Do You Need Supplemental Insurance for a Rental Car?

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If you get into an accident and need a rental car, will your car insurance cover the rental if it gets damaged? In most cases, your existing policy will apply to a rental car, so you likely won’t need to purchase additional coverage.

To help you decide whether your policy provides adequate coverage, here’s a look at the different types of protection rental companies offer in addition to what’s available from insurers, and the gap coverage you might need.

What Does My Personal Insurance Cover?

Most insurance policies for rental cars are identical or close to the coverage you’ll find on a regular car insurance policy—and most personal insurance policies translate to rental cars, too. For example, if you already have comprehensive insurance, including collision and liability, then you’ll already have the level of protection (up to the policy’s limits) that you’ll typically find at a rental car company.

Also, most homeowners or renters insurance will provide coverage for personal items stolen from your rental car. Before deciding to purchase additional coverage from a rental car company, check your existing insurance policies to see if supplemental insurance is actually needed.

Keep in mind that there may be some exclusions for each of these policies, which is why it’s always recommended to check your existing policies before declining coverage from the rental car company. Some policies may exclude certain types of vehicles, such as commercial vehicles, luxury vehicles, or business trip rentals.

Comparing Coverage

Here’s a breakdown of how rental car company coverage compares with other types of coverage you may already have:

Rental Car Company PoliciesCar Insurance Policies
Supplemental liability insuranceBodily injury and property damage liability coverage
Collision damage waiver (CDW) and Loss damage waiver (LDW)Comprehensive collision coverage
Personal accident insurancePersonal injury protection and health insurance
Personal effects coverageHomeowners or rental insurance personal property coverage

Supplemental Liability Insurance vs. Personal Liability Insurance

Since liability for bodily injury and property damage is required in California, you should already have coverage. Car rental companies are also required to offer the state minimum coverage.

If you’re trying to decide whether to add on supplemental liability insurance, ask yourself the following questions:

  • Will I be driving more in an unfamiliar car?
  • Will I be driving on unfamiliar roads (if you’re using the rental on vacation, for example)?

In general, it’s recommended to have at least $25,000 of bodily liability insurance per person, as well as $50,000 of bodily liability per accident and $25,000 of property liability. This will ensure you’ll have enough coverage to cover the full costs if you get into a collision.

Collision Damage Waiver/Loss Damage Waiver vs. Comprehensive and Collision

Usually, this waiver can be declined if you already have personal collision and comprehensive coverage on your policy. However, you’ll want to make sure that the insurance limits can cover the actual cash value (ACV) of the rental car.

Luxury Vehicles – Collision or Loss Damage Waivers

Comprehensive and collision coverage is designed to cover the costs of repairing a car that’s comparable to your personal vehicle. This means that if you rent a more expensive vehicle, such as a luxury car, your policy may not cover the full repair costs of an accident.

With a collision or loss damage waiver, you won’t be held accountable for any damage to the rental car. It also eliminates the fee some rental companies charge for the time the vehicle is out of commission while it’s being repaired. Since collision and comprehensive policies often cover these costs, it’s best to check your policy before making a decision.

Personal Accident Insurance vs. Personal Injury Protection and Health Insurance

Personal Injury Protection and health insurance cover medical fees that might arise from an accident. If you already have no-fault or personal injury protection, medical payments, or good personal health insurance, you can feel comfortable declining the personal accident insurance offered by the rental company.

As an alternative, you can rely on your health insurance to cover any medical bills from an accident. However, since collision injuries could potentially amount to hundreds of thousands of dollars, you’ll want to make sure you have adequate coverage available.

Personal Effects Coverage

Personal effects coverage will reimburse you if your personal items are stolen from your rental car. Most renters and homeowners insurance already cover personal items; if you have an existing policy, you can probably decline it.

Does My Insurance Cover Rental Cars?

Fortunately, most insurers include rental car coverage in their policies—but it’s best to check your policy or talk with an insurance agent to make sure you’re covered. Some of the biggest national insurers that offer rental car coverage include:

  • State Farm
  • Geico
  • Progressive
  • Allstate
  • Liberty Mutual
  • Travelers
  • Farmers
  • USAA
  • Nationwide
  • American Family

Credit Card Rental Insurance

Many major credit card companies also offer supplemental insurance coverage if you pay the full balance of the rental with your credit card. However, sometimes this insurance will only apply after your personal insurance plans are applied. There may be other restrictions, also, such as requiring you to decline a collision lost waiver.

Mastercard, for example, only provides coverage if the renter:

  • Declines the rental car collision loss waiver
  • The car is rented out for 15 days or less
  • All other insurance policies have been exhausted

Mastercard also excludes coverage for all trucks, full-size vans, and vintage vehicles, so make sure you understand your card’s benefits and exclusions.

When to Consider Rental Insurance

Even if you’re already covered by your regular insurance policy, there are some instances where you may want to purchase supplemental insurance. These include:

  • You have only liability insurance. In this case, it’s best to purchase a collision damage waiver (CDW). Although liability insurance will cover the damage to another vehicle, it won’t cover repairs for your rental car—which means you’d be responsible for covering the full repair costs and any loss-of-use fees, even if the other driver was responsible for the accident.
  • You have the minimum liability insurance coverage. If you have only basic liability coverage, you may want to consider purchasing supplemental liability insurance from the rental company to help cover the costs of damaging another vehicle or injuring its passengers. This will help cover any gaps in your personal liability insurance coverage.
  • Your personal insurance policy has a high deductible. If you have high deductibles on your personal auto insurance policies, you may want to consider a collision damage waiver. That way, if your rental car gets scratched, dinged, or otherwise damaged, you won’t be responsible for the repairs. Before purchasing a CDW, however, make sure it doesn’t come with a high deductible as well.
  • You’re an at-risk driver or you want to protect your existing insurance policy premiums. If you’re worried about your driving record or what a collision might do to your insurance premiums, you may want to purchase a CDW, liability, or personal accident insurance—especially if you’ve already had an at-fault claim within the past three years and don’t want your premium to increase. Successive claims within a three-year period can make premiums rise rapidly; in contrast, a supplemental insurance claim wouldn’t affect your personal insurance premium.
  • You have low limits on your existing collision or comprehensive plan. If your personal vehicle isn’t worth as much as your rental car, your collision and comprehensive policy may not provide enough coverage for your rental car. If your rental is more valuable than your personal vehicle, it’s recommended to purchase a CDW.

As you can see, whether you need supplemental insurance is dependent on several factors, including the type of coverage you have on your personal vehicle. As coverage needs can change over time, it’s always a good idea to review your existing insurance policy from time to time to make sure you have the protection you need.

At Cline Collision Center, we offer complete insurance coordination and can help you determine whether you might qualify for a free rental car, even if you don’t have rental car coverage in your policy. Contact us today at (707) 591-9909 or schedule a free estimate appointment online.