What To Do When Renting a Car and You Don’t Have Car Insurance?

Reader Tracey left a comment on my using Priceline for rental cars post asking the following question:

Hi Scott, I recently sold my car, so I am uninsured. This will be my first time bidding as well as never having auto insurance.

Bodily injury, med expenses are my big concern. I will be using my Mastercard, but the small print has made me crazy. Any other ideas to stay safe?

What kind of insurance should I buy?

Kind thanks! Tracey 

This is an excellent question and one I wanted to take the time to answer in a larger post. When renting a car, to simplify matters, there is basically two kinds of insurance you need. One the covers the rental car and one that covers damage to other drivers.  Between the two of these the later is more important.

But first, let me discuss insurance that covers damage to the rental car.  Rental car companies offer this insurance for purchase.  The price it is offered at is pretty expensive, usually $20-$40 per day.  The one convenient thing about purchasing this from the car company is that if you side swipe a guard rail you can and hand over the keys and walk away, no hassle.  If you have your own insurance, there will be more paperwork.  I always decline to purchase this from the rental company.  I think it is too expensive and my own car owners insurance and usually my credit card offer protection for my rental car.

But what do you do if you don’t have car insurance?  Some credit cards offer this kind of protection, but some do not.  If you don’t have a copy of the benefits offered by your credit card I would call the customer service number on the back of the card and ask them.

What do you do in the event your credit card does offer rental car protection?  I would buy the insurance from a third party.  Some travel insurance companies offer car rental insurance.  Travel Guard offers it for $9 per day.  Another website, Protect Your Bubble, offers it for about $8 per day.

However, keep in mind this type of insurance does not protect you against, potentially, your biggest liability, which is harm to other drivers.  God forbid you are in some type of major accident.  If you are, and you are deemed at fault the potential liability you face could dwarf the damage to the rental car. Insurance that covers potential injury (both personal and property) to other drivers is referred to as liability insurance.  Liability insurance is required in every State to be legally allowed to operate a vehicle.  In fact, a rental car company may not (and probable should not ) rent a car to you unless you carry this kind of insurance, or purchase it from them.

Even if you have your own car insurance it is always important to know whether the insurance extends to you operating a rental car, it should, but make sure you know for certain.  If it does not or if you do not have car insurance then you need to purchase liability insurance.

Some car insurance companies do offer short term or temporary car insurance.  You can either purchase a temporary policy from a car insurance company or you can purchase it from the rental car company.  I am not sure how much these policies cost, although, I would imagine it would be cheaper to purchase a short term policy from an insurance company.  Take a look at Esurance, Geico, Progressive, and other companies that have a heavy online presence.  You should be able to purchase a short term policy from them.

You may also want to ask for a quote for a policy that covers the rental car as well.  You will probably save money.  If none of these options work out for you then I think you will need to purchase it from the rental car company.  If that is the case hopefully my priceline bidding strategy saved you a bunch of money to help offset the cost.  Good luck.

Update:  I noticed when this posted my website showed an add for Protect Your Bubble, I do not have a financial relationship with Protect Your Bubble.  If you see this add it is likely because Google saw a connection between the content of the post and the relevancy of the add, which is pretty relevant, so I guess their algorithms work.

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