to pay for rental car insurance regularly. Many of the industry's leading providers — like Geico and USAA — offer coverage that can apply to rental vehicles when you travel within the U.S. To find coverage that works for you, we recommend comparing car insurance quotes from multiple providers.

Geico: Editor's Choice

Geico offers a wide range of coverage options with a number of extras like roadside assistance and classic car insurance . After comparing every major provider, we rated Geico at 9.1 out of 10.0 and named it the top insurer in the nation. Drivers tend to find affordable rates from Geico, and many have positive experiences with the company's claims service. Having been in business for over 80 years, Geico has a strong reputation with an A++ financial strength rating from AM Best and an A+ rating from the Better Business Bureau (BBB).

Our rate estimates show full coverage insurance from Geico costs $1,352 per year on average. This estimate applies to 35-year-old drivers with good credit and good driving records. Compared to other national providers, Geico is one of the top three companies for affordability.

USAA: Low Rates for Military Families

If USAA insurance was available to all drivers, we would have ranked it in first place. Drivers consistently find cheap car insurance and great service from the company. So, if you are a military member or if you're a member of a military family, it can be a good idea to get a car insurance quote from USAA. The company scored 890 out of 1,000 points in the J.D. Power 2020 U.S. Auto Claims Satisfaction Study^SM for customer satisfaction during the claims process. USAA also has an A++ rating from AM Best and an A+ rating from the BBB.

In our rate estimate analysis, we found that full coverage policies from USAA cost about $1,013 per year, on average. This was the lowest cost out of any leading provider we researched.

Frequently asked questions

How much is full coverage insurance on a rental car?
If you purchase all the insurance a car rental agency offers, you'll pay an extra $30 to $60 or more per day. This includes the loss damage waiver, liability coverage and personal accident and effects coverage.
What happens if you damage a rental car without insurance?
Without insurance on a rental car, you're responsible for any damage you cause. Rental cars come with the minimum liability coverage in your state, but that doesn't cover vehicle damage that is your fault.
Does your personal auto insurance cover rental cars?
Yes, your personal insurance usually extends to rental cars. You will have the same coverage and limits that apply to your primary vehicle. If the trip is for business, check with your company to see if it has a business auto policy.

Our methodology

Because consumers rely on us to provide objective and accurate information, we created a comprehensive rating system to formulate our rankings of the best car insurance companies. We collected data on dozens of auto insurance providers to grade the companies on a wide range of ranking factors. The end result was an overall rating for each provider, with the insurers that scored the most points topping the list.

Here are the factors our ratings take into account:

Reputation : Our research team considered market share, ratings from industry experts and years in business when giving this score.

Availability : Auto insurance companies with greater state availability and few eligibility requirements scored highest in this category.

Coverage : Companies that offer a variety of choices for insurance coverage are more likely to meet consumer needs.

Cost : Auto insurance rate estimates generated by Quadrant Information Services and discount opportunities were both taken into consideration.

Customer Experience : This score is based on volume of complaints reported by the NAIC and customer satisfaction ratings reported by J.D. Power. We also considered the responsiveness, friendliness and helpfulness of each insurance company's customer service team based on our own shopper analysis.

*Data accurate at time of publication.

What Insurance Should I Buy When Renting a Car

Source: https://www.marketwatch.com/picks/guides/insurance/rental-car-insurance/