We’ve all been there. You’ve selected a rental car and are preparing to sign the paperwork. Then suddenly, the salesperson hits you with the dreaded question: would you like to tack on optional insurance? On one level, it seems like a good idea. But on the other hand, it will substantially raise your daily bill. What to do?
What We'll Cover
- How to know if your Auto Insurance Covers Rental Cars?
- Should I Get Rental Car Insurance? Is it Worth It?
- How Much is Rental Car Insurance?
- Full-coverage Car Insurance Prices by State
- 2022 Best and Cheapest Auto Insurance with Rental Car Coverage
- Rental Reimbursement Coverage vs Rental Car Insurance
These are the situations when being familiar with your regular auto insurance policy can save you a great deal of money very quickly. Many auto insurance policies extend to rental car coverage, so there may be no need to tack on the additional charge. Let's go over the details and take a look at some of the best, cheapest car insurance policies that extend coverage to rentals.
How to know if your Auto Insurance Covers Rental Cars?
You’ll need to check your insurance policy to know for sure. Not only will you want to make sure that your coverage extends to rental cars, but also that you have the correct type of coverage needed. For instance, if your policy includes liability and comprehensive coverage, it would most likely extend to rental cars.
It’s important to understand the different types of coverage that auto insurance policies offer and what exactly they cover. Here are some hints as to the common types of coverage that may be equivalent to the rental company’s offerings.
- Liability Insurance Supplement
Also referred to as Supplemental Liability Insurance (SLI), this type of insurance covers any property damage or injuries you may cause in the event of an accident.
- Collision Damage Waiver
A Collision Damage Waiver (CDW) covers any damage to the rental vehicle that may result from an accident. It may be offered separately or in addition to a Loss Damage Waiver.
- Loss Damage Waiver
A Loss Damage Waiver (LDW) covers you in the event that your rental vehicle is stolen.
- Personal Accident
Personal accident insurance covers the medical costs of any injuries that you or your passengers may sustain in an accident while driving your rental car.
- Personal Effects Coverage
Personal effects coverage covers the loss of any items in your rental car. For instance, if your rental is broken into, you’d be covered up to a certain amount for theft or damage of any possessions in the car at the time.
|Rental car insurance policy:
|May already be covered by:
|Liability Insurance Supplement
|Injuries or property damage you may cause another driver in an accident
|Liability coverage for property damage and bodily harm
|Collision Damage Waiver
|Damage to a rental vehicle in an accident
|Loss Damage Waiver
|Loss of the rental vehicle due to theft
|Personal Accident Insurance
|Injuries you sustain in an accident while driving the rental
|Health or Life Insurance
|Personal Effects Coverage
|The loss or damage of any personal belongings in your rental car
|Homeowners, Renters, or Travel Insurance
Should I Get Rental Car Insurance? Is it Worth It?
If you are uninsured, then yes, the optional insurance offered by the rental car company may indeed be worth the extra cost as most of these companies just have minimal coverage on their vehicles, therefore, you could be responsible for all damages in case of an accident. I you're uninsured, it may be wise to either get a package from the rental agency, or one from a third-party provider, or use your credit card
If you have liability, collision, and comprehensive coverage, then you may choose to opt-out. However, one thing you should also take into consideration is the value of the car you're renting, since you're current policy will have enough coverage for the rental as long as it has a similar or lower value than you personal car. On the other hand, if you rent a car with a higher market value, then it may be convenient to opt for some extra coverage from the rental agency.
While many major insurers cover rental cars, it’s vital to check the fine print in order to understand your policy and limitations.
How Much is Rental Car Insurance?
If you choose to use your own insurance to cover your rental car, then there shouldn’t be any additional charge. If you opt for the coverage offered by the rental company, however, you’ll likely face a range of options depending on which policies you choose to tack on. Each policy may even be available on a sliding scale depending on various factors, such as the value of the car.
The cost of coverage from rental companies can vary from state to state. But here are the average costs of options from several major companies to give you an idea.
|Supplemental Liability Insurance (SLI)
|Collision Damage Waiver (CDW) /Loss Damage Waiver (LDW)
|Personal Accident Insurance (PAI)
|Personal Effects Coverage (PEC)
|Bundled with PAI
|Starting at $9/day
|Bundled with PAI
Full-coverage Car Insurance Prices by State
While the figures presented above may vary by state, the same could be said for regular full-coverage auto insurance. The price of coverage can also vary based on factors such as your age, the type of car you drive, and your accident history. Here’s a breakdown of the average prices of car insurance in the seven most populated U.S. states.
|Average Annual Full Premium Coverage
2022 Best and Cheapest Auto Insurance with Rental Car Coverage
While most major auto insurance companies extend their coverage to rental cars, it’s vital to check with your provider to make sure that this is the case with your policy. If you're on the hunt for the best car insurance that covers rentals, then the following list can point you in the right direction. You’ll also find the average annual cost of full coverage insurance for each.
