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Liability Insurance on Rental Cars


Every rental car carries coverage for at least the minimum legal coverage required by the state that register's the vehicle's plate. The minimum requirements are low when you consider the high costs of cosmetic repair to new vehicles or recurring medical bills after an injury. However, it is usually enough to protect a driver from smaller accidents that can happen from time to time. If you don't plan to drive the car very far and you feel confident that you are a good defensive driver, the minimum coverage may be enough.

Most drivers, however, like to have a little more than the minimum coverage when driving a rental car. Renting a car can put you into a serious financial hole if you cause a collision that involves a pedestrian or injures someone in another car. It makes sense to carry the most coverage you can afford on your rental car, just in case the unexpected happens.

Purchasing Insurance through the Rental Company

Every large rental company offers its own additional car insurance for each vehicle. Customers can choose to purchase a high level of insurance through these additional policies. The majority of rental companies allow customers to choose different levels of insurance coverage depending on the type of car they are renting and the amount of travel they plan to do. People who plan to drive long distances or through congested traffic areas might find it worth the extra cost to purchase comprehensive coverage as part of the rental agreement.

However, the rental company's car insurance is probably the most expensive insurance option available to any driver. Rental companies charge by the day, which can add up very quickly. If purchasing additional coverage through the rental company is your only option, it is worth the extra money. If you have any other option available to you, though, you should find a way to avoid signing up for the extremely high rates. Remember that the car already carries the state's minimum insurance before you purchase any additional policies.

Alternatives to Rental Company Insurance

You might already have rental car insurance through your credit card company. Some credit cards add extra insurance as a perk. Others come with the option for rental car insurance at a reasonable rate. You can choose how much insurance you want to purchase, and whether you want insurance for a one-time rental or for ongoing rentals if you rent cars more often. Credit card rental car insurance policies tend to provide coverage for damage done to the vehicle while you are driving it. They don't all cover injuries, so you will need to do some research to find out what your credit card covers.

Some traditional car insurance companies offer special supplemental insurance coverage specifically designed to cover rental cars. If you don't own a car, you could qualify for a non-owner's policy, which is less expensive than a full-fledged traditional policy. It makes sense to look into traditional insurance options if you plan to drive a rental car more than once a month and you don't own a car. If you do own a car, your own insurance limits will pay once the rental car insurance is exhausted. If you have your own auto policy with good limits, you don't need to buy more insurance.

It's Always Better to Buy Higher Limits

The purpose of buying insurance is to make sure that you have coverage in case of a catastrophe. That said, the most practical thing you can do is buy the largest amount of insurance that you can afford. You need to protect yourself against the cost of repairing any damages and paying any medical bills that you might be responsible for after an accident. You also need coverage in case the injured party decides to file a lawsuit against you. Settlements for injury accidents can quickly exceed tens of thousands, or even hundreds of thousands of dollars. In rare cases, they can be over one million dollars, so every bit of insurance you own will help toward meeting those court settlement costs.

Whether you are purchasing your rental car insurance through the rental car company, your credit card, your regular car insurance company, or some other source, always find out what your highest limit options are. Compare the limits to the deductible payments to make sure that you would be able to handle the out of pocket expenses for the policy you want. Purchase the policy with the highest limit you can comfortably afford. That limit is your safety net if you are involved in an accident that becomes extremely expensive.

Lower Limit Coverage Still Provides Adequate Protection in Most Cases

Just because common wisdom is to purchase the highest limit you can afford, there is no reason to panic if you can only purchase the minimum insurance automatically provided with the rental car. The majority of rental car accidents only require repairs to the rental car itself. Sometimes there is damage to other vehicles or objects that need repair. In any case, the state's minimum liability coverage should comfortably handle the cost of a minor fender bender or a collision involving an inanimate object. As long as no one is injured in the accident, you are probably carrying more than enough coverage to keep you protected from an accident in a rental car.

The additional insurance available to you through the rental company or other sources protects you against the most expensive types of accidents. Most rental insurance claims occur when the car has been scratched or dented because of a minor traffic accident that left no one injured. Always purchase the highest limit you can afford through the least expensive option you can find, but do not worry too much if your insurance is not at the highest limit possible.