What is Car Rental Insurance?

The Two Categories of Car Rental

Need a Rental Car
Getty Images/Chris Ryan

Renting a car can really come in handy when you are in a pinch with your current vehicle or are about to embark on an exciting road trip. The term car rental insurance can pop up on several occasions referring to different things. Car rental insurance can be broke down into two categories.

  1. Insurance on the car being rented.
  2. Coverage on your auto policy which pays for a rental car while your vehicle is being repaired due to a covered loss. Insurance carriers refer to this coverage using different terms such as rental, increased transportation limits or something similar.

    Insuring a Rental Car

    Insuring a rental car is similar to insuring your own car. Coverage for liability, medical, and physical damage is required. It is important to know what you are purchasing. The car rental company offers multiple types of coverage that are named a little differently from your auto policy.

    The range of price can vary greatly depending on where you obtain car rental coverage. You can get insurance for a rental car from a several different sources including your car insurance, your credit card, online travel packages, or directly from the car rental company. Check the fine print to find out exactly what is offered from each source. Remember, sometimes you get what you pay for.

    Car Insurance Coverage that Pays for Renting a Car

    If you are ever in a car accident and don't have access to a back-up car, a rental car is a necessity.

    An optional coverage on your car insurance is car rental coverage or it is sometimes referred to as increased transportation limits. The coverage helps cover the expense of renting a car. The coverage is displayed using two numbers.

    • amount per day / total amount covered

    For example, if you have car rental selected on your policy it may be listed as 30/900 or 50/1500.

    The first number represents the amount available to pay out daily and the second number represents the total amount paid over 30 days. If your car rental coverage is 30/900 and your car rental costs $35 a day, you will be responsible for $5 a day.

    Car insurance coverage that pays for renting a car is only useable if you have a covered loss. Your car must be undrivable due to a loss, or in the shop for repairs in order for the coverage to pay out. It does not cover mechanical maintenance repairs or if you are going on vacation and need a rental car. Some insurance companies may offer a small automatic coverage like 15/450. Check with your insurance carrier to see if your policy pays towards a rental car after a covered loss.

    Car rental insurance is important to understand. Nothing is more frustrating than thinking you have coverage for something, just to find out it's not what you thought. Car rental insurance protects you when you need a rental car and when you are driving a rental car.

    Knowing what coverage you need, and where to get it can save you from a monstrous headache in the future.

    Important Rental Car Info:

     

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