What Type of Insurance do I Need to Buy for A Rental Car?


It may be an expensive affair if the vehicle you rent for personal use meets with an accident, causing severe damage to it and third-party properties. You will be liable to compensate for all the losses in such a situation. This is why you must ensure that the vehicle is covered with a rental car insurance policy. This policy will protect you financially by covering the expenses of repairing your rented vehicle.

What is a Rental Car Insurance Policy?

As the name suggests, the insurance policy for rental cars covers possible damages caused to rented vehicles due to accidents. Most of the time, the company from which you rent a car offers this insurance policy so that its customers get a financial cushion against on-road mishaps.

Coverage Included in a Rental Car Insurance Plan

Following are some of the coverages that you can enjoy by protecting your rented car with this policy:

  • Collision Damages

The maximum damages in an accident occur in the exterior part of the vehicle. You can cover these exterior damages with this policy and restore that vehicle’s looks. In this regard, you need to know that this rental car insurance policy will not cover any internal parts, such as gearbox, engines, etc.

  • Third-Party Damages

The rental car insurance policy covers the damages caused to third-party properties and lives. Insurers compensate third-party individuals for their losses caused due to collisions with covered vehicles. However, to get this benefit, you need to ensure that you have not flouted traffic rules.

  • Theft Protection

If your rented car gets stolen, this policy ensures that you do not have to pay your rental company for the loss. In this circumstance, all your financial liabilities get shifted to the insurers.

This way, with the help of this rental car insurance plan, you can protect yourself sufficiently from probable financial losses.

Additional Benefits of Rental Car Insurance Plan

Besides the basic coverages mentioned above, you can also enjoy the following advantages by purchasing this rental car insurance plan:

    • Personal Accident Cover: If you get injured while driving your rented vehicle, this policy will cover expenses incurred due to medical treatments.
  • Protection of Uninsured Motorists: It covers the medical expenses of the driver of the opposite vehicle involved in the accident. However, insurers extend this coverage only if that driver is not insured.
  • Roadside Assistance Cover: You can get car break down services from your insurer if the rented car becomes inoperative due to a mechanical breakdown on your journey. For example, you can contact your insurer for help if the tyre gets punctured or the fuel tank becomes empty.

Things to Check before Buying a Rental Car Insurance Policy

Following are a few things you need to be mindful of while purchasing this rental car insurance plan:

  • Maximum Sum Insured

If repairing costs exceed the insured amount, you will have to bear the rest of the expenses from your pocket. This is why you must check whether the maximum sum insured value is sufficient. It will help you avoid dipping into your savings.

  • Geographical Limitation of Roadside Assistance

Some insurers provide you with the benefits of roadside assistance when you get stuck within a pre-specified geographical location. However, you have to manage on-road assistance yourself if the situation occurs outside of that zone. So, while choosing rental car insurance, you need to confirm that this coverage applies to as many locations as possible.

  • Deductibles

If there is any deductible associated with this policy, you may have to share a certain percentage of the claimed amount from your pocket. For example, if the deductible is 5% and the repair expenses are Rs. 10,000, you need to pay Rs. 500 out of your savings. 

Downsides of Rental Car Insurance 

Following are some downsides of this policy:

  • Lack of Transparency

Generally, you need to pay a fixed amount while renting a car from a company. If you return the vehicle with any damages, it deducts a certain amount to cover the repairing expenses, but you do not get to know the actual price needed for servicing the car. 

  • Higher Policy Price

In most cases, the added price of collision damage waiver cover significantly increases the overall cost of renting a car. 

  • Exclusions 

As mentioned, the rental car insurance policy only covers the expenses to repair damages to the exterior. There is a high chance that an accident will impact engines, batteries, gear, etc. You will have to cover servicing costs from your pocket if such mishaps occur.

In conclusion, a rental car insurance policy can significantly help individuals avoid their financial obligations if they meet on-road mishaps with their rented vehicles. It enables them to cover the expenses of repairing or compensating damages caused to the vehicle and third-party properties and lives.

In addition to rental car insurance, you can also opt for temporary car insurance. A temporary car insurance is for those who are driving a rented car for a short time. Buying a new car requires more complex financial planning, whereas using rental car services is a great way of securing a major investment.