Rental Car Insurance: How Does It Work and Is It Necessary?

If you’ve ever rented a car, you know that the employee behind the counter is going to offer you rental car insurance. And, if you decline coverage, they are undoubtedly going to go over a worst-case scenario about what could happen if you get into an accident while driving a rental car. However, the reality is that most drivers already have some amount of coverage in the event of a rental car accident. While additional coverage isn’t necessarily a bad thing, it may not be necessary for everyone: it’s just an additional expense. But how can you tell what type of rental car coverage you already have, how much coverage is necessary, and whether paying a few extra dollars for insurance through the rental agency is worth it? Read on to find out. 

What Is Rental Car Insurance?

Broadly speaking, rental car insurance is an insurance policy that covers you in the event you are involved in an accident while driving a rental car. However, when most people talk about rental car insurance, they are referring to the coverage offered by the rental car company at the time they pick up the vehicle. 

Rental car insurance offered through Hertz, Enterprise, Avis, Budget, Alamo, and other agencies refers to a separate policy that only covers you for the rental period. There are various types of car insurance that can be used in the event of an accident, including the following:

Liability: Covers an at-fault driver for any injuries or damages they caused while driving the rental car. For example, liability coverage would kick in if someone caused an accident in a rental car and another driver or passenger, pedestrian, or cyclist was injured. 

Collision: Collision coverage releases a person from responsibility for damage that occurs to the rental car, including theft and vandalism. For example, if someone left a rental car parked in a grocery store parking lot and came back to find that a stray grocery cart crashed into the side of the vehicle, collision coverage would ensure they are not on the hook for any damage to the rental car. 

Personal Effects Coverage: If a driver’s personal belongings are stolen from a rental car, this converge will cover the costs. 

Personal Insurance: This coverage from a person’s personal insurance protects against injuries that they or their passengers may obtain when driving a rented vehicle. 

Collision Damage Waiver: Rental companies offer a collision damage waiver which can protect a renter from “ loss of use” while a rented vehicle undergoes autobody repairs and can not be rented out. Waivers also protect against damages from an accident, other miscellaneous damages such as natural disasters, and some cases of theft. 

Do You Already Have Rental Car Insurance?

If you were involved in a rental car accident, anyone injured in the collision as well as the rental car agency may look to you to cover the costs associated with the accident. This usually includes medical expenses and property damage. Rental car insurance covers these expenses on your behalf. However, if you have a credit card or a personal auto insurance policy, you may be covered. 

Coverage Under Your Primary Car Insurance Policy

If you have an auto insurance policy, that policy may cover a rental car accident. Most major car insurance policies cover rental car accidents. Of course, you’ll need to read your policy closely to understand what your liability limits are and if you should opt-in for additional collision and comprehensive coverage if it is not already included. Popular insurance companies that offer both types of coverage include:

• GEICO
• USAA
• Esurance
• Mercury
• Auto-Owners

Collision coverage can be beneficial if you are often found to be at fault in accidents, drive in traffic every day to get to work, or may not have the funds readily available if you were to be in an accident and your car is a considered a complete loss, requiring you to purchase another vehicle.

According to WalletHub, the best comprehensive auto insurance companies are Progressive, GEICO, and Esurance. Comprehensive insurance is additional coverage for situations that fall outside of typical collision accidents, including glass, animal, flood, fire damage, and theft.   

Coverage Through Your Credit Card Company

It may come as a surprise, but some credit cards provide rental car insurance as a cardholder benefit. Not every credit card extends rental car insurance, so it is important you contact your credit card company and ask whether you have rental coverage and, if so, what the policy’s limits are.

According to ValuePenguin, American Express cardholders are offered secondary rental car insurance. The benefits include coverage for pickup trucks, luxury vehicles, and SUVS whereas other credit cards may exclude these types of vehicles. Also, the coverage is up to $100,000 for theft and damages. 

Other credit cards that offer rental insurance include:

• Chase Sapphire Reserve Card
• Chase Sapphire Preferred Card
• Chase Freedom Unlimited Card
• Ink Business Preferred Card
• United Explorer Card

Other consumer credit cards with Bank of America, Wells Fargo, Capital One, US Bank, and Mastercard may also have rental insurance. It’s best to contact them directly to find out if you are covered with rental car insurance and, if so, what the limits include. 

Coverage Through Membership Programs

It may be worth looking into your membership benefits to see if rental car coverage is offered. Surprisingly, AAA and AARP offer rental car insurance. The AARP Travel Credit Card only works if you deny the rental company’s collision waiver.

However, Costco does not offer rental car insurance. You would need to use your personal car insurance or opt-in for the collision waiver offered by the rental company. 

What is the Difference Between Rental Car Insurance and Rental Car Reimbursement Coverage?

Rental car insurance and rental car reimbursement coverage sound like they would provide similar coverage; however, the two are very different. Rental car insurance refers to coverage that applies if you are involved in an accident while driving a rented car. You probably have some amount of rental car insurance coverage if you have an existing car insurance policy or certain credit cards. Rental car reimbursement coverage is an optional coverage that may be part of your own personal auto insurance policy. This type of insurance reimburses you for the cost of renting a car if you are involved in an accident in your own vehicle and need a car while yours is in the shop. 

Have You Been Injured in a Rental Car Accident?

If you were involved in a rental car accident and wonder how the various insurance policies may come into play, the dedicated Charleston car accident attorneys at the Steinberg Law Firm can help. At the Steinberg Law Firm, we have over 95 years of experience helping accident victims and their families navigate the complexities of the insurance claims process to ensure they recover fair compensation for what they’ve been through. We offer free consultations to prospective clients, during which we will provide you with an overview of the process, answer your questions, and explain how we can help connect you with the compensation you deserve. To learn more, and to schedule a free consultation with a Charleston car accident attorney today, call the Steinberg Law Firm at 843-720-2800. You can also reach us through our secure online contact form.