Rental Car Insurance vs Rental Car Reimbursement. Know the Difference!

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When renting a car, it’s important to make sure you have all the insurance you’ll need to be safe and legally compliant. However, it can be hard to tell what types of insurance apply to your situation. Many of the terms are similar to each other. This leads to a lot of confusion among renters. Two types of insurance that are commonly mixed up are rental car reimbursement and rental car insurance. While they both sound the same, they cover very different things and have virtually no overlap. Here’s a quick breakdown of both to help you out the next time you rent a car or get car insurance.

What is Rental Car Reimbursement?

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While they both sound similar, rental car insurance and rental car reimbursement are two very different things. Rental car reimbursement is a part of a personal car insurance policy. If you get into an accident in your own vehicle, your insurance company will reimburse the cost of a rental car while your vehicle is being repaired. That way you can get to work, go to the store, and perform your daily tasks without paying out of pocket. This helps prevent financial hardship while your car is out of commission. Rental car reimbursement is a non-standard option for most insurance companies. However, it’s typically inexpensive and can save you a lot of money if the worst happens and your car is unavailable for weeks.

What is Rental Car Insurance?

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On the other hand, rental car insurance is exactly what it sounds like. It’s car insurance for your rental vehicle. This coverage is meant to pay for any damages to the vehicles involved in an accident, as well as any medical bills for both parties. It’s a law that every vehicle on the road must have insurance to be driven on public roads. This extends to rental cars as well.

There are four main types of coverage you can opt in to when you book your rental car. Depending on who you rent from, these may be offered as a complete package or separate policies.

Liability Insurance

This type of insurance is mandatory in all states. It covers damages incurred to other drivers when you are “at fault” in a collision. This includes medical bills, damage to their vehicle, and damage to their possessions.

Collision Damage Waiver

Also known as a CDW, a collision damage waiver covers damages to the vehicle you are driving. However, a CDW is a little different than the insurance you have on a personal vehicle. It more or less releases you from any liability to the car rental agency if you have an accident in one of their vehicles.

Personal Accident Insurance

This covers medical treatment for your and your passengers in the event of a collision. While it’s not mandatory, it offers extra coverage to supplement your personal medical insurance.

Personal Effects Coverage

This insurance extends your coverage beyond the vehicle and your person, to any belongings you have inside the vehicle during an accident. If you travel with expensive equipment for work, it’s a good idea to get this coverage just to be safe.

Do You Need Extra Coverage?

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If you already have car insurance for your personal vehicle, this may cover other vehicles you drive including hired cars. This depends on your insurance provider as well as your insurance policy. Before you rent a vehicle, it’s always a good idea to contact your insurance agent and ask about the details of your policy. In some cases, the credit card you use to book the vehicle provides some rental insurance. Travel-specific credit cards are more likely to provide extended rental care coverage as a perk.

Looking For Car Rental in Los Angeles or Pasadena?

Value Rental Car offers clean and affordable rental cars for local driving in Los Angeles and Pasadena, with complimentary pickup and drop off service within seven miles of our two locations. If you’re a college student, we want to help you get on the road. We rent to drivers under the age of 21, and we offer cash and debit card car rentals. Check out some of our other articles to learn more about how car rental works!

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