Whose Insurance Covers Rental Car Accidents?

Louisiana is no stranger to the tourism and related rental car industry, with 41 million visitors flooding the state in 2021 which generated $16.8 billion last year, according to the Louisiana Department of Culture, Recreation, and Tourism.

Nationally, the number of cars rented doubled from 17.3 million in 2020 to 29.2 million in 2021. This boom of car rentals actually led to a shortage in Louisiana, a result of last-minute travel planning and fender-benders in the available fleet – and it is predicted that the rental car industry will spike even more to 46.8 million cars rented in 2024.

But, along with these positive tourism stats and the good news that folks are returning to travel on the road post-Covid, are the increased chances of rental car accidents and dealing with whose insurance covers it. In fact, rental cars have a higher collision rate per vehicle than non-rental cars.

What to do After a Rental Car Accident

The complicated process of sorting out whose insurance covers the damages left behind after drivers are involved in a rental car accident can be stressful, pelted with finger-pointing, claim-filing, and more.

The steps of what drivers should do after a rental car accident are very similar to after any car accident. One difference: The rental car driver should notify their personal car insurance, as well as the rental car agency (check for a sticker inside the car or paperwork in the glove compartment for contact info), to make sure their protocols are followed.

Similar steps after a car accident are:

• Check to make sure you, all passengers, and the other driver are OK, and seek medical attention if any injuries are suspected.
• Contact law enforcement for a police report to be recorded after the accident.
• It is also a good idea to exchange personal information with the other driver, such as name, address, license plate of the rental car and any other vehicle information, insurance company, and policy number.
• Take pictures and detailed notes of the scene, such as any damage to the vehicles, and document the actions leading up to the accident, which simplifies the step of filing a claim.
• File an insurance claim and, if the other driver was at fault for the accident, a claim would need to be filed with their insurance company to cover damages. Insurance rates of the at-fault driver will most likely increase by an average of 43 percent when it is time to renew the policy.

A claim may need to be filed with:

• The driver’s primary insurance company
• The rental car insurance company
• The credit card’s rental insurance
• The other driver’s car insurance company

When Primary Car Insurance Covers a Rental Car Accident

Even if the driver of the rental car has a personal car insurance policy, that driver still needs to contact the rental car agency, as well as their primary insurer, to find out how to proceed, depending on the coverage and circumstances of the crash. This is even if they do not think they are at fault.

If the driver of the rental car is responsible, their liability coverage will usually cover the costs of the accident. If at fault, they may also be able to use the policy’s collision coverage to repair or replace the damaged rental car. If the other driver’s car was damaged, they would file a claim with the rental car driver’s primary car insurance, too.

When Rental Car Insurance Covers a Rental Car Accident

Car renters are typically given an option to buy insurance for the duration of the rental from the rental car company. The supplemental coverage protects the rental car driver from any damage to the rental car and other vehicle involved, and prevents the liability from piling onto the premium insurance carrier. But it is also commonly more expensive than regular insurance coverage.

The four main types of supplemental coverage that can be added onto the liability the rental car companies are required to carry are:

• Supplemental Liability Protection (SLP), which adds coverage to the minimum liability coverage offered by rental car companies. This may not need to be purchased if the renter has their own car insurance.
• Loss Damage Waiver (LDW), or collision damage waiver (CDW), increases the cost of the rental each day to cover any scratches, dents, or damages to the rental car. It could also potentially cover towing fees and repairs.
• Personal Accident Insurance, an extra personal injury protection that covers any injuries to the driver and passengers if involved in a car accident.
• Personal Effects Coverage, which covers any personal belongings or valuables that are stolen or damaged while in the rental car. (Home or renter’s insurance that the driver already has may protect these items.)

What a Credit Card’s Rental Car Insurance Covers

If the driver pays for a rental car with their credit card, some of these companies offer a level of rental car coverage at no additional cost. It is considered a form of collision or loss damage waiver, but not liability coverage.

Keep in mind, too, that this kind of rental coverage from credit card companies is secondary coverage, so it only fills in the voids where the primary car insurance does not cover.

It is a good idea for drivers to check into exactly what is protected. Some questions to ask the credit card company include:

• What is covered (liability, collision, theft, towing, and more) and what is not, like certain rental vehicles (luxury cars, motorcycles, or large vans)?
• Does a claim need to be filed with a personal insurance company first?
• Does the insurance cover international rentals?

When the Other Driver’s Car Insurance Covers a Rental Car Accident

If the other driver damages the rental car in a crash, the rental car driver will file a claim with their primary car insurance company, which, depending on the policy, will pay out for any injuries and damages to the rental. This third-party liability claim does not involve a deductible for the rental car driver.