Protecting My Car

What do you need to know about auto liability insurance and rental cars? Whether you were in an accident and the repairs will take a few days to complete, or you need a rental for an out-of-town excursion, take a look at the top questions about these cars and your insurance coverage.

Are Reimbursement and Insurance the Same Thing?

Perhaps you're in the process of renting a car but you're not sure who should pay for the rental or how to protect the vehicle. These are two separate issues with two separate insurance-related answers. 

Rental car reimbursement refers to the payments your auto insurance policy makes to you or the rental company. While a reimbursement won't cover the costs of a rental that you use for general recreational or travel purposes, it may pay for some or all of the costs related to an accident. 

The amount of money the policy pays towards the cost of a rental (reimbursement) depends on your coverage. If you need a rental after an accident or auto incident, talk to your insurance agent about your options and potential out-of-pocket expenses before you rent a vehicle. You may need to choose a specific type of car or rental company for the insurance to pay.

Even though rental reimbursement is part of an insurance policy, it isn't the same as rental car insurance or car liability insurance. Rental car insurance refers to additional coverage that a rental car company or agency provides.

Do You Need Rental Car Insurance?

There isn't one standard answer to this question. Some people feel more comfortable with the safety net that rental car insurance provides, while others don't believe the extra cost is necessary. Many auto insurance policies extend to rentals. This means if you already have coverage, your existing policy will also cover some types of damage to the rental—minus the deductible. 

Before you assume that your current policy will pay for any type of damage to a rental, review your coverage with your agent. If you only have the state-required minimum (and not comprehensive or full coverage car insurance), you will have to pay out-of-pocket for damage due to non-covered accidents or incidents such as vandalism, theft, flooding, or a falling tree.

Full coverage auto insurance will cover more types of damage and different types of incidents. This could include theft, vandalism, flooding, falling objects, and other non-collision issues a liability-only policy won't pay for.

If you don't already have an auto insurance policy, your current policy doesn't include comprehensive coverage, or you have a high deductible, you may need or want to add separate rental insurance. The rental company and some third-party companies can provide this type of temporary policy.