Does Car Insurance Cover Rental Cars?

This is a question we get all the time. Usually our insurance clients will call us while at the rental car agency asking “does my auto insurance cover rentals” because the rental car agency is trying to shove their own insurance down their throat. They want a quick, easy answer- “does my car insurance cover me in a rental car ?”. The answer is: it depends!

Does My Car Insurance Cover Rental Cars?

It depends on the type of coverage your current car insurance policy offers and the company providing coverage. You need to check your policy. 

There are a number of factors that need to be considered when determining if you need to purchase the rental car agency’s insurance coverage or if your normal insurance policy will cover you. Your first step should be to call your insurance agent BEFORE you get to the rental car agency, not while you are there.

Here are a few things to consider:

Does Liability Insurance Cover Rental Cars?

Generally, your liability limits that you carry on your personal insurance would transfer over to a rental car. So if you have liability limits of $100,000/$300,000/$100,000 on your personal insurance policy then those limits would most likely transfer over to the rental car. So, does liability insurance cover rental car? In most cases, yes. 

Does Full Coverage Insurance Cover Rental Cars?

Your physical damage coverage is generally transferred over to a rental car as well. So, does personal car insurance cover rental cars? If you have comprehensive and collision coverage with $1,000 deductibles then that coverage would most likely transfer to the rental car.

A key point to note is that we are talking about personal rental cars here, not commercial vehicles. So when wondering does personal auto insurance cover rental cars, remember, things like renting a U-Haul or any other large, commercial vehicle would not be covered under your personal auto insurance policy.

There are two more points that need to be considered-

What Does Rental Car Insurance Cover?

-Even if you have great coverage on your personal auto policy, there are a few things that wont be covered on the rental car. One of those things is “loss of use”.

Consider this example- You rent a car, you elect not to purchase the rental car agency’s insurance coverage because you have “full coverage” on your personal insurance policy. You are in an accident and it’s your fault. There is damage to the rental vehicle. Let’s say the rental car has to go in the shop for 10 days to be fixed.

During these 10 days the rental car agency will not be able to rent our the car, they’ll be losing money! Instead of losing money they’ll actually just pass that expense onto you; and that’s something that your personal insurance policy will NOT cover.

How Does Rental Car Insurance Work?

-Let’s say you elect to purchase the rental car agency’s insurance coverage. Let’s say you are in a covered accident. With their coverage you essentially “walk away” and their policy takes care of everything. You don’t have to worry about your personal insurance policy going up at renewal, because the claim won’t be filed under your policy. You wont be haunted by the claim that will follow you around and elevate your rates for the next 5 years. That’s a very nice benefit.

So, does your insurance cover rental cars?

Here’s our answer and our recommendation?

Having been in the insurance industry for 15 years and seeing numerous scenarios and claims involving rental cars, our recommendation is YES, you should buy the rental car agency’s insurance policy.

The ability to spend an extra few bucks a day and buy that extra peace of mind is well worth it, in our opinion. Most rental car agencies policies offer $1 million in third party liability coverage and also offer a collision damage waiver which essentially allows you to walk away from any damage you cause to the rental vehicle. For the small price they’ll charge you for this coverage, we say to go ahead and purchase it.

Quick Tip– most sales people at the rental car counter make a commission by selling you the insurance policy. This means they have a little wiggle room in the pricing. Negotiate with them! Usually you can have great success in lowering the initial price they offer you.

*As always, please note that each policy and each state is different. Please check your specific policy for exact coverage information. If you’re wondering does your insurance cover rental car, don’t rely on any generic insurance website. Check with your insurance agent.