Do I Need To Purchase Insurance On My Rental Car?

insurance on rental car

Does your car insurance policy cover you when you rent a vehicle?

Today we are going to answer this question. The first thing to know is yes, for the most part and with most insurance policies, you are going to have some coverage for any personal rental car that you are renting.

Let’s get into a few more details so that you can understand and so that you can make the right decision when you’re renting a vehicle and trying to figure out if you should purchase their insurance or save some money and just use your own insurance that you already pay money for.

Let’s jump into it. For the most part, with most car insurance policies, all of the coverage that you have on that policy transfers over to any rental car that you are renting. Most of the time, most policies will transfer that coverage over. Let’s talk about what that means.

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Liability On A Rental Car

We’ve talked extensively in recent videos & blogs about liability coverage and what that means and why it’s important and why you should have the right limits. So let’s say you have bodily injury limits of $100,000/$300,000 those limits would transfer over while you are driving a rental car.

Comprehensive & Collision On A Rental Car

Now let’s talk about what people refer to as “full coverage”, comprehensive and collision. These coverages transfer over as well. If you on your personal auto insurance policy you have $500 comprehensive deductible and a $500 collision deductible, the comprehensive and collision coverage would transfer over to that rental car as well while you are driving it.

What Coverage Is NOT On A Rental Car Insurance?

Now there are two things that we need to point out. These things are very important. They are coverages that you would not have on a rental car because they don’t exist on your personal insurance policy.

The first one is pretty obvious but we have to state it because we get questions. Your personal auto policy is just that, a personal auto policy. It’s for personal vehicles not commercial or work or business vehicles. So a lot of times people will rent a U-Haul to move their house, or whatever it may be and they think that their coverage on their personal auto insurance policy will transfer to a U-Haul.

In most cases it would not because the uhaul is not considered a personal vehicle. If you’re renting a vehicle for work purposes and you’re going out and doing work with it. Well again your personal policy does not cover you for work related activities and so that’s not a coverage that can transfer over to the rental car.

So make sure you keep that in mind. This is personal personal use personal vehicle that’s number one.

Number two: A coverage that doesn’t transfer because it doesn’t exist is what’s called loss of use. Let’s give an example.

So let’s say you are renting a vehicle, you are in an accident while you’re in that vehicle. Your liability transfers over, like we talked about Your comprehensive and collision transfers over like we talked about. However, what happens when that car is in the shop because damage occurred while you were renting it and it’s in the shop for a whole week? The rental car company cannot rent that car out. They cannot make money.

Guess what? They’re not gonna lose money. They’re gonna pass that expense along to you and you are going to have to continue to pay that rental fee every day while the car is in the shop and they cannot rent it out again.

This is a coverage that does not exist on your personal car insurance policy, so it cannot transfer over. So you would be responsible. You would be on the hook to pay for that time and loss of use.

Whose Record Does It Show Up On?

Let’s talk about something else that is very important to point out. So if you forgo buying insurance from the rental car company and you decide to use your own insurance, should something happen, that will show up as a claim on your insurance record even though it’s not your vehicle. It will show up because you use that insurance to file the claim. As we know those incidents will stay on there for 3 to 5 years and they will affect your rate for those 3 to 5 years.

In other words, you’re going to pay a higher premium because you use your own insurance.

Now, if we look at the opposite of that, let’s say you decide to buy the insurance from the rental car place, something happens, you may have a deductible with their insurance. Usually it’s a couple $100, I’ve never seen more than $1,000.

So let’s say you pay that, then you walk away. Their insurance company takes care of it. It is not tied back to you personally. It’s not going to show up on your insurance record. Therefore it is not going to affect your insurance rates for the next 3-5 years. Like it would have if you used your own insurance.

Now let me tell you what I personally do and what I would suggest.

Easy answer: buy the insurance from the rental car place.

I do this for a number of different reasons. One reason is because of those two coverages we talked about that don’t transfer over, but it’s also is because of the accidents not showing up on my record. I don’t want to use the insurance companies insurance, I want to use the rental car companies insurance so that I don’t have to have that on my record for the next 3 to 5 years. It’s nice just to pay it and walk away.

Also, something else that is important to point out with a lot of these rental car companies is the sales person who is selling you the insurance at the counter (if you’re doing it in person) a lot of times they get a commission for selling the insurance to you.

And so many times if you try to negotiate with them and say, hey, “I don’t want to buy the insurance at $30 a day, but if you bump it down to $15 a day, I’ll buy it”. I’ve had luck with them bumping it down to $15 a day and then it’s worth it. And I don’t have to worry.

I know if anything happens again, I pay that small deductible and I walk away. So that’s what I would recommend. But now you have all of the information and you can go and make your own educated decision.

As with all of our blogs and videos, it’s important to point out that every company and every policy and every state is different.

So do not take this video as doctrine. Go and look at your policy. If you don’t want to read through your policy, go and talk to your agent and let them tell you so you know with 100% certainty what is covered and what is not.

What Happens If You Crash A Rental Car Without Insurance?

If you do not purchase the rental companies insurance and you crash your rental car, then (in most cases) your personal insurance policy would kick in. Depending on the coverage you have on your personal insurance policy, those coverages would help pay for the damage to your rental car and even medical injuries of those involved.

If you don’t purchase the rental companies insurance AND you don’t have your own insurance, then you will be in a very bad position. Don’t take the risk, if you don’t have your own personal insurance, buy all the insurance for your rental car that the rental company will allow you too.

Insurance Company Refusing To Pay For Rental Car?

Sometimes insurance companies can be difficult and not provide a rental car to you when they should. Click here for a video that will help you know what to do should the insurance company refuse to pay for your rental car.

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