Car ownership comes with numerous challenges. Your car may break down or get into an accident, which can leave you stranded. Fortunately, you can rent a car and get on the move while your vehicle’s at the service center.

Rental companies will offer you rental car insurance to protect you from any eventualities while driving the leased car. Although not mandatory, it’s best to take the cover and add rental car reimbursement to your auto insurance policy. The rider will help defray car rental costs as you wait to pick up your car from the repair shop. Let’s find out more about rental car insurance.

How Does Rental Car Insurance Work?

Rental car insurance is an insurance policy that covers you from damages, injuries, and theft that might occur when driving a leased car. It protects you and your rented car from unforeseen eventualities. Taking out rental car insurance is a good idea if you don’t have a personal auto policy.  

Your auto insurance might provide some coverage if the leased car is for personal use. However, this might not be the case if the rental car is for leisure or traveling out of the country. The insurer may not pay the entire cost in case of an accident unless you have a comprehensive policy.  

Even though the car rental company may have coverage on their leased vehicles, it only covers the bare minimum. You may have to pay for other damages not covered by the agency’s insurance policy.  

What Are the Types of Rental Car Insurance?

There are four types of rental car insurance you can consider. These include the following:


Rental car liability insurance covers you from damages and injuries caused to others while driving a leased car. More often than not, your personal liability policy might provide coverage if the rental car is for personal use and not for business. However, you may have to take out a higher policy amount to ensure adequate coverage in all situations.

Personal Accident Insurance

Personal accident insurance covers you and the passengers in the leased car against damages and injuries. It pays for the medical costs of the injured persons whether or not you were at fault while driving the rental car. This insurance policy doesn’t require a deductible and is similar to Personal Injury Protection and Medical Payments coverage.

Loss-Damage Waiver

A rental car loss-damage waiver covers you from financial liability in case of damage to the leased car and protects you from paying for environmental damage, accidental damage, vandalism, and theft. A collision-damage waiver only covers damage and not theft or loss. If the leased car has to spend days in the repair shop, a rental car loss waiver will cover the fees the rental company might charge you for the days the vehicle isn’t in service.

Personal Effects Coverage

If someone steals your items from a rental car, you can claim your rightful compensation via the personal effects coverage. Items covered include electronics, smartphones, clothing, and luggage. A homeowners or renters insurance policy might protect you from losses, including items stolen from a leased car.

Do You Need Insurance to Rent a Car?

You don’t need insurance to rent a car. However, the car rental company will encourage you to take out rental car insurance to protect you from unforeseen happenings while driving the leased car. The most offered rental car insurance is liability coverage that covers you from injuries and property damage you cause while driving the rented car.

What Are the Benefits of Rental Car Insurance?

As with other insurance policies, rental car insurance has numerous benefits. It covers you, the rental car, passengers, third-party property, and other road users from injuries, losses, and damages. You won’t have to pay out of your pocket for damages caused in case of an accident. Depending on the insurance policy, it may also cover the theft of the leased car. However, always read the fine print to determine coverage details.

Can You Use Auto Insurance for Rental Cars?

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 You can use your personal auto insurance for a rental car. However, most auto insurers only cover rental cars for up to 30 days. Besides, rental coverage only works if your auto insurance policy has collision or comprehensive coverage. 

Liability coverage on your auto insurance protects you from damages and injuries caused to others while driving the rental car. You may add rental car reimbursement to your auto insurance policy to help defray car rental costs as you wait to pick up your repaired vehicle from the service center.

How Do You Get Rental Car Insurance?

The rental company will encourage you to take out a rental insurance policy when completing the paperwork for the rental car. The rental company essentially becomes your car insurer for the duration of the lease. Without rental car insurance, you’re responsible for all damages you cause.

How Much Does Rental Car Insurance Cost?

Rental car insurance costs vary greatly. Rental companies calculate insurance costs depending on the vehicle type, condition, and duration of the lease. Your location might also determine how much you’ll pay as premiums. That said, expect to pay anywhere from $30 to $60 daily.

Do Credit Cards Provide Insurance Coverage for Rental Cars?

Most premium credit card companies offer insurance coverage for rental cars. This option is highly convenient, especially when traveling abroad. However, it’s often secondary coverage. If you have an auto insurance policy, your insurer will pay out first, meaning you won’t need your credit card, even if it supports rental coverage. Then again, not all credit cards offer coverage for rental cars.  

Taking out rental car insurance every time you lease a car makes sense. After all, the policy protects you from financial obligations that might result in case of an accident. However, rental car insurance can limit you since some car rental companies cover the bare minimum. Adding a rental car reimbursement to your auto insurance policy can help offset the rental costs. Contact American Auto Insurance to talk to an expert and learn more about insurance coverage options when renting a car.

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