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What is Rental Car Insurance?
Rental Car Insurance is a short-term insurance policy which will cover your financial loss if the rented vehicle is damaged, stolen, or if you are at fault for causing injury and/or damage to others while driving the vehicle. In contrast to your usual auto insurance, the coverage is limited to cars that you rent, regardless of whether it is for a vacation, business trip, or simply a short period.
The insurance normally covers a variety of costs such as those related to the repairs after an accident, theft of the car, damages to the property of a third party, and bodily injury liability. In certain cases, some policies may also provide an option to be protected against very high deductibles imposed by rental firms. Since in most cases, rental contracts stipulate that the renter is held responsible for any damage that occurs during the rental period, thus the policy acts as a buffer for the renter in case of unexpected expenses and even relaxes the mind when the keys are given to you for the drive.
How does Rental Car Insurance Work?
Insurance for rental cars works differently when compared to personal car insurance. Rental car coverage is not as simple as your regular car insurance, the benefits and coverage vary depending on the rental company and geographical location.
Types of coverages offered in rental car insurance
1. Collision Damage Waiver (CDW)
As the name suggests, Collision Damage Waiver will cover you against damages to the car. Note that CDW covers only bodywork damage and it doesn’t cover other parts such as windshield, tyres, battery, interior damage and engine/gearbox. Damages to the car due to reckless driving/driving under the influence of alcohol are also not covered.
2. Theft Protection
If the rented car gets stolen, then the theft protection cover will make sure that you won’t have to pay any money to the rental company. Theft protection also covers damages to the car that occurs in an attempt of stealing.
3. Third-Party Liability
The third-party car insurance policy will cover damages caused to third-party property/life while driving a rented car. However, if you were found breaking the rules and regulations in such situations, then this coverage will not be applicable.
Does comprehensive car insurance provide coverage for rental cars?
No, generally a comprehensive car insurance policy will not cover rental cars as standard. Comprehensive insurance primarily covers your own vehicle against risks such as accidents, theft, fire, and natural disasters, as well as third-party liability.
Rental cars are handled differently, though. As they are not your insured vehicle, rental cars normally require a separate rental car insurance. This is a short-term cover that applies only to the possibility of damage, theft, or third-party liability while driving a rental vehicle.
It is possible that your insurer will offer you the option to add rental car coverage as an add-on or extension. Nevertheless, it's better to get rental car insurance separately if you rent cars regularly to be fully protected.
Significance of Car Rental Insurance Cover:
When you rent out a car, you are responsible for damages caused to the vehicle, and that’s why the car hire insurance cover is such a critical aspect of renting a vehicle. Rental car insurance will cover you against damages, theft and also damages to third-party property/life. Below are the benefits of rental car insurance coverage:
Super Collision Damage Waiver (SCDW): CDC only covers damages to the bodywork of the car, while the Super Collision Damage Waiver covers several additional parts of the vehicle. SCDW gives you peace of mind, even if the rental car is damaged very badly.
Personal Accident Insurance (PAI): If you or any occupants of the rented car gets injured, the Personal Accident Insurance cover will pay out the medical expenses incurred.
Uninsured Motorist Protection (UMP): If you are involved in an accident, and the driver of the other car is not insured, the Uninsured Motorist Protection will cover damages/injuries.
Supplemental Liability Insurance (SLI): The Supplemental Liability Insurance will increase the maximum amount paid by Third-Party liability coverage.
Roadside Assistance Cover: The RSA (Roadside Assistance) cover will come in handy if the rented car breaks down. You will be assisted if the car runs out of fuel, suffers a puncture or completely breaks down.
Full Protection: As the name suggests, it is the combination of all the covers which are mentioned above. It covers damage/theft, repair costs, RSA charges and other costs involved in the process of claim.
Things to check before Buying Insurance for Rental Cars
Before buying insurance for rental these things needs to be remembered
The maximum limit of the collision loss damage insurance
Usually, it depends on the value of the rented car and the rental company. But if the claim made by the rental company exceeds the coverage offered by the insurer, you might have to pay the exceeding amount.
Deductible in car rental insurance
Yes, there will be deductibles in car rental insurance, and you might have to pay a partial amount to cover the damage. But if you get Complete Coverage or Zero Deductible coverage, then the deductibles will not be applicable.
Primary or secondary coverage
Usually, the most common coverage is secondary coverage, and it covers damage and theft. In secondary coverage, the rental company has to apply for a claim with the insurer. Primary coverage is the best option in car rental insurance, and it’s available with credit cards. The claim will be taken care of by the credit card company, and you don’t need to worry about paying for damages.
Entire car covered under the rental car insurance
No, the Collision Damage Waiver does not cover the entire car. CDW covers only bodywork of the car, but the Super Collision Damage Waiver will cover some other parts in addition to bodywork.
Roadside Assistance in rental car insurance
It depends on the car rental company and the geographical location. Some companies do provide RSA as standard while some companies will offer it as an additional cover.
Frequently Asked Questions on Insurance for Rental Cars
FAQs
How do I purchase rental insurance?
When you rent a car from any of the reputed companies, they also offer you the rental insurance covers. You can purchase the covers from the rental company depending on how many days you are renting the car. Usually, the coverage is provided by insurance companies.
I am renting a car. Do I need extra insurance?
Yes, if you are renting a car, you need insurance which covers accidental damage. Usually, the car rental company will provide you with an accidental damage coverage policy. On the other hand, if you have personal car insurance with accidental coverage, then it will also extend to the rented car.
Can I rent a car with my personal insurance?
Yes, you can. But you need to have comprehensive insurance which provides liability coverage for your car. This coverage will also extend to the rented car.
Is car rental insurance covered by my credit card?
Usually, a credit card will provide Collision Damage Waiver cover, and some credit cards even cover loss of business and compensate the company for the time the car has been out of operation.
Is collision damage waiver necessary in rental car insurance?
If you already have an insurance/credit card which provides cover against damages for rental cars then CDW cover is not required. But if you don’t have a personal cover, then you might have to buy such rental car cover from the rental company.
Somebody scratched the rental car while it was parked. Does Collision Damage Waiver cover such damages?
Yes, Collision Damage Waiver covers damages to the body of the rented car.
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