What Happens if You Crash a Rental Car Without Insurance

Crash a rental car is stressful, but knowing the right steps can help manage the situation effectively. You’re excited about your upcoming trip and have booked a rental car. But at the rental counter, you face a dilemma – should you purchase the rental car insurance? It seems expensive. You think:

• “I’m a safe driver; what are the chances of an accident?”
• “My auto policy will cover rental cars, right?”

Declining rental car insurance could prove very costly if you get into a car accident without coverage. Being correctly insured protects you from:

• Paying out-of-pocket for rental car damages
• Covering medical bills for any injuries
• Potential legal liability and lawsuits

This guide explains what can happen if you crash an uninsured rental car. It covers rental insurance options, the risks of declining coverage, steps after an accident, and ways to reduce your liability exposure.

Rental Car Insurance Overview

When renting a car, companies will offer several insurance options as add-ons. These coverages can provide valuable protection but also increase the total rental cost. Understanding the different types of rental car insurance is essential:

• Collision Damage Waiver (CDW) / Loss Damage Waiver (LDW) 

The rental company will charge a daily fee for CDW/LDW.

• Liability Insurance

It protects you if you cause injuries or property damage to others in an accident. It covers their medical bills and repair costs up to set limits. Liability insurance is required in most states.

• Personal Accident Insurance

It covers medical expenses for you and your passengers if you’re injured in an accident while driving the rental car. It can pay for injuries, ambulance fees, death benefits, etc.

Roadside Assistance

 It provides tow truck services, battery jump-starts, flat tire changes, and lockout help if you have car troubles during your rental period.

Many rental companies offer these coverages combined in a package. Depending on the coverage and rental location, the costs can range from $10 to $30 daily.

When declining the rental company’s insurance, you take on more risk and liability in case of a crash. However, avoiding duplicate coverage you may already have can save money. The key is understanding your current auto policy’s rental car provisions.

Scenario: Declining Rental Car Insurance

There are a few common reasons why renters choose to decline the rental company’s insurance coverage options:

Cost Savings

 The daily rates for rental car insurance can add up quickly, especially for more extended rental periods. Trying to keep costs down may motivate some to take the risk.

Perceived Low Risk

Some renters, especially younger drivers, may feel confident in their driving abilities. They think an accident is unlikely, so paying for extra insurance seems unnecessary.

Relying on Personal Auto Policy

Many auto insurance policies provide some coverage when driving rental vehicles, so renters assume their existing policy offers enough protection.

However, declining rental car insurance opens you up to significant financial exposure if you do get into a crash. The potential consequences can be severe:

Out-of-Pocket Repair Costs Without a Collision Damage Waiver

 You are responsible for paying the repair or replacement cost of the damaged rental car out of your pocket, which can easily reach thousands of dollars.

Lawsuit Liability

 If you cause injuries or property damage to others, you could be sued for those costs not covered by your personal liability limits. The rental company may also sue you to recover their losses.

Personal Injury Expenses

Your health insurance may not cover all medical bills for injuries you or your passengers sustained in a rental car accident you caused.

Purchasing the rental company’s reasonably priced insurance options, designed to safeguard you and the rental company, can avoid the financial risks of declining rental coverage.

Liability and Financial Responsibility

You could face extensive liability and financial responsibility if you rent a car without the rental company’s insurance and are involved in an accident. The costs can quickly add up and become overwhelming:

Personal Liability for Damages and Injuries

 As the renter operating the rental car, you assume liability for any damages or injuries you cause in an accident. It includes:

Repair Costs for the Rental Car 

You will be responsible for paying the rental company for all repairs needed to fix the rental car you crashed. If the vehicle is totaled, you must pay the full replacement value.

Medical Expenses for Injured Parties

 If you cause injuries to other drivers, passengers, or pedestrians, you are liable for their medical bills related to the accident injuries, including ambulance transport, hospital stays, surgery costs, etc.

Legal Fees and Potential Lawsuits

 Depending on the accident’s severity, you may face lawsuits from injured parties, the rental company, or others seeking compensation for damages. Attorney fees and court costs quickly become expensive.

Impact on Personal Auto Insurance Policy

Causing an accident in a rental car can affect your auto insurance rates, even if you didn’t have the rental covered under your policy.

Increased Rates or Policy Cancellation

 Your insurance provider may hike your premium rates significantly at renewal time due to the elevated risk from the rental car claim paid out. In some cases, your policy could be outright canceled.

Read More: Worst Trucking Insurance Companies

Exclusions for Rental Car Accidents 

Some personal auto policies exclude accidents when driving rental vehicles from coverage. You’d be fully responsible out-of-pocket.

Without insurance, the liability exposure from a rental car accident is substantial. Purchasing rental coverage is a relatively inexpensive way to transfer that risk.

Steps to Take After an Accident with an Uninsured Rental Car

If you unfortunately get into an accident while driving an uninsured rental car, you must take specific steps immediately and long-term actions. Proper handling is crucial to minimize further liability.

Immediate Actions 

Safety First, Pull to the side of the road if possible and out of harm’s way. Call emergency services if anyone is injured.

You must report the accident to the rental car company and local police, no matter how minor it seems. Get a copy of the police report.

Document the Incident 

Take photos or videos of the accident scene, including damage to all vehicles involved, injuries, road conditions, etc. Obtain contact and insurance information from others involved.

Contact Rental Company
Notify the rental company immediately about the accident, even if you plan retroactively to purchase their coverage. 

