Rental car insurance can be confusing at times and downright “tricky” at others. If you don’t inquire within, you could end up paying the rental car company and your auto insurance company for coverage, when you really don’t have to. Let’s start with state auto insurance laws and bare minimum coverage. All states have minimum auto insurance requirements. So in theory, every driver on every U.S. road should carry at least the bare minimum coverage required by law.
Unfortunately, bare minimum coverage rarely includes coverage for rental cars in many states. For example, some states, such as the state of Ohio, require as little as 12.5/25/7.5 or $12,500 for bodily injury liability for one person in an accident, $25,000 for all injuries in an accident, and $7,500 for property damage in an accident. This is barely enough to cover a fender bender, and chances are this type of policy will not cover rental car insurance. On the other hand, high bare minimum coverages of 50/100/25 (Alaska), may very well cover rental cars, so it’s best to inquire within.
If your auto insurance policy does not automatically cover rental car insurance, the next phone call you should make when renting a vehicle is to your credit card company. Yes, some credit cards cover rental car insurance and others do not. Check with your credit card company to make sure you are covered and find out the exact amount of coverage – get it in writing if you can. And here’s an inside tip about credit cards and banks. In some cases, the bank that issued the credit card may provide the coverage – not the credit card itself (Visa, AMEX, and MC). In these cases, the rental car insurance may have exclusions. Exotic cars, SUVs, convertibles, sports cars, and luxury cars may be excluded from coverage.
Once you have an amount in hand from your credit card company, this will help determine if you should accept the insurance products the car rental company offers. They will likely offer a collision damage waiver or CDW. A collision damage waiver also called “loss damage waiver,” releases an insured from responsibility for damage to the rental car, provided the insured complies with the rental contract terms. The waiver will become void if the renter has an
At-fault accident that was caused by speeding, driving under the influence of alcohol or drugs, or driving on unpaved roads. Keep in mind that CDW often duplicates coverage the insured already has. If you opt for CDW, this will cost between $10 and $20 per day.
If you have adequate amounts of comprehensive and collision coverage on your own car, generally speaking, the same coverages and deductibles that you carry on your vehicle should apply to rental cars. These amounts do not apply to rental cars used for business. If you have done the research and weighed all of your options, and you come to the conclusion that it’s safer to opt for supplemental rental car insurance, the rental car company will provide liability insurance for $7-$14 per day. Other additional rental car insurance includes: personal accident insurance which covers you and your passengers for medical and ambulance costs resulting from injuries in an auto accident ($1-$5 per day) and personal effects coverage, which covers items left in the car ($1-$4 per day). It is important to note that these coverages are only necessary if you do not have adequate health insurance coverage, adequate PIP or personal injury protection under your own auto insurance policy, or a homeowners or renters insurance policy that does offer off-premises theft coverage.
For more information about auto insurance and auto insurance laws in your state, visit
Auto Insurance Tips or your state insurance department for details.
