« Return to Learn

Do I Need Separate Rental Car Insurance?

Properly insuring a rental car can be confusing, frustrating, and downright daunting. Unfortunately, many consumers do not even think about car rental insurance until they get to the counter. This results in costly mistakes—either wasting money by purchasing unnecessary coverage or having dangerous gaps in coverage.

Before renting a car, Direct Choice Insurance suggests that you make two phone calls—one to your California auto insurance agent or company representative, and the other to the credit card company you will use to pay for the rental car.

Your California Auto Insurance Company

Find out how much coverage you currently have on your own car. In most cases, whatever California auto insurance coverage and deductibles you have will apply when you rent a car, providing you use the car for recreation and not for business. If you don't have comprehensive or collision in your auto insurance policy, you will not be covered if your rental car is stolen or damaged in an accident.

Find out if your California auto insurance company pays for administrative fees, loss of use, or towing charges. Some auto insurance companies may provide a car insurance rider to cover some of these costs. This would make it less expensive than purchasing coverage through the rental car company. Keep in mind, however, that in most states diminished value is not covered by insurers.

Credit Card Company

Credit Card Company Insurance benefits offered by credit card companies differ by both the company and/or the bank that issues the card, and by the level of credit card used. A platinum card may offer more car insurance coverage than a gold card. Credit cards usually cover only damage to or loss of the rented vehicle, not for other cars, personal belongings, or other property. There may be no personal liability coverage for bodily injury or death claims.

Some credit card companies provide coverage for towing, but may not provide for diminished value or administrative fees. Some credit card companies have changed their policies, so you may not have as much coverage as you thought. To know exactly what type of insurance you have, call the toll-free number on the back of your credit card you plan to use.

If you are depending on a credit card for car insurance protection, ask the credit card company or bank to send you their coverage information in writing. In most cases, credit card benefits are secondary to your personal insurance protection or the insurance offered by the rental car company. If you have more than one credit card, consider calling each one to see which offers the best insurance protection.

At the Rental Car Counter

Since car insurance is state regulated, the cost and coverage will vary from state to state. Consumers, however, can generally choose from the following coverages:

Loss Damage Waiver (LDW)

Also referred to as collision damage waiver outside the U.S., an LDW is not technically an car insurance product. LDWs do relieve or “waive” renters of financial responsibility if their rental car is damaged or stolen. Waivers can also provide coverage for “loss of use,” if the rental car company charges the renter time a damaged car cannot be used while it's being fixed. It may also cover towing and administrative fees.

Waivers may be void if the accident was caused by speeding, driving on unpaved roads, or driving while intoxicated. If you already have comprehensive and collision coverage on your own car, check with your personal state or California auto insurer to make sure you aren't duplicating coverage you already have. Should you decide it is necessary, this coverage generally costs between $9 and $19 a day.

Liability Insurance

By law, rental companies must provide the state-required amount of liability insurance. Generally, these amounts are low and don't provide much protection. If you have adequate liability protection on your own car, you probably won't need additional liability protection. If you want the supplemental car insurance, it will cost between $7 and $14 a day.

An umbrella liability policy may be more cost-effective. Umbrella liability insurance is named because it acts like an umbrella, sitting on top of your auto and homeowners (or renters) liability policies to provide extra protection. This includes accidents while driving your own car or one that you rent. These policies, usually sold in increments of a million dollars, cost as little as $200 to $300 annually for a million dollars worth of coverage and another $50 to $100 for each additional million.

Those who don't own their own car and are frequent car renters can consider purchasing a non-owner liability policy. This not only provides liability protection when you rent a car, but also when you borrow someone else’s car.

Personal Accident Insurance

Personal Accident Insurance offers medical and ambulance coverage to you and your passengers for injuries caused in a car crash. If you have adequate health insurance, or are covered by personal injury protection under your own car insurance, you may not need this additional insurance. It usually costs about $1 to $5 a day.

Personal Effects Coverage

Personal Effects Coverage provides auto insurance protection for the theft of items in your car. If you have a homeowners or renters insurance policy that includes off-premises theft coverage, you are generally covered for theft of your belongings away from home, minus the deductible. If you purchase this coverage through the rental car company, it generally costs between $1 and $4 a day.

If you frequently travel with expensive items, such as jewelry, cameras, musical equipment, or sports equipment, it may be more cost-effective to purchase a personal articles floater under your homeowners or renters insurance policy. With this floater, your valuable items are protected at home, while traveling anywhere in the world, and the coverage is broader.

Other Things to Consider

States have minimum age requirements for renting a car. Most major rental car companies refuse to rent a car to someone who is under 21, and in some states, under 25. Some rental car companies investigate your driving record and/or credit history, so it's a good idea to check with the rental car company before picking up the car.

If you are planning to rent a car abroad, contact both your insurance agent and travel agent to find out what you need to do to be properly insured. Renting and driving a rental car from the U.S. into Mexico has become progressively more difficult as U.S. rental car companies are increasingly concerned about rising crime rates in that country.

The minimum required auto insurance coverage to drive in Mexico is civil liability insurance, which covers you if you cause injury or damage. Your American liability auto insurance is not valid in Mexico for bodily injury. Some American insurance policies cover you for physical damage. Check with your state's or your California auto insurance company representative. You can also buy Mexican car insurance in several American border towns. There are generally several storefronts selling Mexican car insurance near the border.

Note: If you're renting a car abroad, you may need an international drivers license.

To find an independent California auto insurance agent, visit www.Direct Choice Insurance .com

Do you live in California ?
California Auto Insurance  |   California Car Insurance  |   California Home Insurance  |   California Business Insurance