Rental car insurance: What you need to know

Does your insurance provide the right coverage?

AAA Staff

Wednesday, March 22, 2023

Confused about whether you need rental car insurance? You're not alone.

With road trip season on the horizon, many drivers don't know if their auto insurance provides adequate coverage or if they should spend the money for coverage at the rental car counter.

This is a common question that our insurance advisors see from AAA Members, especially this time of the year. Because insurance policies vary so much, there's no one blanket answer that applies to everyone. It's best to speak directly to an agent who can review your specific policy and help you understand exactly what's covered.

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Before renting

Contact your insurance company. Find out how much coverage you have and if it includes rental cars. The coverage and deductibles you have on your auto insurance policy apply in most cases when you rent a car, as long as it's for personal use and you are driving in the United States.

Contact your credit card company. If paying for a rental car with a credit card, you may have some level of insurance coverage. Call the number on the back of your credit card to find out what the terms are and what coverage you have. In most cases, credit card benefits are secondary coverage. If an accident occurs, you will still need to file a claim with your insurance company, and your credit card company may pay a portion of the charges that your primary auto insurance company does not.

Understand your options at the rental car counter

The Insurance Information Institute cites four typical rental car coverage options, which can vary from state to state:

Loss Damage Waiver: Also known as a collision damage waiver, this option waives financial responsibility if your rental car is damaged or stolen. It also provides coverage for loss of use charges if the rental must be fixed or if it is towed. If you have comprehensive/collision auto coverage, you may already have coverage for damage to a rental car, subject to policy provisions and deductibles.
Liability Insurance: This is a state-required minimum amount of liability coverage. These coverages may not provide a lot of protection. A standard auto insurance policy typically includes liability coverage.
Personal Accident Insurance: This option will cover the driver and passenger(s) for medical costs caused by a car accident regardless of fault. The personal injury protection portion of your auto insurance policy, or your health insurance policy, may cover your medical expenses.
Personal Effects Coverage: This provides protection for personal items kept in a rental car. Your homeowners or renters insurance policy may include off premises theft coverage.

Using a car-sharing program?

If you decide to rent through a car-sharing program, such as Zipcar, it's important to understand that insurance offered by these companies may vary. Before renting, go to the company's website to learn more about insurance coverage options.