What happens if I don’t have a personal auto insurance policy?
If you don’t have your own auto insurance policy for a personal car, things can get a bit more complicated. The credit card that you used to pay for the rental may provide collision damage coverage on rental vehicles. One thing to keep in mind is that most credit cards don’t typically cover “downtime” for the period that a vehicle cannot be rented while it’s being repaired. So, if you crash the rental car, you ultimately could be on the hook to pay rental fees for that vehicle for every day it’s in the shop. As well, most rental companies offer various forms of optional insurance or add-ons. If you purchased the rental company’s auto insurance, then they may handle the coverage. Usually, the optional insurance offered by rental companies includes:
- Collision damage - also known as a “loss-damage waiver,” it covers financial responsibility if the rental car is damaged, stolen, or requires towing, and other fees.
- Personal accident insurance – also known as “no-fault insurance,” it covers medical costs and general healthcare expenses. It can also protect you against loss of income as a result of the accident.
- Personal effects coverage – this covers any personal items that might be damaged or stolen from the car during use, such as luggage, electronics, personal items, etc.
- Liability – this would cover you if there’s an accident and you were at fault; liability coverage would take effect if any other driver made a claim against you – the limit is usually $1 million.
To summarize, there are typically 3 avenues of insurance that could cover damage to a rental car:
- Your credit card coverage
- Your personal auto insurance
- The rental car company’s insurance products
Note: If the other driver is at fault, the rental car company may not wait for the insurance claim process to finish before expecting payment for repairs to the vehicle. This means that your credit card may be charged for the full amount of the damages, and you will need to file a claim in order to be reimbursed.