Do You Need Car Insurance to Rent a Car?

If you have a car and your own auto insurance policy, that also covers you when you rent a car. Your policy will protect you in your rental car just like it does in your own. Many popular credit cards also have complimentary rental car insurance for damage and theft that can provide extra protection.

But what if you don’t own a car or have your own car insurance? Without an insurance policy that will cover damage and liability issues, you could be at risk of a financial disaster.

Do you need car insurance to rent a car?

In most states, you don’t need car insurance to rent a car. That’s because most states have laws requiring that rental car companies provide a minimum amount of liability insurance. You’ll be covered by that liability insurance, even if you don’t have insurance of your own.

Keep in mind that liability insurance only covers property damage and injuries to other people when you’re at fault for an accident. It doesn’t cover anything that happens to the rental car. For that, you’ll need collision and comprehensive coverage. You can purchase that through the rental company. Or better yet, pay with a credit card that offers collision and theft coverage.

A few states have different rules regarding rental car liability insurance. In Missouri and Utah, rental companies only need to provide liability insurance if the driver doesn’t have it. You’d still be covered in that case to rent a car without insurance.

However, in California and Texas, rental companies aren’t required to provide liability insurance. To drive a rental car in either state, you need to either have your own liability insurance or purchase it through the rental company. Insurance from a credit card wouldn’t be enough, because it covers the rental car. Credit cards don’t include liability insurance.

The rental car company might not check that you have insurance. But it’s illegal to drive without it. You’d be risking a ticket if you’re pulled over, and potentially a huge bill if you were found at fault for an accident.

Minimum rental coverage might not be enough

Even though you can rent a car without your own insurance in most states, that doesn’t mean it’s a good idea. Remember that the rental company is only required to meet the legal minimum. This varies by state, but it often isn’t much.

For example, here are New York’s minimums for liability coverage:

• $25,000 minimum for bodily injury sustained by one person not resulting in death, or $50,000 for any injury resulting in death
• $50,000 minimum for bodily injury sustained by two people not resulting in death, or $100,000 for any injury resulting in death
• $10,000 minimum for damage to another party’s car or property

In a serious accident, medical bills can easily exceed $25,000. And with today’s car prices, $10,000 may not be nearly enough to cover repair or replacement costs.

Imagine you’re in an accident and you total another driver’s car. The average new car price was over $48,000 last year. If your insurance caps out at $10,000, you could be on the hook for tens of thousands of dollars in damages.

Protecting yourself when renting a car

It’s in your best interest to have sufficient insurance when renting a car. At a minimum, you should have enough liability insurance to cover the potential cost of an accident, and also coverage for the rental car itself.

Drivers who already have policies through quality car insurance companies are covered. If you don’t have auto insurance, there are a few ways to get it for a car rental:

• The rental car company: This is the most convenient option, but it could be expensive.
• Third-party rental car insurance: Companies that offer this include Allianz, Bonzah, and Travel Guard.
• Non-owner car insurance: This is liability insurance for people who don’t own a car but drive often. You’re likely better off with one of the first two options, unless you rent cars regularly.

To find the right option, first figure out exactly what insurance you need. If you have a credit card that will already cover damage and theft of the rental car, then you can stick to just liability insurance. If you don’t have any credit cards with rental car insurance, then you’ll need a policy with liability, collision, and comprehensive coverage.

Once you know what type of insurance to get, check prices with the rental car company compared to third-party providers. Prices and plans vary, so take a little time to compare options.

Insurance will add to your car rental costs, but it’s well worth having. With how much an accident can cost, you don’t want to leave yourself at risk.

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