What is Car Rental Insurance?

Car insurance is a type of insurance that covers expenses caused by a car accident or auto theft. When a driver rents a car, rental companies offer car rental insurance, which applies only while the renter is driving the car from the rental company. Common insurance packages include collision and loss damage waivers, personal liability coverage, and personal accident insurance. Renters may also choose to purchase personal property insurance to cover items lost or stolen from the rental car.

Many people do not realize that their personal car insurance and health insurance cover many of the same situations that are covered by car rental insurance. Some credit card companies also offer coverage if the rental is charged using one of their cards. Before buying insurance from the rental company, renters should check with their personal auto insurance companies and credit card companies.

The most common types of car rental insurance are the collision damage waiver and the loss damage waiver. Technically, these are not actually insurance because they are not underwritten by an insurance company. Instead, they are a contract between the renter and the rental company. Without them, the rental company can hold the renter fully responsible for any damage or theft of the vehicle. Many personal auto insurance companies already cover this.

Personal liability coverage is another common type of car rental insurance. The collision damage waiver covers only damage to the rental car and does not cover damage caused to other cars during a car accident. Personal liability coverage covers both property damage and bodily injury caused to other people or their vehicles when an accident occurs. It may also cover the renter if he or she is involved in an accident with an uninsured driver. Again, this type of insurance may already be provided by the renter's personal auto or health insurance company.

Less common types of car rental insurance include personal accident insurance and personal property insurance. Personal accident insurance pays out a lump sum if the renter or a passenger is killed or seriously injured. Personal life insurance and health insurance policies may already cover this. Personal property insurance pays for items lost or stolen from the rental car. Most personal car insurance policies do not cover this type of situation.

The cost of all of these coverages can add up, making renting a car much more expensive. Renters should always check with personal car and health insurance companies before purchasing coverage from a rental company to prevent duplicating insurance. The only reason duplication may be worth while is to prevent personal car insurance premiums from going up if the renter has to make a claim associated with the rental vehicle.