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How Does Rental Car Insurance Work? Is It Important To Have?

Like your personal car, a similar risk is associated with being in the driver's seat of a rented car. Damage, injuries to yourself or passengers, and loss of any belongings are some of these risks. It can be frustrating to deal with when you suffer such problems. So, here comes the role of insurance. In this post, we will give you some useful insights into how rental car insurance works and why it is crucial.

Do you already have rental car insurance, like personal vehicle coverage? More often than not, you do not have to buy rental insurance. The rental car insurance automatically covers the bare minimum if you lack coverage. But, if you wish for extra protection or traveling abroad, you can apply for rental car insurance.

About Rental Car Insurance

Rental car insurance is a type of insurance that offers coverage for rental cars. People often get confused between "rental reimbursement coverage" and "rental car coverage." A rental reimbursement coverage is an additional coverage that is included in your auto insurance. It assures protection for a rented car when the vehicle is under repair due to an insured loss or accident.

A rental company offers you a number of insurance options as you pick up a car. Among these are liability insurance, personal accident insurance, and collision damage waivers.

What Else Do You Need To Know About Rental Car Insurance Coverage?

When you know you do not possess personal insurance, you may have to purchase liability coverage from a car rental company. You must be aware of the following things when buying rental insurance:

It Is An Option

One should know that rental car insurance coverage doesn't apply automatically following an accident. Since it is an option, you must think of buying it separately. Moreover, there is a misconception that car insurance automatically offers coverage for replacement costs. But, it is not true; you generally need to select it and apply it to your plan.

It May Be Less Costly Than Expected

Generally, a one-year rental insurance plan will cost less than an out-of-pocket rental cost that has a one-day limit.

There Is A Limit

If the limit of your insurance coverage is 25/750, your insurer will pay $25 a day. However, it won't pay over $750 per claim for rented cars. A majority of insurers will provide you with various options. This will let you select the ideal limit for you.

No Need To Worry About Any Extra Coverage

For the majority of the time, when you possess collision and comprehensive coverages in your policy, they'll transfer to the rental car. Thus, you do not have to buy extra coverage from the car rental service provider.

Let You Use It Immediately

Once you file a claim and when your car is not in the condition to drive, you may get a rental car immediately. If not, you'll need to rely on the insurer of the driver at fault. Also, you might need to wait for a while before they can evaluate the claim and agree to reimburse the cost of a rental car. But, for rental reimbursement coverage, there is no need to wait.

Do Car Insurance Offer Coverage For Rental Cars?

In the case of rental vehicles, your standard car insurance usually comes into play. Your own car insurance coverage generally extends its protection level over rented cars. It may cope with accidents and damages in the same manner.

But the catch is that this coverage generally covers personal usage, not work-related activities. It may be good to choose the specifics of your policy and identify any possible gaps before considering additional rental cover.

Also Read: What Happens If A Rental Car Breaks Down? Who Pays For The Repairs?

What Is All Covered In A Typical Rental Insurance?

Most rental service providers offer a short-term, standard range of rental vehicle insurance services. You must be well informed about your insurance plan before you reach the counter of the car rental company. Here is what you can expect to get after buying rental insurance.

  • Personal effects coverage

  • Personal accident insurance

  • Collision Damage Waiver /Loss Damage Waiver

  • Liability coverage

What Does Rental Car Insurance Not Cover?

Not everything is covered under rental car insurance. So, it is essential to know what your rental insurance offers and what it does not before purchasing it. A typical rental car insurance may not include:

  • Damages like mirrors, undercarriage, tires, or windshield.

  • Personal belongings

  • Cover for damage to other vehicles or property

  • Illegal activities such as driving the car in the intoxication of alcohol or drugs.

  • Loss of rental income

Buying A Rental Car Insurance

There is an array of options when you are purchasing rental car insurance. One option is purchasing insurance coverage from a rental service provider. Many rental companies provide a variety of insurance plans. This may include liability insurance, collision damage waivers, and more.

The other option is opting for third-party rental insurance. It may be more affordable than the coverage plans offered by rental service providers. You can get various levels of coverage after buying third-party car rental insurance, including personal accident insurance and loss damage waivers.

You must sensibly review the policy details as you purchase rental car insurance online. These include deductibles, coverage limitations, and exclusions. As you know these details, it becomes easier to ensure that it matches your special requirements.

Is It Worth Buying Rental Car Insurance?

People often ask whether it is good to buy rental insurance or not. Well, buying rental car insurance coverage depends on several things. You want to ensure you and your rented car have a backup plan. But, you also do not want to pay unnecessary extra insurance coverage that may increase the costs of the rented car.

Compared to buying rental insurance for a 2-week vacation, raising your insurance limits for a year is less costly. To put these costs into view, you may spend significantly less for your personal auto insurance than $60 per day ($1,800 per month). It does not matter even if you have a full coverage policy with high limits.


Many things come to mind after a car accident. Who will pay for the damage is one of them. Rental car insurance often comes into action in this situation. Compared to your insurance plan, rental insurance works quite differently. Every rental car often needs three types of coverage, including collision damage waiver, theft protection, and third-party liability. All these make up the standard package. However, there are differences in the ways they work. So, knowing the basics of rental car insurance is what you should know.

Are you going to a new city or state in the upcoming week? You may be searching for transportation options like rental cars to get around. If yes, look no further than Bon Voyage Car Rentals, a trusted car rental service company. We promise to give you impeccable support throughout your journey. With us, you can choose from luxurious SUVs to economical hatchbacks. To book your rental car now, call us at 202 696 6487 or click here.