Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com.

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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Here's what you need to know...

  • When you rent a car, the rental agency can’t require that you show auto insurance as a requirement to renting a car
  • If you have either a personal car insurance policy or a nonowner’s car insurance policy, the liability coverage that you carry will pay for any third-party claims that are made against you or drivers that are listed on the policy as long as the car is rented in your name
  • While the agency’s rental inventory is insured under a commercial policy, the policy will only protect the company’s interests and not yours
  • You have the option to add insurance coverage to your rental contract for a daily charge
  • If you have full coverage insurance, you don’t need to carry a physical damage waiver


Renting a car has its advantages. When you choose to rent, you can explore new lands without restrictions and limitations. You can also skip public transportation lines and leave your room the moment that you’re ready.

While there are benefits to renting, planning is crucial. If you don’t do your homework, you could be left footing a higher bill than you agreed to.

It’s critical that you look for restrictions under your contract as far as where the car can be taken and how many miles you can drive daily. Another area of the contract to research is the insurance requirements.

Before you take possession of any rental vehicle, find out how to insure it and how to keep your expenses low. Compare car insurance companies today by entering your zip code in the free tool above.

Are you required by law to insure a rental car?

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As much as rental agents at the counter push supplemental insurance, it’s against the law for any car rental company to refuse to rent to a customer if they won’t buy supplemental insurance.

All of the coverage options that are being pushed through the rental company are considered optional.

It can be a bit shocking to learn that you’re not required to buy insurance or prove that you have insurance to rent a car. Since the car is owned by the car company and not by you, it’s not your duty to insure it.

While it’s not your legal duty to buy at least state-mandated coverage on the car, it’s wise to protect yourself with at least some coverage.

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What can happen if you rent a car without any type of insurance?

If you take the risk and you rent a compact car or an SUV without insurance, you still can face litigation. Injured parties in vehicular accidents typically have the right to sue when someone is negligent for the events that led to the crash.

If you’re the at-fault driver, you may have to defend yourself in court against both founded and unfounded claims.

One of the problems with having to go to court to answer to civil claims for damage is that legal fees and court costs can add up. If you lose, you’re obligated to pay both out of pocket.

When you have at least some liability insurance, the supplementary payments benefits will pay to defend you in court without even using up your liability limits.

If you own a car and the rental is a temporary substitute, your auto insurance policy may protect you while you’re driving the rented car.

One of the great things about your personal auto policy is that the liability insurance will cover you while you’re in any car, especially in your rental.

Your policy will also pay for third-party damages if a named driver that’s on the policy is driving the rental and crashes. It’s very important to be mindful of how the names on the rental contract play a role in whether or not your claim will be denied.

For the claim to be considered, you or a named insured on the policy needs to be listed as the renter.

Will damages to the rental car be covered by your policy?

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All car insurance policies include liability coverage but not all policies include physical damage coverage.

When you sign a rental contract, you are accepting the fact that you’ll be held accountable for any new damage to the vehicle that happened while the car was in your custody, regardless of how the damage happened.

Whether or not your policy will pay for this depends on what you’re carrying under your personal insurance.

If you have full coverage, which includes comprehensive and collision insurance, you can file a claim for damage to a rental against your policy as long as the estimated damage exceeds your deductible.

If you don’t own a car, you don’t have to go without insurance. In fact, you have a few different options so that you can drive off of the rental lot with peace of mind.

If you rent often and you are in need of asset protection, you can buy a nonowner’s policy so that you have  the following:

  • Bodily Injury
  • Property Damage
  • Medical Payments
  • Uninsured Motorist Protection

What type of coverage is available through the rental agency?

If you don’t have a need for a nonowner’s policy, or you want physical damage protection, you should consider all of the supplemental options available through the agency. Here is a list of the most common options that are sold for $10 to $30 per day:

  • Supplemental Liability Insurance – pays for liability claims made against you
  • Collision Damage Waiver – pays for the cost to repair a rental after it’s stolen, vandalized, or crashed
  • Personal Effects Coverage – pays to replace luggage or other property stolen from your car
  • Personal Accident Insurance – pays for your medical costs if you or your passengers are injured in a crash

The last thing that you want to do is drive a car without the proper insurance. If you’re renting or even buying a car, you must build a sufficient policy. Use an online comparison shopping tool and get instant quotes today.

Start right now by entering your zip code below!

References:

  1. https://www.thebalance.com/how-to-get-non-owners-sr22-insurance-527248
  2. http://money.cnn.com/2014/06/30/pf/insurance/rental-car-insurance/
  3. http://www.businessinsider.com/travel-experts-explain-9-things-you-should-know-before-renting-a-c…
  4. http://www.ag.ny.gov/consumer-frauds/car-rental-tip-sheet
  5. https://www.thebalance.com/penalties-for-driving-without-car-insurance-in-california-527033
  6. http://www.iiat.org/infocentral/policy-coverages/auto-dealers-(iso)/general-liability-coverages/s…
  7. http://thismatter.com/money/insurance/types/auto-insurance.htm
  8. http://disb.dc.gov/page/things-know-about-car-insurance-and-rental-cars-starting-your-road-trip
  9. http://www.insurance.pa.gov/Documents/auto_guide.pdf
  10. https://www.thebalance.com/what-is-non-owners-insurance-527421
  11. http://www.thesimpledollar.com/rental-car-insurance/