What does my car insurance cover on car rentals

This can be a confusing situation, and the car rental agency may try to persuade you to purchase their insurance policy. The truth is, your own auto policy may already cover your rental.

Buying supplemental insurance from the rental company— can add approximately $15 to $30 per day to the cost of the rental.1 However, if you already have an insurance policy on your own car, you may be covered in your rental vehicle.

Before you sign any paperwork at the rental office, call your auto insurance agent and ask if your car insurance covers your rental car. If you don’t have liability, comprehensive and collision coverage on your own car, then your insurance likely will not cover your rental car if you get into a collision or damage the rented vehicle.2

Another important thing to keep in mind when figuring out whether or not your auto insurance covers your car rental is the purpose of the trip. If your personal auto insurance doesn't cover business use, you may not be covered by your policy if you rent a car for a business trip.

Always double-check your personal auto insurance policy to make sure that you have sufficient coverage before accepting or declining insurance at the rental office.

Any coverage that you have normally through your auto insurance policy will typically transfer to the car that you’re renting. The following are some kinds of coverage your rental company will offer you in lieu of your standard insurance.

Liability coverage protects you if your rental vehicle is in an accident that causes bodily harm to other individuals or damage to property. Your liability insurance from your auto policy will most likely cover this already.

A collision/loss damage waiver relieves you of financial responsibility for damages caused to your rental vehicle. Your collision and comprehensive coverage will usually cover this already, however a more expensive rental car may require you to purchase additional coverage to ensure the cash value of the vehicle is covered.

Personal effects coverage protects you if any of your belongings are stolen from your rental vehicle, however renters or homeowners insurance typically covers you in these cases.

Personal accident coverage protects you from any medical fees caused by an accident. If you have personal injury protection through your auto insurance, you can decline this additional coverage from the rental company.3

In addition to coverage from your auto insurance policy, your credit card company might provide insurance coverage if you use its card to pay for the rental. However, it's important to check with the company before you rent to understand exactly what kind of coverage you may or may not have. In some cases, it might only be collision insurance, which can help pay for any property damage but not cover any costs arising from injuries that occurred in the collision.4

Also, be aware that different credit card companies have different rules and restrictions when it comes to what they cover. Certain models such as sports cars or exotic vehicles are often excluded, and what's covered can vary from one credit card provider to the next. Some don't cover incidents that take place on dirt or gravel roads, while other cards don’t cover damage to wheels and rims.5

Knowing whether or not your auto insurance covers your rental car isn't a simple yes-or-no answer. Because there are many different factors to consider, always contact your auto insurance agent before going on a trip. Review your policy and determine what you might need.

1 “Why you don’t need to buy extra car rental insurance,” Money, https://money.cnn.com/2014/06/30/pf/insurance/rental-car-insurance/index.html, June 30, 2014.

4 “When to Buy Car Rental Insurance,” DMV.org, https://www.dmv.org/insurance/when-to-buy-rental-car-insurance.php, Downloaded April 17, 2018.

5 “Why you don’t need to buy extra car rental insurance,” Money, https://money.cnn.com/2014/06/30/pf/insurance/rental-car-insurance/index.html, June 30, 2014.

For most people traveling for personal reasons, paying extra for coverage from a car rental company is probably not necessary. If you already have State Farm car insurance with collision and comprehensive coverage, it should carry over to your rental car.1 Check out this article on rental car insurance for detailed info about coverage options and more.

Your personal car insurance has a very high deductible or doesn't cover rental cars (some don't).
You would like to temporarily have protection you don't currently have such as emergency road service, personal injury protection (PIP) or medical payment coverages.
You have no other source of coverage. For example, if you don't own a car and therefore have no personal car insurance policy, and you're not using a credit card that offers rental car coverage.
You're traveling for business, and your personal insurance policy won't cover you.
You're traveling in another country and the insurance agreement or local laws prevent you from leaving until you've fully paid for any damages that might occur.

Talk to a State Farm agent

Many credit card companies offer rental car insurance as a perk. Contact your card issuing company to learn if they provide this car insurance coverage, how much, and what limitations there may be.

At the rental car office, you're likely to encounter certain insurance-related terms like LDW, CDW, PEC and PAI.

While these options are usually referred to as insurance, they're actually waivers since the rental car company is waiving its right to hold you accountable for certain types of loss. So, what are these acronyms?

LDW (Loss Damage Waiver) limits the amount you'd be responsible for if your rental vehicle is damaged or stolen.
CDW (Collision Damage Waiver) only covers losses caused by collisions.
PEC (Personal Effects Coverage) covers certain items you might carry around with you in a rental car, such as backpacks, purses, luggage or personal electronics.
PAI (Personal Accident Insurance) covers personal injuries while renting a vehicle.

The claims process should be the same with whatever type of coverage you choose. However, if you chose the rental car insurance, you'll need to work through the rental car company.

When it comes to car insurance, you’ve got plenty of policy options. State Farm can help you find the right coverage or how much auto insurance you might need. Coverage varies by state and your selection.