Do I Need Insurance to Rent a Car?

New driver in town!

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You've got everything you need for your weekend road trip: snacks, sunscreen and the perfect playlist. Now you just need to pick up the convertible you reserved from the rental company. But do you need car insurance to rent the car? You can usually rent a car without showing proof of insurance, but you'll still need to purchase insurance before you can hit the road. Here's how to make sure you're covered when you drive off the rental lot.

Can I Rent a Car Without Having Insurance?

You typically don't need to show proof of insurance when renting a car unless you use a debit card to pay for it. (Many insurers don't allow this and require a credit card instead.) If you use a credit card, you won't need proof of insurance, but you'll still need to purchase some level of insurance to rent the vehicle. There are several options for this.

  • Rental company's car insurance: Car rental companies provide temporary car insurance that you can buy for the term of your rental. This will be offered at the time you rent the car.
  • Your own car insurance: If you already have car insurance, that insurance also covers cars rented for personal use. As long as you aren't renting the car for business, you can decline the rental company's extra insurance. If you don't have car insurance but were considering purchasing it, now may be a good time to research your options.
  • Non-owner car insurance: If you don't own a car but frequently rent them, consider purchasing non-owner car insurance. Also called non-driver insurance, this type of policy provides liability coverage for property damages or bodily injury you cause while driving a car you don't own. It may also include personal injury protection or medical payments coverage, which pays medical and other costs if your passengers are hurt in an accident while you're driving. Non-owner insurance doesn't cover damage to or loss of the rental car, so you'll need other options for that.
  • Credit card coverage: Some credit cards include car rental insurance when you rent a car using the card.

Check if Your Credit Card Offers Rental Car Insurance

To find out if your credit card offers car rental insurance and what type of coverage it includes, check your credit card agreement or call the number on the back of your card. Policies vary from one card to another, so be sure you understand your policy's coverage, requirements and exclusions. For instance, some policies exclude long-term rentals or certain types of vehicles. Coverage may require that you decline the car rental company's coverage, use the card to pay all charges for the rental car, or file a claim within a certain time frame.

Also check to see if the credit card provides primary or secondary rental car coverage. Primary coverage is rarer and means you can file a claim with the credit card benefits administrator before filing a claim with your own car insurance or homeowners insurance. If the credit card policy covers the damage, you won't have to pay your own insurance policy's deductible or worry about your premiums rising. Secondary coverage kicks in only after any benefits from your own insurance policy have been exhausted. It may cover any deductibles you have to pay your insurance company.

If you don't have a credit card that includes car rental insurance, you may want to apply for one that does. The Chase Freedom Unlimited® card offers secondary rental insurance. All these cards require good or better credit or better and offer plenty of other rewards and benefits.

A personal credit card that has rental car coverage may not cover a car rented for business. For that, you'll want to use a business credit card.

Rental Car Insurance Options

After you determine what your car insurance and your credit card cover, consider whether you need any of the rental agency's insurance products. You'll generally be offered four types of rental car coverage:

  1. Loss damage waiver (LDW) or collision damage waiver: This covers damage to or theft of the rental car, similar to the collision and comprehensive coverage in a car insurance policy. Most LDWs also cover loss of use while the car is being repaired; some also cover towing or any administrative fees the rental company charges. Clarify what is covered and what might void the coverage; for example, accidents due to speeding, driving while intoxicated or driving on unpaved roads are typically not covered. Cost: $9 to $19 per day.
  2. Liability coverage: This provides financial protection from lawsuits related to accidents you cause while driving the rental vehicle. Car rental agencies must provide the minimum amount of liability insurance required by state law. However, these minimums tend to be low, so you may want to buy supplemental liability insurance to protect yourself. Cost: $7 to 14 per day.
  3. Personal accident insurance (PAI): PAI covers medical bills for you and your passengers. If you have health insurance or have medical coverage or personal injury protection through your car insurance policy, you probably don't need PAI. Cost: $1 to $5 per day.
  4. Personal effects protection (PEP): PEP covers personal items stolen from the rental car. Homeowners or renters insurance that includes off-premises coverage generally covers this, but you'll have to pay your deductible if you file a homeowners claim. If the car rental company's PEP doesn't have a deductible, paying $1 to $4 per day for this coverage may be worthwhile.

Before purchasing any type of coverage from the rental car company, make sure you understand its dollar limits, exclusions and requirements—and whether you may already be covered by your insurance policy or your credit card's policy.

Protect Yourself When Renting a Car

Paying for a rental car accident or theft out of pocket could cost you tens of thousands of dollars. Before you hop into the driver's seat, make sure you're adequately insured by your own car insurance, the rental company's coverage or your credit card's policy.

Good credit can make it easier to qualify for credit cards that include rental car coverage. Before applying for such a card, review your credit report for accuracy and check your credit score. Taking a few simple steps, such as paying down debt and bringing late accounts current, can help improve your credit score so you can get the credit card you want.

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