Follow their instructions

Long-Term Implications 

Dealing with Rental Company Claims

 The rental company will likely claim you to recover repair costs for the damaged vehicle. They may pursue you through collections or small claims court.

Navigating Legal Proceedings 

If other parties were injured or had property damaged, you could face personal injury or property damage lawsuits brought against you by their insurance companies or attorneys.

Potential Credit Score Impact

Unpaid rental car claims, legal judgments, or collections accounts from an accident can severely impact your credit rating and ability to get approved for loans or credit in the future.

Transparency and cooperation are crucial to mitigating risk and liability. Failing to properly handle an uninsured rental car accident can exacerbate legal and financial fallout. Consulting an attorney may be advisable in severe cases.

Alternatives and Risk Mitigation Strategies

Rather than outright declining rental car insurance, some alternative options and strategies could provide coverage while potentially saving money:

Relying on Personal Auto Insurance Coverage 

Many personal auto insurance policies extend liability coverage to rental vehicles you operate. However, policies vary greatly – you need to verify a few key points:

Rental Car Coverage Details

Confirm that your policy provides comprehensive collision coverage for rental cars, not just liability coverage. There may be excluded scenarios or limitations.

Deductibles 

Your average deductible for personal auto claims applies to any rental car damage. High deductibles mean more out-of-pocket expenses.

State Minimums

 Personal liability limits adequate for your vehicle may not meet the rental company’s state minimum insurance requirements.

Using Credit Card Rental Car Insurance Benefits

You may have free rental coverage as an included benefit if you pay for the entire rental car booking with a credit card. But there are typically exclusions:

Eligibility Requirements 

Coverage may only apply to rentals of a limited duration (e.g., 15 days) or vehicle type. International rentals are often excluded.

Coverage Limitations

Credit card benefits usually only provide secondary coverage after your auto policy. Certain damages, like liability, may not be covered.

Third-Party Rental Car Insurance Providers

 Alternatively, in addition to the rental company’s coverage, you can purchase supplemental insurance from a third-party provider like Bonzah or Insured Nomads.

Cost-Benefit Analysis

 These policies are usually cheaper than the rental counter options but have varying coverages and deductibles to compare.

Comparison with Rental Company Review to see if the third-party plans match or exceed the rental company’s minimum coverage requirements.

No option is risk-free, but carefully evaluating the pros and cons of alternatives like these can reduce your overall rental car insurance costs while still providing protection.

Final Thoughts and Recommendations

Renting a car without purchasing the rental company’s insurance coverage is an easy way to save money upfront. However, the potential financial risks of being uninsured in a rental car accident are substantial.

Weigh the Costs and Risks

 While rental insurance adds to the total cost, the daily rates are relatively inexpensive compared to the penalties you could face:

• Paying thousands to repair a damaged rental car
• Covering medical bills for any injuries caused
• Litigation and legal fees from liability lawsuits
• Rate increases or policy cancellations from your auto insurer

For most consumers, low-cost rental insurance is worthwhile protection.

Importance of Being Adequately Insured

An uninsured or underinsured rental car accident can quickly become a financial nightmare. At a minimum, you need:

• Liability coverage meeting the rental state’s minimum limits
• Collision/Loss Damage coverage for the rental car itself
• Sufficient personal injury protection for medical expenses

Responsible Decision Making

Overconfidence in driving abilities or assuming “it won’t happen to me” is unwise regarding rental car insurance. Even the most cautious drivers can be involved in an accident caused by other negligent parties.

When renting a car, make an informed decision after:

• Reviewing your existing auto policy’s rental car provisions
• Understanding the rental company’s coverage options
• Considering alternative third-party insurance providers
• Honestly, assessing your ability to cover worst-case-scenario costs

An ounce of prevention through proper rental coverage is better than potentially paying tens of thousands after an accident.

Additional Resources Rental Car Company Policies and Contacts

• Enterprise
• Hertz
• Avis
• Budget

Personal Auto Insurance Providers

• State Farm
• Geico
• Progressive
• Allstate

Government/Consumer Protection Groups

• National Association of Insurance Commissioners
• Insurance Information Institute
• Â Governors Highway Safety Association

Frequently Asked Questions

If I’m in an accident with a rental car, will my auto insurance cover it? 

It depends on your specific auto insurance policy. Many personal auto policies provide some coverage for rental vehicles, but there may be limitations or exclusions. You’ll need to check with your insurance provider about the details of rental car coverage, deductibles, liability limits, etc. Refrain from assuming you’re fully covered.

What does the Collision Damage Waiver (CDW/LDW) cover? 

The CDW/LDW rental companies offer is not technically an insurance product. A waiver releases you from financial responsibility if the rental car is damaged or stolen. If you accept it, the rental company agrees not to charge you for repairs, subject to any prohibited uses outlined in the rental agreement.

If I pay for the rental with a credit card, will that provide insurance coverage? 

Some credit cards offer auto rental collision coverage as a complimentary benefit when you use that card to pay for the rental. However, these benefits are often limited, may only provide secondary coverage, and have exclusions like vehicle type or international rentals. Check your card’s guide to services.

Does the law require rental car insurance?

While most states require minimum liability insurance to operate a vehicle legally, no universal law specifically mandates rental car insurance coverage. Rental companies set their insurance requirements as part of their rental agreements, which you must adhere to.

Is it ever okay to decline rental car insurance? 

There can be scenarios where declining rental coverage makes sense, such as having a non-owner liability policy or your existing auto insurance fully covers rental cars with no deductible. However, most recommend purchasing the rental company’s insurance to avoid potential financial catastrophe from an uninsured rental accident.