Average Annual Full-Coverage Estimate: $1,360
GEICO offers a range of different coverage options for drivers for reasonable rates. If you already have comprehensive and collision insurance through GEICO, your coverage will usually extend to rentals. GEICO recommends reaching out to customer service at 1-800-841-0728 with any questions.
- The second-largest auto insurance company in the U.S
- Affordable rates
- Offers plenty of great discounts
- Lower local agent availability than some other companies
Average Annual Full-Coverage Estimate: $1,773
Progressive is another great company that’s known for its comprehensive plans throughout the country. The company also offers some great information on rental car coverage and how to know what types of coverage you may or may not want to consider tacking on when you rent a car.
- Third-largest personal auto insurer in the country
- Opportunities to save when you bundle with different types of insurance
- No partner dealership for rental reimbursement
Average Annual Full-Coverage Estimate: $1,497
As the largest auto insurer in the U.S., it’s no surprise that State Farm offers plenty of coverage options and additional add-ons. You can also purchase options such as roadside assistance, rideshare assistance, and travel insurance. State Farm suggests reaching out to your State Farm agent to verify your policy’s range of rental car coverage.
- Largest U.S. auto insurer
- Great rates for younger drivers
- Variety of coverage options
- Not available in a few select states
Average Annual Full-Coverage Estimate: $2,317
Farmers offers a full range of insurance coverage options that you can customize to meet your individual needs. The company specifies its policies also cover most vehicle rentals in the U.S., Puerto Rico, and Canada. The only exceptions may be specialized vehicles like moving vans or recreational vehicles.
- One of the nation’s largest insurance providers
- Offers one of the most customizable selections of options available
- Not available in all states
Average Annual Full-Coverage Estimate: $2,312
AllState is a national company with plenty of local providers. In addition to car insurance, AllState also offers everything from property and life insurance to identity protection. The company is a bit vague about whether their auto insurance covers rentals, so it’s worth reaching out to your agent to verify.
- National provider with plenty of locationsWide range of insurance productsGreat discounts
- Vague about terms and conditions of rental reimbursement coverage
Average Annual Full-Coverage Estimate: $1,168
USAA is an insurance company that offers coverage to military service members, veterans, and their families. Rental car insurance may be covered not only by USAA insurance policies but also by a number of USAA credit cards. Members also enjoy some great car rental discounts when booking from the USAA website.
- One of the most affordable full-coverage auto insurance plans available
- Plenty of great perks and discounts available
- Only available to military members, veterans, and their families
Average Annual Full-Coverage Estimate: $1,297
Nationwide is yet another great company with a full range of auto insurance options. Each will also extend to rental cars during the life of your policy. Nationwide also offers a generous number of discounts, as well as a wide range of other insurance and financial services.
- Great discounts
- Also offers coverage for everything from classic cars to pets
- Nationwide also offers financial and investment services
- While one of the cheapest full coverage options, clients who go with minimal coverage may have higher premiums
Average Annual Full-Coverage Estimate: $1,337
While Erie Insurance is only offered in select eastern and central U.S. states, it’s worth checking out if you live in one of the coverage areas. Erie is known for offering high-quality auto insurance at very reasonable rates. When it comes to rental car coverage, Erie highly recommends reaching out to your agent to verify what your policy covers.
- Low rates
- Auto coverage options can include insurance for pets, roadside assistance, locksmith services, personal items, and more
- Only available in select states
Rental Reimbursement Coverage vs Rental Car Insurance
Not to be mistaken for rental car insurance, rental reimbursement coverage is an optional add-on offered by most major providers. It's designed to cover the cost of a rental if your vehicle needs to be repaired due to an accident covered in your existing policy.
But is rental reimbursement worth it? While the answer may vary based on your situation, it generally only costs around $10/month and can be very helpful if your car ever needs to be repaired due to an accident. The exact terms, conditions and benefits of rental reimbursement coverage can vary widely based on your insurer or plan. Make sure to reach out to your insurance agent for more information.
|Daily/Claim Coverage Limits
|Length of Coverage During Repairs
|Until repairs are done, or coverage runs out
|Can bill Enterprise directly for rentals you make using your coverage
|Pre-existing customers can add rental reimbursement from their online account
|Pays for up to $500 in travel expenses if your accident happens over 50 miles from home
|Farmers can handle billing and arrangements
|Offers direct billing for rentals
|Automatic rental extension if needed when your vehicle is being repaired at a USAA-approved repair facility
|Coverage extends to public transportation while your car is being repaired
|Basic rental car coverage automatically included with comprehensive plans in most states
Dealing with rental car paperwork can be hectic enough without having to worry about whether or not to tack on insurance. Hopefully, this has helped give you a better idea of the types of insurance commonly offered by rental car companies, what they cover, and if you need them. As always, make sure you reach out to your insurance provider if you have any questions.
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