This article on insuring a rental car was updated in March 2018.

A few years ago, I appeared on the Pete The Planner radio show on WIBC and discussed insurance and rental cars.  This post is a summary of the auto insurance issues that surround rental car coverage.

When I rent a car for personal use, I usually accept the collision damage waiver coverage offered by the rental car company and pay for the entire cost of the rental with my credit card.  It saves me a lot of money on duplicate coverage.  This may or may not be the right answer for you depending upon your personal auto insurance policy. It also depends on how expensive the coverage offered by the rental car company is.

Coverage Offered

There are five typical coverages offered by the rental car companies:

  1. Loss Damage Waiver – Protects the car in the event it is damaged while in your possession.  It typically costs between $15-$35 dollars per day. Your auto insurance policy will usually pay for this damage, subject to your deductibles.  And your credit card company may provide secondary coverage to help eliminate gaps in coverage.
  2. Personal Accident Insurance – Pays for medical expenses incurred while using the rental car. The cost is about $5 per day.  This is usually covered by your personal car insurance or your health insurance.
  3. Personal Effects Coverage – Reimburses you for property stolen from your rental car.  It costs about $5 per day from the rental car company.  Your home insurance or renters insurance will  provide coverage for your personal property, subject to a deductible.
  4. Supplemental Liability Protection – Provides additional liability protection to you if you cause injury or damage to a third party.  Your personal auto insurance policy or umbrella liability policy can provide this same coverage.  A rental car company will normally charge about $12 a day for this coverage.
  5. Roadside Assistance – Helps you in the event your rental car becomes disabled, needs gas, etc. It costs about $4 per day from the rental car company.  Coverage is available from your auto insurance or a company that offers this protection.

There are advantages and disadvantages to purchasing the coverage from the rental car company instead of your auto insurance company. One of the advantages of purchasing insurance through the rental company is they will usually cover diminished value and loss of use. Diminished value is the lower amount the rental company may receive when they sell the car because it’s been in an accident. This is a tough amount to quantify, but they may try and do it. Loss of use is the lost rental income they will experience because the car is not in service. Your personal auto insurance policy, will probably not cover diminished value.

If you are renting a car, I highly recommend that you talk with your insurance agent and credit card company prior to renting a car and accepting the coverage.  If renting a car outside the United States, you need to be extra careful, because your auto insurance policy will typically not cover you.

This site (Credit card protection) – Includes good information about coverage provided by your credit card company.

If you’d like to have a dependable source to make sure you’re protected when you rent a car, please call our Fishers insurance agency at 317-644-1770.