Auto Insurance and Road Trips: Everything You Need to Know Whether You're Driving Your Own Car or Renting

Checking your auto insurance before hitting the road for a driving vacation is hardly the most exciting pre-trip activity. But a little research before you leave could spare you some hassles during the vacation itself. It could also save you money, especially if you’re renting a car.

This piece focuses on domestic drives, because, more than usual, that’s what Americans are expected to take this summer. The borders to Mexico and Canada are closed indefinitely and the AAA predicts the number of flying vacations will be down by a massive 74% over 2019.

Staying within the U.S. simplifies your auto insurance, whether you’re renting a car or driving your own vehicle. Still, read on for a quick guide to the auto-insurance realities and decisions you’ll face on a road-trip vacation this summer, arranged by the way you’ll be driving.

You’re driving your own car

Your insurance will cover you wherever you drive on vacation this summer. It'll even be valid in Canada, should its border re-open to tourists before the season is over. (Should the same happen in Mexico, however, be aware you'll need to buy a Mexico-specific policy to covered south of the border, such as those sold by GEICO.)

Since an accident isn’t the only mishap that can befall your car on vacation, it’s also good idea to review any roadside assistance you may have through your insurance or other sources. If you aren't covered, you might consider buying this service. While the provisions of roadside services vary, they typically include dispatch to your car to boost a battery, refill an empty gas tank, open a locked car, change a tire, or winch you out of a ditch. Towing to a nearby repair facility is usually included too, to a varying maximum mileage.

The premium to add roadside assistance varies. While it's pricey with some companies, the coverage costs no more than about $25 or so a year if you’re insured with GEICO, State Farm, Progressive, Farmers,and USAA. Limits may apply to how many times a year you can use the service and what you receive on any one call. Some insurers also require that you have collision and comprehensive coverage in order to add the service to your policy.

Before you pay to add roadside assistance, check that you don’t already have free coverage through another source. If you’ve bought a new car in recent years, chances are high that its warranty include roadside assistance, as this listing from auto site Edmunds.com details. Also, select credit cards issued by Chase, including the Chase Sapphire Reserve and cards co-branded with United Airlines, offer service calls of up to $50 in value for free.

Whatever roadside service you may have, add its emergency number to your cell phone before leaving home. It’s a good idea, too, to carry a print-out of what you’re entitled to receive in the car’s glove box, so you can read up on your benefits while on the go.

 

You own a car, but are renting another one for your trip

If you have your own car at home, but are renting a vehicle for your road trip, the insurance on your own vehicle should also cover you for the rental, at least provided you’re staying within the U.S. The coverage applies both to liability for damage or injuries to others or their property, and for damage you may cause to the rental vehicle.

There's no requirement to notify your insurer in order to be covered, although it's wise to confirm rental-car coverage on your policy before you leave on a trip, the Insurance Information Institute advises. Assuming it indeed applies, you can safely decline paying the rental-car company for insurance coverage, including declining the waivers that protect you from loss or damage to the car, and can cost $10 or more a day.

Keep in mind, though, that any limitations to the coverage of your personal car will also apply. For example, if you’ve chosen to drop optional collision or comprehensive coverage on your older car, as a way to reduce your premiums, your policy won’t cover you if your rental car is stolen or damaged. “You are not fully protected for rentals if you don’t carry these two optional coverages on your auto policy, regardless of the state or rental provider,” says Mark Friedlander, the III’s Director of Corporate Communications for the Insurance Information Institute.

Also, any claim made for the rental car will also involve paying the deductible on your policy, just as with a claim on the car you own. However, you can be spared that burden if you own a credit card that provides rental-car coverage.

As theInsurance Information Institute points out, “most credit card companies provide some level of insurance for rental cars.” For example, some 60 American Express cards offer the benefit. But there are card brands, like Discover, that provide no rental-car coverage at all. Even companies that provide it rarely do so consistently for all the cards they issue.

Contact your card issuer or go online to check if your cards offer rental-car coverage, and under what provisions. As a rule, personal liability coverage isn't included, according to the Insurance Information Institute, and coverage often doesn't apply to luxury cars and SUVs.

For the most part, credit-card coverage allows you to skip financial responsibility for damage or theft of the rental car. If your card provides this coverage, you must decline the waiver included in your rental contract that covers loss or collision damages (typically titled the Loss Damage Waiver or Collision Damage Waiver). The waiver, which costs about $10 and up a day, spares you from being on the hook for damage to the car, even for your deductible.

However, in most cases this coverage is what’s known as “secondary.” That is, the credit-card company will cover only those costs that the insurer of your own car doesn’t cover. That means damage to the car that exceeded the amount of your deductible would likely still be claimed against your insurance and be added to your claims history. And that, in turn, could have consequences for the premiums you pay on the policy in future.

A few cards, however, provide the ultimate in credit-car coverage for rentals: what is known as primary coverage. Under this coverage, the credit-card issuer takes care of the costs of any resulting damage or liability from your use of the car, and you avoid any risk of having to make a claim if you’re involved in an accident. Among consumer cards, it's offered by the Chase Sapphire Reserve, Money’s top card pick for travel rewards, and cards co-branded with United Airlines.

 

You’re renting, and don’t own a car

If you don’t insure a car of your own, you’ll have little choice but to buy at least some insurance for your rental car. Coverage through a credit card is again useful here, since it can cover you for damage to the rental car. The steps are the same; you decline the waiver or waivers in the rental contract that cover loss or collision damage, and the credit-card issuer then assumes responsibility for those costs.

If you don’t own a card that provides coverage against loss or damage, you can buy it through the rental-car company through accepting those waivers at the counter. However, some third-party options can save you money if you’re prepared to do a little extra work in advance. Online insurer Policygenius estimates you’ll pay $20 to $30 a day to the rental company, where third-party insurers like Allianz and Traveler offer collision insurance for less than $10 per day.

When it comes to liability coverage on a rental car, some is included with your rental fee, but it’s only to the minimum level required by law in the state. Those levels, typically in the tens of thousands of dollars per person and per accident, falling far short of the minimum of $100,000/$300,000 (per person/per accident) that most experts recommend, according to insurance broker National General.

Unfortunately, free and discounted options to fill the gap are limited. As the Insurance Information Institute warns, credit cards rarely if ever provide free liability coverage for rental cars. The leading option is to purchase supplemental liability coverage from the rental-car company for an estimated $8 to $12 a day, according to Policygenius.

If you plan to rent cars regularly (more than a few times a year), you might consider what’s known as a non-owners insurance policy. Purchased from regular car-insurance companies, these policies cover liability on any vehicles you drive over the course of a year. There’s also the option to take out an umbrella insurance policy, which can provide liability cover not only when you drive a car but to supplement your home or renters insurance.

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