Does your car insurance cover you when driving a rental car?

If you're renting a car, whether for a vacation or business trip, you'll want to make sure you have adequate insurance coverage.

Otherwise, you could be on the hook for any damage during your rental period—either to the rental car itself or other property. The good news? If you already have auto insurance for your personal vehicle, that coverage can extend to your rental. Still, it's important to understand how far this coverage extends and when it might be worth it to purchase additional protection.

Does standard auto insurance cover you in a rental?

Broadly speaking, your everyday car insurance policy usually extends to a rental car. This applies to your liability protection, medical payments coverage or personal injury protection, collision coverage, and even comprehensive coverage. The coverage amounts you have in place for your personal vehicle usually also extend to your rental. If you have collision coverage with a $500 deductible, then your rental car will also have collision insurance coverage and the same deductible of $500 would apply in the event of a crash.

There may be exclusions, so it's always a good idea to read the fine print on your policy before you book a rental car. For example, some insurance carriers only extend auto coverage to a rental car when it is being used for leisure purposes. This means if you're renting a car for business-related purposes, your same coverage may not apply.

Likewise, keep in mind that your personal auto insurance coverage limits may not always be suitable for a rental car. Let's say you drive a 10-year-old car that you only have $5,000 of uninsured motorist property damage coverage on. You decide to treat yourself and rent a luxury convertible for your upcoming trip, but you end up in a fender-bender with an uninsured driver that costs $10,000 to repair. Unfortunately, your uninsured motorist property damage coverage limit of $5,000 won't be enough to cover that repair—and you could be on the hook for the remainder.

On the other hand, if you're lucky enough to have a credit card that includes primary rental car coverage, it will pay out the claim first and foremost. You might not even have to get your personal auto insurance company involved at all. Still, there will be coverage limits involved, so you may still end up having to pay for some things out of your own pocket (especially if there is a lot of damage).

Taking the time to read the fine print from your credit card company will help you better understand what type of coverage may apply to your rental car, whether it's primary or secondary coverage, and what to expect if you do need to file a claim. Pay special attention to any requirements for the coverage to take effect, such as declining the rental company's own insurance or calling the credit card company ahead of time. 

When should you consider additional coverage?

If you have decent insurance coverage for your personal vehicle or book your rental car with a credit card, you might not need to purchase additional coverage for your trip. Still, there are some situations where it may make sense to buy additional insurance at the car rental counter or through a reputable third-party insurance carrier:
 

• You want to avoid filing a claim with your personal insurer: Even if your regular car insurance policy covers you in a rental car, you may still be left paying your deductible and other out-of-pocket expenses. A claim may also cause your insurance rates to increase. By opting for dedicated car rental insurance, you can help avoid getting your own insurance involved and enjoy some added peace of mind.
• You want coverages you don't otherwise have: For instance, maybe you drive an older vehicle without much resale value and only carry liability coverage. If you rent a newer and more valuable car, however, you'll want comprehensive and collision coverage to avoid large out-of-pocket expenses in case of a crash or other damage.
• You're renting an unusual type of vehicle: Auto insurance policies often have exclusions for vehicles like large passenger vans, classic cars, and other unique vehicles. Credit card rental coverage may also exclude such vehicles, or even large pickup trucks or off-road vehicles. If you're renting one, you may need additional coverage.
• You're renting internationally: Typically your personal auto insurance coverage will only apply to rentals in the United States and Canada. If you're renting a car elsewhere, you can either see if you have credit car rental coverage that applies in the countries you plan to visit, or buy the appropriate add-on coverage.