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If you’ve ever rented a car, you’re familiar with the moment at the rental agency when you’re presented with the opportunity to buy insurance. This can be a bit stressful, since adding insurance can significantly raise costs. However, it’s important to know that you may not need to.
If you carry car insurance of your own, your coverage may overlap with most rental coverage, and you won’t need to pay for duplicate coverage. What’s more, your credit card might provide an extra layer of protection. There are, however, some instances in which adding coverage may make sense. Let’s take a closer look.
Key Points
• Personal car insurance often covers rental cars, but limitations may apply.
• Credit cards can provide secondary rental car insurance.
• Review policy limits, including deductibles and exclusions.
• Contact insurance and credit card companies before renting a car.
• Report accidents promptly to all involved parties.
Where Your Rental Car Coverage Can Come From
When you drive a car, you need insurance. That’s true for your personal vehicle and for rentals. When renting a car, insurance coverage can potentially come from three places.
Your Personal Auto Policy
Most car insurance policies will cover the same things as rental car insurance. So, what does car insurance cover? If you get in an accident, liability coverage can pay for damages and injuries you cause to other people and their property. Collision coverage should cover damages to your rental vehicle.
Your Credit Card Benefits
Some credit card companies offer coverage if you use your card to pay for the rental. This coverage is secondary and typically kicks in once your personal auto insurance has paid for what it’s willing to cover. That said, credit card coverage can be quite valuable. For example, it might reimburse you for part of the cost of your deductible.
Most major credit card companies offer some form of insurance. However, the exact details can vary depending on the bank that issued the card. Check the benefits guide for your card, or call the customer service number on the back of your card and ask what coverage they offer.
Insurance from the Rental Car Company
If you buy insurance from a rental company, it may include liability coverage to cover the cost of damages and injuries you cause. It may also include loss or collision damage waivers. These essentially release you from responsibility of damages caused to the vehicle during an accident or during theft or vandalism. There may also be personal damage coverage that covers injuries to yourself and personal effects coverage that covers the cost of items stolen from your rental car.
Recommended: A Comprehensive Guide to Auto Insurance
Key Coverage Limitations and Considerations
Your personal insurance and credit card coverage may be enough to cover your risks when renting a car. But there may be limits that are important to understand as you get to know how your car insurance works.
Understanding Your Deductibles and Policy Limits
Certain car insurance policies, such as collision and comprehensive coverage, have deductibles. They require you to pay up to a certain amount — $1,500, for example — before they kick in. If you have a very high deductible, it’s certainly worth checking to see if your credit card will cover part or all of it in the case of an accident.
For example, if your deductible is $1,500 and your credit card covers $1,000. If you were involved in an accident with $2,000 in damage, you’d still be on the hook for $500. If covering this difference feels risky to you, you may want to add rental insurance from the rental car company, which often carries no or low deductibles.
You’ll also want to investigate limits to your policy coverage. For instance, travel outside of the U.S. may not be covered, in which case you might want additional insurance.
Common Exclusions
In addition to exclusions for international travel, there may be additional exclusions for renting trucks or vehicles for business purposes. These vehicles present higher risks for insurance and potentially different legal liabilities.
However, your personal coverage may cover small pickup trucks. There’s often a weight limit, so it’s worth familiarizing yourself with your policy details before renting one.
Deciding If You Need to Buy Extra Insurance
If you’re considering renting a car, you’ll want to figure out how much insurance you really need and whether to buy extra insurance. If the vehicle you’re renting isn’t covered, that’s a no brainer: You’ll likely need extra insurance. The same goes if you don’t carry a personal policy.
Otherwise, it comes down to personal preference. You may want extra insurance if you have a high deductible or carry very low liability coverage, for example.
Buying insurance with the rental company bypasses your insurance company. So, you may also want to buy the insurance if you’re worried that an accident will cause your personal rates to go up.
What to Do Before and After You Rent
Before you’re asked to make a decision about coverage at the rental desk, it helps to gather all your facts.
Before You Rent: Steps to Check Your Coverage
Check what types of coverage your insurance provides. It may be easiest to contact your insurance company directly. Have the representative explain what your policy covers and any limitations.
With this information in hand, contact your credit card company and find out where their coverage comes in. Some cards offer primary coverage, though most will offer secondary coverage that kicks in after your auto insurance has finished paying. Credit cards typically provide a collision or loss damage waiver, but may offer little in the way of liability coverage.
In Case of an Accident: How to File a Claim
If you’re in an accident, notify your rental company, insurance company, and credit card right away. Start gathering evidence, including police reports, photos of the damage, and the other party’s contact information and insurance details.
Depending on who is at fault, you’ll work with your insurance company, the other driver’s insurance company, or a combination of the two to cover the cost of repairs. Depending on how much your insurance covers, your credit card may step in to cover further costs.
Recommended: How to Get Auto Insurance
The Takeaway
You don’t always need additional rental car insurance. But before you make that decision, get to know exactly what your personal car insurance covers and what protection your credit card offers. This knowledge can help you know exactly how much additional insurance you need, if any, when you rent a car. And avoiding duplicating coverage can potentially save you a lot of money.
When you’re ready to shop for auto insurance, SoFi can help. Our online auto insurance comparison tool lets you see quotes from a network of top insurance providers within minutes, saving you time and hassle.
FAQ
Does my personal car insurance automatically cover rental cars?
Your personal car insurance may automatically cover renting a car. However, it’s important to ask your insurance carrier if your policy has any limitations.
Is the insurance offered by my credit card enough?
The insurance offered by your credit card may not be enough coverage. For example, your card could provide a loss and/or collision waiver, but may provide little in the way of liability coverage.
Should I buy the insurance offered at the rental counter?
If there are holes in your personal coverage or the coverage offered by your credit card, you may want to purchase additional insurance at the rental counter. You may also want to do so based on personal preference. For example, if you wish to avoid the possibility of your insurance premiums going up in the event of an accident, you might prefer buying insurance at the rental counter.
What happens if I get into an accident in a rental car?
If you get into an accident in a rental car, contact your insurance company and credit card company immediately. They will start the claims process. If you bought insurance through the rental car company, they will investigate the claim.
Does my car insurance cover U-Haul trucks or international rentals?
It’s likely that your personal coverage does not cover moving vans and international rentals, so you may want to consider purchasing additional coverage.
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