Don’t Forget to Insure Your Rental Car

Whatever rental service you plan to use, the most important first step is to actually read and understand the car rental or car sharing agreement. It's not as fascinating as a good fiction novel, but it's a must-do. If there's anything in the agreement that you don't understand, don't sign it until you've asked a representative of the rental service to walk you through it.

What to Do Before You Rent

Not checking the coverage you have (or think you have) could lead to spending money for double coverage. It could also lull you into believing you're already covered when you're not. Don't assume: Pick up your phone and check.

Car Owners

• Ask your insurer how much coverage you have on your own car, and whether that coverage would apply to a rental car for recreation (not for business). That is, will the same auto insurance and deductibles that apply to your own car apply to a rental car?
• Check to see if you still have collision or comprehensive coverage on your policy. Many people drop these as a way to save money. But without them, you may not be covered if your rental car is damaged or stolen. Rules vary by state.
• What about administrative fees? Are they covered?

Homeowners or Renters

• Ask the carrier of your homeowner or renter insurance if these policies cover your belongings if they are stolen from your rental car or somehow damaged.

Credit Cardholders

Before you decide which credit card to use when you pay for the rental, find out if that specific card will cover damage to a rental car. Coverage may be limited, for example, to the deductible. It's important to know what protections will be provided so you can, if necessary, purchase separate coverage.

• Call the credit card issuer. It's best to contact the credit card issue and explain the coverage you need. Ask your credit card carrier about the extent of the coverage. For example, A platinum card may offer more robust coverage than a green card. If you have multiple cards, compare to see which one offers the best coverage.  If time permits, ask them to send you the coverage information in writing.
• Realize that credit card insurance is usually secondary. That is, it will kick in after other insurance has paid, such as your personal insurance or that offered by the rental company.

Renting from a Traditional Car Rental Company

Also called, brick-and-mortar car rental companies, these companies generally offer insurance that is fairly standard in its coverage, though it varies by state.  You'll likely be offered the following coverages:

• ‍Loss Damage Waiver (LDW): This is a product that waives renters of financial responsibility if their rental car is damaged or stolen. However, if an accident was caused by speeding, driving on unpaved roads or driving intoxicated, the coverage may be voided.‍
• Liability insurance: Rental car companies are required by law to provide the minimum amount of liability insurance coverage in your state. But it may not be enough. Your own auto insurance (with higher liability coverage) should be adequate.‍
• Personal accident insurance: This insurance protects the driver and passengers for medical and ambulance bills incurred in a car crash. Whether you need this depends on your own health insurance and personal injury insurance.‍
• Personal effects insurance: This covers items in your rental car, if they are stolen. If you have homeowners or renters insurance, you may not need this.

Car Sharing Services or Peer-to-Peer Service

Car-sharing programs allow consumers to rent vehicles for short periods, from just a few minutes up to several days, after paying a monthly or annual membership fee. These services are especially popular in cities, where owning a car is often costly or inconvenient, yet having access to a car when needed is helpful. Some of these programs include insurance costs in the fee. But if the car is involved in a collision or is stolen, the renter may be billed for an amount stated in the agreement.

While most car-sharing programs include some level of insurance, the coverage varies significantly between companies. It's important to carefully review the insurance details, typically available on the service's website. If you have questions, you can contact the company's customer service. For additional guidance, consider reaching out to your own auto insurer.

Peer-to-peer rental car networks rent personally owned vehicles to others. They may offer a wide variety of coverages. Renters may also decline coverage.