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Even if you're just leasing a car, most states still require the driver to carry car insurance. In fact, most times the bank or auto dealer that is financing the car make it mandatory to purchase collision and comprehensive coverage. This is in order to cover the costs they would have to endure in case of a total loss of the vehicle.
Depending on the state, additions to comprehensive and collision coverage may be necessary according to the laws. One example is auto liability insurance, which will cover any damage to the vehicle that is caused by an accident with another car or object, or a natural disaster or similar circumstances out of one's control.
Gap insurance, which isn't available in all states, will cover the difference in the case that the leased car listed on the policy is totaled before the loan is paid off. Most leasing companies require drivers to carry gap insurance because there is normally a “gap” between the amount still owned on the car and the amount that the insurance company will provide. Generally, gap insurance is included in the monthly lease payments.
You will need car insurance to rent a car. When renting, depending on whether it is used for business purposes or pleasure, your own car insurance policy may cover a rental car. If your comprehensive and collision insurance deductibles apply to a rental car, you will be covered on your personal auto policy.
In the case that your car insurance isn't enough or if you don't own a vehicle, most places that provide rental cars have two kinds of rental insurance: rental car counter insurance and non-owned auto liability insurance. Collision damage waiver relieves you of any financial obligations if your rental car gets stolen or damaged, but doesn't count if you cause an accident by speeding or driving drunk.
Rental car counter insurance, which can cost from $5 to $14 per day, also includes liability insurance, personal accident insurance, and personal effects coverage. The first is required in rental companies at least at a minimum coverage level, which varies by state. Liability insurance protects you up to a million dollars each time you rent a car. Medical bills of your and passengers will be covered under personal accident insurance if your own auto policy doesn't already provide adequate coverage. Any personal items that get stolen from your vehicle will be covered under personal effects coverage, but only with proof of ownership or receipts.
Another option, non-owned auto liability insurance, can be purchased from your auto insurance company if you frequently need a rental car for out of town trips. This coverage tends to be cheaper than purchasing liability coverage from the rental car company every time you need to rent a vehicle. It protects against damages to someone else's car, injuries to occupants, or pedestrians in case of an accident. However, most non-owned auto insurance will not provide collision coverage, so that has to be purchased at the rental car company.
Most car insurance policies do not cover rental cars after putting a vehicle into the shop for repairs caused by a collision. This happens because most people overlook the option for rental reimbursement while determining the details of their policy, which only costs a small amount.