A LOT of us rent cars while on vacation – but knowing the insurance rules is important.
If you don’t, you risk losing your pocket and paying damages in the event of an accident.
Much like standard auto insurance, the cost of rental policies can vary depending on the state, the rental company, and the amount of coverage you choose.
We explain everything you need to know below.
Do you need rental car insurance?
You don’t need to have your own auto insurance policy to rent a car.
Still, some rental companies usually have minimal coverage on their vehicles, so you might have to pay a hefty bill if you have an accident.
Other options include purchasing additional insurance from the car rental company, using a credit card for coverage, or obtaining a stand-alone policy through a third.
Does auto insurance cover rental vehicles?
If you already have auto and auto insurance, this can also cover a rental vehicle.
In other words, before you rent a car, be sure to review the coverage you already have on your personal auto insurance policy.
If you are covered, purchasing rental car insurance can duplicate what you are already paying for.
Types of car rental insurance explained
If you don’t have other insurance and don’t want to use a credit card to cover yourself, you may decide to purchase rental car insurance.
If so, be aware that car rental companies typically divide additional rental offers into four sections, according to the Insurance Information Institute.
We’ve rounded them off below.
Loss and Damage Insurance (LDW)
Also known as no-deductible collision insurance, an LDW is not technically an insurance product.
Instead, it’s designed to relieve or “exonerate” renters from their financial responsibility if their rental car is damaged or stolen.
The exemptions can also cover “loss of use”.
This is usually charged by the car rental company for the time that a damaged car cannot be used because it is being repaired, as well as the administration fee.
By law, rental companies must provide the indicate the minimum amount required liability insurance coverage, but often this does not provide sufficient protection, according to III.
If you have your own auto insurance and have opted for higher liability limits, you should have sufficient coverage.
Non-owner of cars who are frequent renters have the option of purchasing a non-owner liability policy.
Personal accident insurance
This covers the driver and passengers for medical and ambulance bills for injuries caused in a car accident.
Whether or not you should consider it depends on your health insurance and injury protection (PIP) provided by your auto insurance, if you have one.
Personal effects coverage
Last but not least, it provides insurance protection against theft of items in a rental car.
This might be suitable if you don’t have home or tenant insurance, or if your policy doesn’t cover this type of loss.
We show you how much your insurance increases after speeding.
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Plus, we’ve gathered everything you need to know about driving without insurance and the fines you incur.
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