First, I must say this is a tough question to answer for any insurance agent because every company has different language in their policy and every state requires the insurance company and/or rental car company to provide certain coverages . So the answer and options give a general idea of the average situation.
I am going to talk about the last one since I am an insurance agent , but I do want to state one thing about purchasing it from the rental company. It comes with a cost, but besides that it is the clear way to make sure you are covered for no out-of-pocket expense as far as insurance. So if you are in doubt, buy the coverage and have peace of mind.
Your personal insurance policy usually covers a rental car with no extra cost.
Liability- (Liability means bodily injury/property damage you do to someone/something) is covered by your personal insurance policy, there are not many questions or gaps here. If you have a personal auto policy that covers you for liability you will have liability that covers you in a rental. All states also mandate the rental companies cover you for at least the state minimum in that state. Keep in mind that in Florida the minimum state coverage is $10,000 per person and $20,000 per accident for bodily injury you would do to someone else! That is LOW so don’t depend on this.
Full coverage – ( Full coverage means you have 1. collision coverage so that if you wreck your vehicle and it is your fault, your insurance company will fix your vehicle and 2. comprehensive coverage which is any other loss you may have to your vehicle such as, theft, flood, hitting a deer, etc.) You will need to have full coverage on your personal vehicles in order to have the full coverage extend to a rental car. The deductibles on your car insurance will still apply to the rental car. If you are traveling across state lines the state insurance laws of the state you are currently driving in apply.
So it sounds like you don’t need to purchase car rental insurance, right? Wrong!
Below are a few coverages that are not covered by your personal policy that could cost you huge!
Loss of use- Loss of use it is exactly what it sounds like. It is loss of use of the rental car. If you wreck the car and it is your fault, during the time that vehicle is being fixed and unusable the rental car company is losing money because it can’t rent that car. You are responsible for that cost. 99% of all insurance companies specifically exclude this coverage, meaning they will not pay and the bill is put on your credit card. The rental companies insurance will cover this, be sure to ask the rental agent which level of their insurance does cover this.
Loss of depreciation/value- This means that due to you wrecking the rental car the value of the vehicle is less now than before you wrecked it. This can add up to be huge. Once again 99% of companies exclude this, but the rental companies insurance will cover this, be sure to ask the rental agent which level of their insurance does cover this.
Example: You rent a car that is valued at $20,000. You wreck the vehicle and now after it is fixed it has a value of let’s say $15,000. The rental car company can charge you for that loss of value.
So do I need to buy car rental coverage?
Yes, if you want complete peace of mind, and your policy will just be extra coverage. No, if you understand that you probably have coverage, but there are things that could happen that may not be covered. Call your agent/insurance company to be sure before you rent.
Disclaimer- all the above talks about PERSONAL use and not BUSINESS use. That is another article. You must have a personal auto policy for the above to apply
About Jason Cass
I am the Co-Owner of The Insurance Alliance. I love to speak nationally on the topic of insurance and I am the author of "Customer Service is Just Foreplay" an Amazon Best Seller. I don't sell insurance, I help people buy it.