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Do I Need Insurance to Rent a Car?

If you're in the driver's seat of a 3-wheeled rental car or a Lambourghini Murcielago, it makes no difference. You need insurance. If your own veicle has collision and comprehensive auto insurance coverage, it should be enough. Before renting a car, it is important to contact your auto insurance company. Read the "Declarations" page on your insurance booklet listing all of your premiums and coverage types or give your insurance carrier a call. If your coverage does not allow for comprehensive and collision coverage, your rental car will be unsecured in case of theft or damage.

Those sans auto insurance can either: 1) buy coverage through the car rental company, or 2) buy a non-owner auto liability insurance policy.

An Overview of Rental Car Insurance

Rental car companies like Avis and Budget can offer four different types of coverage: collision damage waivers, personal accident insurance, liability insurance, and person effects coverage.

Personal Accident Insurance - Medical and ambulance bills are accounted for yourself and your passengers. This type of auto insurance coverage is relatively cheap, costing $1 to $5 a day. Warning: if you are covered by an already existing medical insurance plan, personal accident insurance may not be needed.

Liability Insurance - Excess liability coverage of up to $1 million is provided throughout the duration of your car rental. According to law, rental car companies must provide the minimum level of liability insurance required by your state. In most cases, coverage is minimal and does not provide adequate protection for a major accident. If your own car has enough liability coverage or an umbrella policy, this rental-car offered insurance may be rejected. Otherwise, expect to pay between $9 to $14 every 24 hours. It is recommended that you purchase a non-owner liability policy if you rent often and don't own a car. Costs run in the $200-$300 a year range. Instead of paying for extra liability coverage, many car renters may find liability insurance less costly in the long run (depending on how often they rent a car)

Collision Damage Waiver - Also known as a Loss Damage Waiver, this coverage removes any financial burden caused by a damaged or stolen rental car. However, the CDW may become nullified if you're at fault for the accident via speeding, driving on malformed roads, or drunk driving. CDW coverage is cheap, costing around $9 to $19 a day. However, if your own auto is secured with comprehensive and collision insurance, a CDW is not required.

Personal Effects Coverage - In layman's terms, personal effects means items you own. This coverage protects against stolen items in your car, like your $10000 jewel or your $600 Playstation. Excluding your deductible, you may be covered for items stolen from the car. In order to file a claim, all receipts and proof of ownership is needed. Personal effects coverage is cheap, costing around $1 to $4 a day.

Many car rental companies consolidate their coverage, with personal accident and personal effects joined as one, while many others sell it by themselves. The cost of insurance varies according to rental car company and is available over the counter. Be sure to inquire about consolidated coverage the next time for additional savings if your current auto insurance is not enough.

Non-owned Auto Liability Insurance

An alternative to insuring your rental car comes through non-owned auto liability insurance. For frequent car renters who want to avoid individual coverage plans, it may be more cost-effective to purchase a non-owner auto liability insurance policy from an insurance company like State Farm or Progressive for $300 a year. Proceed only if you rent frequently! Plus, if an umbrella liability policy has crossed your mind, a non-owner auto policy may be enough to meet underlying policy requirements. Basic policies must meet specified dollar limits of coverage prior to issuance of an umbrella liability policy from most insurers.

A non-owned auto insurance policy covers against injuries to yourself and others in addition to damage you might be responsible for. This policy also covers medical attention for yourself and passengers. Be warned: non-owned auto insurance does not protect against collisions. Collision coverage must be bought through the car rental company. However, many credit card companies are known to throw in collision coverage if their card is used to pay for the rental car so inquire with them the night before.

Posted on: 12/6/06 6:33:23 P

 

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