Affordable Rental Car Insurance Quotes

Guide to Rental Car Insurance

You’ve just gotten into a car accident. Maybe it’s a minor fender bender. Maybe you were seriously injured. Or maybe you were at fault and the other driver was seriously injured. 

We could list the scenarios for days. The point being, whether it’s a gentle rear-ending or a high-speed collision, car accidents are never good news. At best it’s an inconvenience. At worst—well, let’s try not to think about that.

Now add this complication: you had your accident in a car you just rented.

Adds another layer of stress to the anxiety stockpile, doesn’t it? You’re going to be thinking about your coverage for rental cars, personal injury protection, and health insurance.

If you’re driving a rental vehicle, which insurance option you choose is crucial. It’s worth mulling whether you can get the best coverage from the car rental service or from a third-party insurance company.

Either way, knowing what’s available to cover damage when you are driving a rental vehicle will help give you peace of mind.

What Is Rental Car Insurance? 

You need a minimum amount of liability coverage when renting a car from a rental company. Liability coverage financially protects you—to a degree—if you’re at fault in an accident that causes bodily injury or property damage. The minimum liability coverage you must have varies from state to state. Coverage beyond the minimum costs more.

Collision Damage Waivers and Loss Damage Waivers

A loss damage waiver (LDW) and a collision damage waiver (CDW) are the same thing. Technically, a CDW isn’t actually insurance coverage. This waiver is an up-front cost that removes financial responsibility if your rental vehicle is damaged while in your hands.

If you lack a CDW and you have any problems at all with the car, the rental company may charge you to fix scratches, dents, or other damage. You’re also on the hook for administrative fees. 

Another expense that you may incur if you skip the CDW is a loss-of-use fee, which is based on the time spent repairing the car.

The idea is that the company is losing a chance to profit while the car cannot be rented out. It’s the same reason you’d end up paying $100 for holding onto Blockbuster movies for a month past their due date. The video rental store lost an opportunity to make money because they couldn’t rent out their property. 

Should You Opt for Rental Car Insurance Or Use Own? 

Your own auto insurance covers you when you’re using a rental car for personal reasons. Using one for business reasons may involve different rules. Check with your insurer and employer for the details you need about coverage.

Here are a few examples of how using your own car insurance would work.

  • Comprehensive collision coverage on your policy is often compatible with using a rental car.
    • You’re still stuck paying the deductible.
    • A CDW with the rental company also gets you off the hook for damages.
  • When you cause an injury with a rental car, your personal liability insurance may provide coverage.
    • We suggest that if your liability coverage is minimal, you purchase the rental company’s supplemental coverage.
    • The supplemental insurance usually has a $1 million limit.
  • If your passengers have been injured, your own policy is ideal if you have either personal injury protection or MedPay (via your auto policy). But if you lack these types of insurance, consider purchasing the rental company’s personal accident insurance. It will keep you and your passengers covered in the case of accident-related injuries.
  • Possessions stolen from your rental vehicle will be covered by your homeowners or home renters insurance policy. This is true even if the theft happens away from your house:
    • If someone steals from your rental car, you must file a police report in order to use your homeowner coverage. And you’ll still have to pay the deductible.
    • If your homeowners insurance plan is too limited, the rental desk may offer a solution. Rental businesses offer personal effects coverage that pays for your stolen belongings as long as they have been stolen from their rental car.
    • The rental company’s policy will cover your loss only up to a certain dollar amount. 

Using Your Credit Card To Pay For Rental Car Coverage

When you use your credit card to pay for the rental—and the credit card is in your name—using the card can be enough to provide coverage.

As long as your credit card provides the coverage, that coverage is automatic from the moment you pay for the rental car; no phone calls or signatures are required.

Note, however, that credit card-based insurance is often secondary or supplemental. This means that your personal policy pays out first. If you have no auto insurance and instead plan to rely only on your credit card for coverage, make sure to contact your credit card company and check the details of that coverage. Do your due diligence.

Also, keep in mind that with credit cards, you must pay up front for damages and make a claim to recover damages afterward.

Choosing Between Collision Damage Waiver and Third-party Insurance

Although purchasing a CDW may give you some peace of mind, these waivers are often very expensive. According to some reports, a CDW can cost up to $30 per day. Sometimes the expense even eclipses that of the rental.

Many experts therefore suggest purchasing your rental car insurance through a third party. 

Through these providers—for example, Allianz—collision coverage is available for around $10 per day.. If you’re looking for something even more affordable, Bonzah charges $9 per day.

As when using your credit card, you’ll still have to pay the costs of an accident up front and will have to wait for your claim to be processed before you can receive any compensation. Moreover, these plans have terms of coverage similar to those of a credit card. 

How Much Does Rental Car Insurance Cost?

It depends on what you need. Although a waiver is technically not insurance, following the path of least resistance and purchasing a CWA will provide you with more robust coverage. You won’t have to pay for damages up front if an accident happens (so long as the damage is covered by the terms of the CWA). Still, on average, you’ll end up paying between $30 and $45 per day for the waiver.

On top of that, supplemental liability insurance costs $8 to $12 per day, personal accident insurance costs $3 per day, and personal effects coverage costs $2 per day. 

Full coverage, then, is likely to cost between $33 and $47 per day.

On the other hand, a third-party rental insurance policy can cost as little as $9 per day. The drawbacks are that you’re stuck with the deductible and that you must wait for your claim to be processed.

Renting a Car Without Insurance

Technically, since a CDW (aka LDW) isn’t insurance, it is possible to rent a car without an insurance policy.

In most cases, though, a CDW is a redundant expense. You can instead rely on your personal plan or on a third-party source for insurance, either of which would be less expensive than any waiver.

Conclusion

Whether you’re going on vacation or your regular car is on the fritz, you may need a rental car. If so, you’re best served by purchasing an affordable and suitable insurance plan.

Frequently Asked Questions

Will My Credit Card Coverage Be Sufficient?

The extent of the coverage depends on your credit card provider. Some companies do provide decent insurance in the case of auto theft or accident. But you should investigate the policy to make sure that you are provided with coverage that is more than the bare minimum.

Also, keep in mind that most credit card coverage is supplemental. This means that you cannot receive any payment from the credit card company until after you have made a claim through your personal policy.

Another consideration is the fact that the coverage provided by many cards comes with an extensive list of exclusions. For instance, some of these policies don’t cover the following:

  • Damage caused by other drivers who use the rental car if you have not added those drivers to the rental agreement.
  • Lost keys.
  • The costs of roadside repairs.
  • Windshield damage.
  • Undercarriage problems.
  • Mirror and roof damage.
  • Long-term rentals.
  • The high prices that rental companies charge for repairs.

Can I Change Or Cancel My Coverage If My Rental Plans Change?

Yes. You can either modify your coverage or cancel it and get a refund—as long as you do so before you arrive to pick up your rental car. Extending your coverage is possible at any time. 

Are Additional Drivers Covered Under My Policy?

As long as you’ve added drivers to the rental agreement, they’ll be covered—with a small additional-driver fee at most.