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Publish Date - July 07, 2022

Author: Daniel Martin

Categories:   Useful Automotive Information   

Rental Car Insurance - Costs and Types

After looking out for every important detail before renting a car, the next step is to protect both you and your rented car from harm or damage you might cause while driving. You can opt to purchase rental car insurance.

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After looking out for every important detail before renting a car, the next step is to protect both you and your rented car from harm or damage you might cause while driving. You can opt to purchase rental car insurance.

Rental car insurance can pay for any expenses if you have an accident while driving a rented car. It covers any damage you cause to the vehicle itself. If you've ever hired a car, the counter clerk has probably asked you if you'd like to purchase rental car insurance.

The bare minimum liability coverage necessary in your state is included when you rent a car from a rental agency. Additionally, the rental car agency offers optional coverage that you can buy for an additional fee per day.

Also, you can obtain rental car insurance from a rental car third-party insurance provider, or even as an added feature with your credit card. This will lessen the impact of any accidents you may have while driving the rented car.

What is Third Party Insurance for Car Rental?

Every vehicle on the road must have third party rental car insurance, according to the law in the majority of countries. Therefore, car rental companies include it with each rental.

Anyone other than you is a "third party." This includes pedestrians, other drivers, and even the people riding in your car.

Simply put, "liability" is "legal responsibility" for the cost of damage or injuries.

Therefore, anyone renting a car needs rental car third-party insurance mostly in event that they cause injury to someone or damage to someone's property while driving the vehicle. However, in cases where the auto accident was not your fault, the services of car accident attorneys will be needed. Car accident attorneys will help you file your lawsuit and get the settlement commensurate with your suffering and injury.

If a driver causes an accident, they are responsible for the following:

  • The cost of any damage to any third party's property. Including any fences, buildings, phones, or other items.
  • The payment associated with any injury or damages of a third party may include medical expenses and more.
  • Third party legal costs and third party disbursements (e.g, court fees or expert fees).

These costs could be very high, but the car rental third party insurance of the driver can handle the cost while the rental company handles the paperwork.

So it is clear why third party liability insurance is required by law. Without it, the driver would be forced to cover the expenses out of their pocket, which could be extremely costly for many.

However, damage to the driver's rental vehicle is not covered by third party liability insurance. It doesn't even cover car theft. In addition, if the driver has violated the rental agreement's terms and conditions or any applicable local laws, nothing may be covered.

Types of Rental Car Insurance

Regular auto insurance and rental car insurance are somewhat comparable. Depending on your needs, you can choose the kind and level of coverage you want. However, there are many differences between auto insurance and the types of rental car insurance.

Before purchasing rental car insurance, you should be aware of your alternatives. The most typical forms of rental car insurance are as follows:

1. Loss-and-Damage Waiver (LDW):

Loss damage waiver, also known as LDW, is an acceptable product. It releases you from financial responsibility for any loss or damage you cause to the rental vehicle, provided you have not broken any of the Rental Agreement's terms and conditions. For renters, acquiring a loss damage waiver can be a smart decision.

It basically says that the rental car company can not come to you in the circumstance that the rental car is damaged or stolen. However, this will be covered by your policy if you have collision and comprehensive coverage for your vehicle.

Oddly, this is NOT insurance. The rental car company already has insurance on the car, or if it's a big company, they might be self-insured. Consider the waiver as a "free pass" that releases you from responsibility if the car is damaged while it is in your care.

If an accident happens while you are on rental, the waiver could help you save time and money. Without this, even if the damage was not the renter's fault, most states hold the renter accountable for any loss or vehicle damage.

If the unexpected happens, failing to protect yourself could result in you paying out-of-pocket for the full price of the car, towing, storage, impound expense, loss of use, and other costs.

If you don't currently have personal auto insurance or if your provider doesn't cover rental cars, you might also want to think about adding LDW to your rental.

Even with auto insurance, filing a claim with your insurer may increase your overall rates. This will eventually affect how much you pay for personal auto insurance.

Some things cannot always be avoided. LDW includes coverage for incidents like vandalism, fires, theft, collisions, and natural disasters that have a direct impact on your rental vehicle.

Therefore, if your rental car is left outside overnight and locked, and the next morning it's gone, don't get upset. You won't be responsible for paying for the rental car; thanks to your waiver.

