Do I need proof of insurance to rent a car?

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Here's what you need to know...
  • When you’re renting a vehicle, it’s against state law for the rental car agency to refuse a rental when you reject the option to buy supplemental car rental insurance
  • Since you’re not the owner of the rental car, it’s not your legal duty to insure it. Even though you can’t be fined for failing to carry insurance, driving without coverage can put your finances at risk
  • The rental car agent won’t ask you to provide proof of insurance at the counter, but they will verbally offer you the option to buy Supplemental Liability Insurance and Collision Waivers
  • The rental car company does carry commercial liability insurance. If the company is sued because you crash into someone and injure them, the insurance will only protect the company if the company is sued
  • If you have your own personal car insurance or non-owner’s car insurance, your liability insurance and physical damage coverage will extend to the rental car with the same limits that you carry

When you rent a car, one of the first things that you should do before you take custody of the vehicle is review the terms and conditions of the rental contract. Every car rental company has its own rules and some have much stricter terms than others. You’ll have to secure the rental with a credit or debit card, pay a deposit, and agree to keep the vehicle within the state or the country to qualify.

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Car rental companies have their own contractual requirements, but the insurance requirement will be the same no matter where you rent in your state. That’s because auto insurance requirements are state law. If you’re confused about car insurance and if you need to provide proof of coverage before you rent, here’s what you should know:

Who is responsible for insuring the rental car?

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When you rent a car, you’re agreeing to pay a daily or weekly rate to temporarily drive the car. During the rental period, you’re technically paying to borrow the vehicle. You have no financial interest in the car aside from being held accountable if you damage it while it’s in your custody.

Since you aren’t the vehicle’s legal owner, it’s not your responsibility to insure the car in the eyes of the law. Since you’re not the registered owner or titleholder, you don’t have to have insurance on the car to avoid criminal penalties. It’s the agency who must maintain liability insurance while the vehicle is being operated.

You’re Offered Supplemental Car Rental Insurance Each Time You Rent

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When you’re completing the transaction to rent a car, one of the first things that the agent will ask you is if you want to buy supplemental rental car insurance. There are multiple types of different supplemental forms of coverage that you’ll be offered that all protect you against different types of claims. Some of the options you’ll be offered to buy include:

  • Supplemental Liability Insurance – pays for up to $1 million to coverage third-party claims made against you for property damage or injuries (costs between $7 and $10 per day)
  • Collision Damage Waiver – pays to repair the rental car. With this waiver, you won’t be charged for loss of use while the car can’t be rented (costs between $9 and $19 per day)
  • Personal Effects Coverage – pays to replace damaged or stolen belongings in the car (costs between $1 and $2 per day)
  • Personal Accident Insurance – pays for your medical bills if you’re injured in an automobile-related accident (costs about $2 and $3 per day)

Can the company refuse a rental if you don’t have insurance?

Your agent might push pretty hard for you to buy at least some supplemental insurance, but that doesn’t mean that you can be forced to add insurance to your contract. In fact, the state says that it’s illegal to refuse a renter a car just because they don’t buy the car rental insurance.

Can the company refuse a rental if you won’t show proof of insurance?

The company can’t ask to see your proof of insurance just to qualify you for the rental.

They can look at your age, your licensing status, your driving history, and even sometimes your credit history, but insurance history doesn’t play a role in whether or not you fit the criteria to be a renter.

This is why you’re not asked to show proof of coverage.

Will your existing personal car insurance policy protect you while you’re renting?

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If you own a car, you’ll have peace of mind in knowing that you have some protection following you while you’re in your rental. As long as the rental car is in the same name as the insurance policy, you will have liability coverage that follows you while you’re driving in the United States.

Liability coverage is one of the coverage options that follows you as a driver. If you also have comprehensive and collision to pay for damage claims to your auto, this damage coverage will protect the rental in the same way as it protects your car. Other coverage options that can give you peace of mind include:

What are the drawbacks of using your own auto insurance for a rental car claim?

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You can lean on your car insurance policy without being charged an additional rate, but there are drawbacks that you should always keep in the back of your mind.

One drawback is that you have to pay your deductible if you file a physical damage claim. After you meet the deductible, the insurer will pay only up to the rental car’s depreciated value.

Physical damage limits are a setback, but loss of use is a more important one. Loss of use is a charge that can be assessed when the company loses income because a car is being repaired. If you use your insurance, your policy won’t cover this charge.

If you don’t want to pay for expensive rental car insurance and you rent often, make sure to buy your own auto policy. If you don’t have a policy in place, you should comparison shop rates. Use an online rate comparison tool and then you’ll have protection if you’re renting a car.

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