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Do I Need Insurance When Renting a Car?

Finance | 11/03/2022 23:00

With the holidays fast approaching, many of us are planning our family trips. There are flights to be booked, hotels to be vetted, and rental cars to be reserved. But with so many extra costs around the holidays, you may be wondering if you need to pay extra for insurance when you are renting a car. 

What’s the deal with renting a car, and do I need to pay for insurance?

What is rental car insurance?

Rental car insurance is insurance that is offered by the rental company to cover any incidents that may occur while you are renting the car. This coverage may include some or all of the following:

Liability Protection

Liability protection covers you for damages or injuries that are caused by you while you are driving the rental car.

Loss/ Collision Damage Waiver

A loss damage waiver releases you from responsibility if damage occurs to the rental car (this damage includes thefts and vandalism)

Personal Accident Insurance

Personal accident insurance protects you against injuries to you and your passengers that occur while driving the rental car.

Personal Effects Coverage

Personal effects coverage protects your personal items from theft that occurs from the rental car.

There are a number of different protections that may be offered to you, and some may be worth it to you. But some of these protections may already be covered by your auto insurance or homeowners insurance. Check to see if your personal auto insurance policy includes liability, comprehensive, collision, and personal injury protection, and if that coverage extends to rentals. Check your homeowner's or renter’s insurance to see if personal effects are covered in rental vehicles (they often are).

Additionally, your credit card may offer further protection. Credit cards sometimes cover damage or theft expenses that are left over after your insurance pays out. There may be rules and restrictions on this though. 

It is a waste of money to pay for these protections if you are already covered, so check your policy thoroughly, and call to ask if you are uncertain. 

Do I need insurance when renting a car?

If you do not have auto insurance, you will be required to get rental car insurance. The rental company wants to ensure you have insurance of some kind. 

If you are already protected through your car insurance and/or homeowner’s insurance, it might not be required–or even necessary–to get rental car insurance. But there are some instances when it might be worthwhile to get additional protection.

You want to avoid claims.

The more claims you have on your auto insurance, the higher your monthly payments will be. This is especially true if the accident is your fault. If you are worried that an additional claim will cause an increase in your rate that you can’t really afford, it might be worth it to simply pay for the renter’s insurance. 

You have a high deductible.

If your auto insurance has a high deductible, it can still cost you a lot of money if you were to get into an accident. It might be cheaper to pay for renter’s insurance rather than risk an expensive accident.

You don't carry comprehensive coverage or collision coverage.

Supplementing with loss/ collision damage waiver can help protect you if you only carry liability. Similarly if you have a very low liability coverage limit (such as the state minimum), additional coverage can provide further protection. 

You are outside of the United States.

If you travel out of the United States your auto insurance most likely will not apply, so you will need to get separate rental car insurance.

Rented car on a winter road

How much is it to rent a car for a week?

On average it costs about $20 a day to rent a car in the United States. But this depends a lot on the following:

  • Location where you are renting

  • Make and model of car you are renting

  • When you book

  • Where you pick your rental car up

  • Where you drop your rental car off

  • How long you book the car for

  • How old the driver is

All of these factors will affect the price per day that you will pay when you rent a car. But in addition to that, there are other costs to consider when renting a car. Here are some additional fees (and how you may be able to avoid them.)

Damage Charges

If there are any damages to the rental car when you drop it, you will absolutely be required to pay for them. These damages might be as small as a stain on the upholstery or a dent on the car’s exterior. These are not typically covered by insurance and will instead be charged to you when you check out. 

To minimize these fees, be sure to do a thorough check of the car before you drive off in it. Point out any marks or dings to the rental company employee and make sure they are marked down. You don’t want to be charged for something that wasn’t your fault.

Administrative Fees

As with everything, the rental company will charge you a handling fee. There is little you can do to dispute this, but be aware of what the fees are before you sign any paperwork. 

Fuel Charges

The rental agreement will clearly state what your responsibility is when it comes to returning the rental car fueled up. Sometimes they will ask that the car be returned with a full tank, while other times they will ask that it be returned at whatever level the fuel was when you left. Either way, failure to abide by these rules may result in some steep fuel charges. Not only will they charge you a steep rate (rental companies usually charge 133% to 142% of the state gas average) but they will also charge a fee for their trouble.

That’s what you need to know about renting a car and rental car insurance.

Renting a car can be expensive, but it doesn’t have to break the bank. Be smart and shop around with different rental companies and try to be flexible when it comes to the make and model of your car. Reading through the fine print and ensuring that you aren’t double paying for rental car insurance is also helpful when it comes to saving money.

Saving money has never been more important. If you are currently making payments on a financed car, then we have good news! Refinancing your car loan can save you A LOT of money (and it couldn’t be easier!) Contact Auto Approve today to get a free quote and start saving your hard earned money–after all, the holidays are expensive and we need all the help we can get!


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