Do I need Insurance to buy or rent a car?

Normally to most, insurance seems a bit daunting or overwhelming, even when you’ve been dealing with auto insurance for years. There are a million and one different questions/scenarios that are asked when it comes to auto insurance policy questions. You understand that you need insurance to drive your car to protect you and other people, simple.

But do you need insurance before you buy/rent a car? 

To some people yes, you do, and to others not always.

The difference is your current situation. If you are going to a dealership, trying to buy your first automobile and never needed insurance before, you will need to get coverage before you are able to drive off that lot. There are ways of doing this that will help you not only get the coverage you need but understand what buying power you do and do not have.

  • There is some leg work that needs to be done before you can just drive off the lot with your new vehicle. Most likely you have done some internet searches to get an idea of the type of vehicle you would like to purchase. Most of us stop researching here, instead we encourage you to soldier on, give your insurance company or agency a call and ask them to run quotes on how much the insurance is going to cost you in the long run, car payments are one thing, but also paying for insurance might make your dream car not a realistic match at this moment. Find out what car and insurance premium fit into your budget. If you already have auto insurance, simply asking how much it would be for the new car on your policy is a fairly easy request.
  • If you do not have insurance before going to the dealership, it’s okay, they usually have access to the internet and will allow you to shop around for insurance and get quotes while you are there or give you suggestions to companies and insurance agencies that are local to you. You will need to have insurance before you can finish this deal. “The bottom line is you usually need to have proof of insurance sent over to satisfy the lender before you can drive off the lot with your new vehicle” (National General).

If you already have insurance, you may be able to get away with less. Some dealers will let your proof of insurance be enough at that moment, with the promise that within 5-30 days you notify your insurance company of the new purchase so that they may add your car to your existing policy. The earlier it is added, the better you will be protected in the case of a claim.

For when you are renting a vehicle there a few things to consider. 

If you current have auto insurance with liability coverage with comprehensive and collision deductibles, they may be transferred over to your rental as long as the coverage limits match the type of car you are renting. If you have the state minimum requirement for coverage, and your heart is set on a Range Rover to complete your vision of your vacation, you might want to look into buying additional rental insurance. “In addition, to your auto insurance, certain credit cards offer extra insurance if you pay for a car rental using that card, according to the Insurance Information Institute” (Allstate).

Some people have car insurance but have a bare-bones policy (no comprehensive or collision coverages), in which they will need you to sign collision/loss damage waiver. This isn’t actually insurance. This waiver is to help cover the cost of repairs, if you happen to damage the car, though it does exclude coverage for damages caused by speeding or unpaved roads. Additionally, a rental car agency could charge you for lost rental income (loss of use) while the car is in the shop being repaired.

If you are not sure if buying rental car insurance makes sense for your journey, it is always helpful to understand what you have first, so you’ll know what you need. Talk to your insurance agent about your policy so you can get back on the road faster.

Michelle Severson CSR
Gibraltar Insurance Services