Rental cars are used by many people across the world for a variety of reasons. People rent cars for weddings, high school reunions, special occasions, road trips, camping trips, vacations, business needs, moving, car repairs, and in case a car accident has happened with their home vehicles. The use of such vehicles worldwide is growing. By 2025 it’s estimated that the car rental fleet for many rental companies is expected to grow to approximately 7.3 units worldwide.
Car rental statistics in countries like Australia and the United States have reflected this gradual climb in rentals. In 2017 the car rental value sales grew by approximately 4%, which followed the growth of 2% in the previous year in Australia. The total number of car rental transactions grew by 2% in 2017. This growth was mainly due to the influx of international tourism into the country. When people rent cars they are often asked about adding insurance to their vehicle. One question which people might ask is whether they can drive a rental car with the car insurance or auto insurance policy they currently have. Let’s break this question down a bit further.
How do car rentals and car insurance work?
When you go to rent a car you have three options when it comes to adding insurance to your vehicle: your personal auto policy, the rental company, or a third-party insurer. When you use your own car insurance generally speaking the coverage from your own policy will apply when you are using your rental car for personal purposes. This does not cover using the car for business purposes. So let’s say you take a business trip out of town, and rent a car, you can’t use your personal auto policy to cover the use of a rental car.
One suggestion which you’ll want to follow is getting in touch with your auto insurance provider to ask questions about how rentals are covered with your auto insurance. You want to make sure you are covered before jumping into a rental vehicle, so make that call about your auto insurance policy. If on the off chance you assume something about insurance coverage and wind up getting into an accident with no coverage, that could be costly, or at worse can send you to jail. Sure people in jail love reading letters, but you don’t want to be one of them. Have some peace of mind with learning the best way that car insurance can work when you rent a car.
The second option of adding auto insurance to your rental vehicle is through the rental company itself. If you buy rental coverage through the rental agency (at the counter), then you’ll be covered on a few different fronts when it comes to auto insurance on the rental vehicle.
With at the counter insurance, when you experience a crash or car theft, you can sign up for a loss damage waiver (LDW). This will cover you for any damage to the rental vehicle or theft of the car. If you or any of your passengers suffer injuries while in the car accident, at the counter personal accident insurance will cover medical costs for you and your passengers. This can include ambulance, bodily injury, medical care, and even death.
As with personal auto policies, it’s a good idea to speak with a rental car representative about your different coverage options so you know what financial protection you have. For example, don’t hesitate to ask if a licensed teen driver or another licensed family member can drive the vehicle. You want to have the best idea of what the insurance policy covers or doesn’t in the off chance something serious like a bodily injury happens in the case of a car accident.
If you don’t want to go with purchasing at the counter insurance you can then go through the process of seeking out a third-party insurer. Some of the best choices when it comes to third party insurance companies include Bonzah, Insure My Rental Car, Rental Cover, and Sure. These providers can also provide some peace of mind when it comes to deciding on how best to apply car insurance to your rental car.
What does your personal auto policy cover?
As mentioned previously, you can use your personal auto policy to provide coverage for a rental vehicle. Generally speaking, you can drive any car with your auto insurance. It’s always best though to contact your insurance provider to check on what type of coverage your policy offers for the rental vehicle. Also, when getting an auto insurance estimate on a new vehicle, ask in advance what your car insurance policy might potentially cover on a rental vehicle. You don’t want to suffer a painful experience with having a shallow understanding of what your auto insurance actually covers or doesn’t cover.
So what’s actually covered when you use your policy to cover driving a rental car? With car crashes and theft, if you have collision and comprehensive coverage on a vehicle, this will often extend to your rental vehicle. You will more than likely have to still pay the deductible. If you don’t have comprehensive and collision or LDW, then you have to pay for that damage.
With damage that you inflict on others your liability insurance from your auto policy will cover this type of damage. Your MedPay or personal injury protection can help to keep you covered in the case of personal injuries to you. Examples of this would include items that are stolen from your rental car, or cause property damage while operating the vehicle.
If you have homeowners insurance or renters insurance, you will be covered for the theft of the items or property damage associated with the accident. Your auto policy can provide coverage for your rental vehicle, but it’s always good to check with your insurance provider to find out what exactly is covered. You’ll have solace knowing that your rental car is covered by your car insurance coverage.