Do I Need Rental Car Insurance Coverage?

June 28, 2017

Driving a Rental Car on VacationHow do you know when you need to purchase rental car insurance? If you have ever rented a vehicle, odds are you have been asked by the person behind the counter whether you would like their company’s rental car insurance. After hearing the salesperson’s explanation, it may sound like a good idea to purchase their supplemental rental car insurance. However, you may be paying for something you don’t need.

Is Rental Car Coverage Really Necessary?

It can be hard to tell if you really need rental car coverage. While you’re standing at the counter of the rental car company, you’re ready to get driving, while they’re trying to sell you every seemingly scammy add-on possible. Plus, the high-pressure situation of someone waiting on you might encourage you to spend less time considering your options. But don’t worry, we’ll help you get to the bottom of rental car insurance.

What Does Rental Car Insurance Cover?

Typically, rental car insurance offers the same or similar protection as your regular car insurance. It usually covers damages to the car and, in some cases, injury to the passengers. However, to what extent depends on the individual policy. Take your time to read the rental company’s policy for details about their coverage. Then, consider how it compares to your existing car insurance coverage.

Available Rental Car Coverage Options

There are multiple ways that you can be covered if something should happen to your rental car. Your options include:

  • Your regular auto insurance coverage
  • Credit card supplied rental car coverage
  • Loss damage waiver 

Loss Damage Waiver or Collision Damage Waiver

The loss damage waiver, or collision damage waiver, is provided by the car rental company and frees the driver (you) from responsibility pertaining to damage to the vehicle. It is an agreement stating that the rental agency agrees not to hold you fiscally responsible for damages to the rental vehicle for a specified fee. The waiver does not provide coverage for liability or personal injury. For these protections, you must rely on your own insurance policy. If you do not have car insurance, then you’ll likely want to purchase rental car coverage or temporary car insurance.

If your current car insurance policy covers rental cars, then this will be your primary insurance and all additional insurance will be excess or supplemental insurance. For many people, this will be enough. However, drivers with low coverage levels and people renting expensive vehicles may want to consider purchasing additional insurance to protect against damages to your rental vehicle that could exceed the limits of what your current auto insurance policy covers.

Making a Choice on Rental Car Insurance Coverage

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In many cases, the insurance offered by the rental company will be duplicate coverage when combined with your existing auto insurance. This is especially true if you have high coverage limits, or additional types of coverage beyond comprehensive, collision and liability. If your regular car insurance coverage is the minimum coverage, then it might be a good idea to look over the rental company’s policy and see if it offers better coverage.

Another consideration is that if you make a claim on the rental company’s policy it won’t raise your personal car insurance premium. You should also check to see if the credit card you are using to pay with includes rental car protection.

Credit Card Rental Car Coverage

If you have existing car insurance, any other form of insurance will be supplemental or excess insurance, as we mentioned above. If you choose to use your credit card for rental car coverage, be sure to check the coverages that are included. These details can typically be found on your credit card company’s website. Your credit card company may not cover all damage to your rental vehicle. For more information, check the terms of your credit agreement. Credit cards do not typically cover liability or personal injury protection.

So Do I Really Need Rental Car Insurance?

It depends. We recommend consulting your current car insurance policy and credit card coverage to see what you already have. It may not be worth the additional protection for some. However, if you want to avoid making a claim on your own insurance, then the rental company’s coverage may be a valid solution for you.

If you aren’t sure whether you are adequately covered to drive a rental car, contact your insurance company. Ask them to review your policy and determine whether or not you’ll need the extra coverage.

Auto Insurance A to Z

Our Auto Insurance A-Z Guide helps explain things, unpacking these concepts into language you and I can understand.

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