Your rental period is completely covered by LDW 24/7. This implies that you are always covered, even when the car is not moving. You won't have to worry about issues like parking in crowded garages where side-door dings are frequent.

You consent to abide by the Rental Agreement's Terms and Conditions when you sign it with the rental car company. Any coverage that the LDW offers for loss or damage to the rental car where the Rental Agreement's terms and conditions are broken will be voided.

NOTE: Loss Damage Waiver does not cover injuries or damages to third parties.

What is the Cost of Loss Damage Waiver?

Depending on the type of vehicle you choose to rent, LDW prices change. An LDW fee will appear on your booking request as an additional daily fee on top of your rental costs.

However, It all depends on the insurer. If purchased from a rental car company, daily rates range from $20 to $30. Some third-party insurers charge a daily fee of $10.

2. Supplemental Liability Insurance (SLI)

This is also known as Accident Liability Insurance. This liability insurance treats any damage or injuries you cause while operating a vehicle as it would in a regular auto insurance plan.

Liability insurance will pay the other driver's repair costs and medical expenses if you are found to be the at-fault driver in an accident while operating your rental vehicle.

You won't be protected if you cause an accident and the rental company's insurance policy lacks third party liability coverage or has low limits. That implies that you'll be responsible for covering all necessary repairs and medical costs for all parties.

When you rent a car in Europe, third party liability insurance is frequently included. However, if you cause an accident in the US or Canada, where third party coverage is either nonexistent or as low as $15,000 US, you could be seriously exposed. But you can leave with complete peace of mind if you purchase supplemental liability insurance.

This type of insurance only pays out if you are the at-fault driver. For example, If you bump into another vehicle, you will be liable for the damage and will need to file a claim with your supplemental liability insurance.

In case of this, quickly get in touch with your insurance company. They'll walk you through the claims process and ask to see any relevant paperwork, such as a police report, details of third-party damages, and your insurance certificate. Check that you have a hard copy or digital copy of your documents.

If you travel frequently, you can save even more money by purchasing annual insurance rather than single trip insurance. You'll arrive at your destination and collect your rental car with the assurance that you're completely covered.

What is the Cost Supplemental Liability lnsurance?

The cost of Liability Insurance varies by state. For example, the average monthly car insurance rate for California is $165. While the average monthly car insurance rate for New York City is $97.

So it is highly advisable to purchase based on the cost of car insurance coverage in your state.

3. Personal Accident Insurance

This is an optional coverage that compensates if you or your passengers are injured in an accident while driving a rental car.

The types of accidents covered by insurers differ. Concussions, burns, coma, cuts and lacerations, dislocations, eye injuries, and fractures are examples of common injuries that may be covered by personal accident insurance.

You can also get compensated for specific medical treatments and services, such as:

  • Therapy
  • Ambulance services
  • Emergency and non-emergency care
  • Fees for hospital admission and confinement
  • In-patient testing
  • Medical testing
  • Medical appliances
  • In-patient rehabilitation
  • Physician follow-ups

However, injuries are still closely inspected as this insurance does not cover injuries caused by:

  • Self-inflicted harm
  • Prior illnesses
  • Being under the influence
  • Committing a crime
  • Having a pre-existing condition
  • War
  • Taking part in competitive sports, and participating in dangerous activities that could result in injury

However, if your car policy includes personal injury protection (PIP) or medical expenses coverage, you will be compensated for injuries suffered in a car accident. You can probably avoid adding personal accident insurance to a rental car if you have comprehensive health insurance.

What is the Cost of Personal Accident Insurance?

A policy can cost as little as $3 per day, depending on your state, your age, your profession (high-risk professionals pay more) and how much coverage you want.

4. Personal Effects Coverage

This covers the costs of replacing your personal belongings, such as; clothing, cellphones, computers, and other personal belongings if they are stolen from inside your rental car.

However, if you have renters or property insurance, your personal belongings will already be covered. So you can do without this.

What is the Cost of Personal Effects Coverage?

Personal Effects coverage is usually $2 per day. It generally provides $600 in insurance coverage per individual, with a maximum of $1,800 for theft of personal effects.

Conclusion

Rental car insurance is important and you should purchase it while renting a car. However, it's important for you to know the different types and what they cover.

Compare the different insurance and know the ones to purchase. You want to be safe, but it makes no sense to pay more for coverage you have already. Check your other insurance and be sure you are not paying for what has already been paid for.