This answer covers the EASIEST and BEST solution for someone without any coverage. Without planning ahead, the Easiest solution may BE the Best solution.
EASIEST SOLUTION: Buy ALL THREE major insurance options that most rental car companies offer when you sign their contract:
- Damage Waiver
- Sometimes called Physical Damage Waiver, Collision Damage Waiver. Loss Damage Waiver. The waiver puts the responsibility for damage to the rental car squarely on the rental car company. (coverage for the rental car itself)
- Supplemental Liability Coverage
- Provides coverage for damage or injury to others for which you are responsible/negligent. (third party coverage)
- Personal Accident Insurance
- Provides a limit of coverage for injuries following an accident with a rental car. (first party benefits)
QUESTION Details: “What are my options for LIABILITY COVERAGE of a rental car?”
- LIABILITY Best Option: Named Non-Owner Auto Policy
- Most states allow for the purchase of a Named Non-Owner Auto Insurance policy. A Search for “Named Non-Owner Auto Insurance Quote in YOURSTATE” will yield the players in that arena. (this answer is curiously missing from other posts?)
- Important Note: A Named Non-Owner Auto Policy issued in the state you live, will provide all the mandatory coverages the state requires. In addition to Liability coverage, this may also include: Personal Injury Protection, Medical Payments and Uninsured Motorist Coverage.
- LIABILITY Car Rental Company Option: Supplemental Liability Coverage (Rental Car Company Offering)
- Car Rental companies must provide as part of the rental contract, at least the state minimum liability coverage where you operate the vehicle. These minimum required limits can be very low (IE: $25,000 per person bodily injury, $10,000 property damage liability)
- Know the limit of coverage that is provided with the “Supplemental Liability” option. Some rental car agreements start this coverage at a lower limit and offer enhanced limits at an additional cost.
QUESTION Details: “Or maybe CREDIT CARDS that provide liability coverage for any rentals charged to the card?”
- CREDIT CARDS: Some Credit Cards provide coverage for physical damage to the rental car, or first party medical expense/accident type of coverage, but they generally do not provide Liability Coverage.
- American Express may provide some of the most generous benefits (especially on their higher end cards where they may provide medical expense and accidental death coverage.) but it is customary that Credit Cards coverage is “excess” (say secondary) over other collectible insurance.
- Coverage provided by Credit cards can be fraught with exclusions.
- Here is a copy of the Amex Green card policy. (excess)
- Here is a copy of the Amex Platinum card policy. (excess)
- Here is the page you can find the VISA benefits.
- Bottom line… don’t assume. Know the actual coverage your credit card provides. More info on Premium Cards below.
- NOTE for those WITH an Auto Policy: American Express Offers Premium Rental Benefits on some of their cards with Primary Physical Damage coverage for a flat fee ($19.95) PER rental. You can sign up here.
- Important… for credit card coverage to become effective, the rental car must be purchased using the card in question.
- Important… credit card coverage will likely not cover Diminution of Value claims which can be substantial
QUESTION Details: “I was wondering if there are other options, like a policy that covers me for a year for a flat rate for all rentals.”
Excellent Question – YES there IS!
- NAMED NON-OWNER AUTO POLICY: A Named Non-Owner Auto Policy and it can provide the following coverage parts (This depends on the coverages required and available in your state):
- Bodily Injury Liability – Provides compensation for injury to others for which you are negligent.
- Property Damage Liability – Provides compensation for damage to property of others (other cars, structures) for which you are negligent.
- Uninsured/Underinsured Coverage – Liability coverage in reverse. compensation for you and others in your car if the other vehicle/driver does not have liability insurance, or lower limits of liability insurance.
- Personal Injury Protection (in some states) – First party benefits for you and others in your car for your medical expenses regardless of who is at fault (sometimes called “no-fault”).
- NO COMPREHENSIVE OR COLLISION: A Named Non-Owner policy provides coverage for most types of losses EXCEPT for the Physical Damage to the Rental Car itself.
NOT ASKED(but provided free of extra fees and charges):
“What is the Best Rental Car Insurance Option Overall for someone who doesn’t own a car but rents one frequently?”
- BETTER: A Named Non-Owner Auto Insurance Policy PLUS Purchasing a Damage Waiver. – or –
- BEST: A Named Non-Owner Auto Insurance Policy PLUS a Credit Card with a Rental Car Physical Damage policy/coverage. (less expensive than option #1 above for frequent car renters)
- This option is attractive because of the low/no cost of the physical damage piece, but as mentioned above, know your card’s terms and conditions.
- NOTE for people who own a car with a standard Auto Policy: Want peace of mind that the rental car company won’t come back on you or your auto insurance for damage to the vehicle? Credit cards that offer primary physical damage coverage are available. It will take some research, but here are some sources to find such a card:
If you live in and have an Auto Policy in New York State… the rules are a bit different. Here is the straight and skinny on Rental Car Insurance Coverage in New York.
Author: Jeff Ryan, 35 Yr Brokerage Owner, Reader of Policies, Insurance Geek