When you rent a car, it can be hard to know if you need rental insurance
coverage. For some drivers it's a necessity, and for others it's a redundant
expense. After battling security checks, turbulence and baggage claim, weary
travelers often face puzzling choices at the car rental counter. Should you buy
the rental car insurance offered by the rental car company, or is it enough to
depend on your own insurance coverage or the credit card for coverage? Just
understand that the credit card does not provide liability insurance and doesn't
cover you for damage, injury or death that you cause to your own vehicle or to
someone else’s vehicle!
Most credit cards offer some kind of free coverage for damage or loss to a
rental car resulting from an accident or theft as long as you charge the rental
to that card. Keep in mind that if you have solid car, health, and
homeowners/renters coverage, you can probably decline the extra protection and save a fair amount of cash. But if you're less than optimally insured, you may want to add rental car insurance.
Know your current coverage’s
Check your car insurance policy or call your insurance company or agent to find out which coverage’s extend to your rental car. The limits and deductibles on your policy still apply to your rental car so long as you drive it for personal use. If it's a commercial or business rental, your personal car insurance coverage may not apply.
If you'll be paying for the rental with a credit card, check with your credit card company to see what additional rental car coverage is provided.
Call the number on the back of the card you use to pay for the rental before
buying extra protection.
Know your at-the-counter options
•Loss-damage waiver (aka collision damage waiver)
Typically waives financial responsibility if the rental car's
damaged or stolen; also covers loss-of-use charges while the rental's in the
shop, towing charges, and related fees
• Costs roughly $9–$19 a day
• This state-required coverage protects you from potential lawsuits
• Costs around $7–$14 a day
•Personal accident insurance
• Covers medical costs after an accident
• Costs $1–$5 a day
•Personal effects coverage
• Insures what you keep in the rental car
• Costs $1–4 a day
The tempting add-on
Of the 4 rental car insurance coverage’s listed above, the loss-damage waiver offers the most protection. But if you have comprehensive and collision coverage on your car insurance policy, the value of your rental car is covered even in the event of a total loss. You'll only be responsible for the deductible, plus any added fees from the rental company.
Check with your insurer on whether rental car insurance is a good idea before you make a decision, and ask about potential administrative and loss-of-use fees levied by the rental company. Your comprehensive and collision coverage may be all you need.
Depending on your policies …
If you have reliable car insurance, renters/home insurance, and health insurance, you can save a good chunk of change by declining the other 3
coverage’s. Here's why:
•When you buy car insurance, you're required to buy a state-mandated amount of liability coverage (except in New Hampshire, where it's optional), meaning you likely won't need to add it at the counter.
•If you have health insurance, consider declining personal accident
insurance if your health plan covers accident-related injuries. If you have
personal injury protection and/or medical payments coverage on your car
insurance policy, it would also offer the same protection if an accident
•And finally, if you have renters or homeowners insurance with
off-premises coverage, your things are already insured before you stash them in
the rental car. So consider declining personal effects coverage as well.
Declining these 3 coverage’s can save between $126 and $294 on a
When rental car insurance coverage is a good idea if:
- You're not currently insured, you'll need to at least buy liability coverage
from the rental company before you hit the road. Otherwise, rental insurance isn't legally required — which is not to say it can't help. If any of the following scenarios apply, the extra protection provided by rental insurance is worth considering:
•Your current policy doesn't have comprehensive and
•You're only insured under a commercial car insurance policy
•You don't want to risk paying a high deductible,and if you're driving abroad (apart from Canada), your current car insurance probably won't
cover you. Check your policy's declarations to find out.
The truth about rental car insurance coverage
Adding the extra coverage’s can be a waste of money if your car insurance policy already provides the coverage you need. Take a few minutes to find out if your existing car insurance, your credit card company, your health plan, and/or your renters or homeowners insurance have you covered.
You could save a pretty penny and leave the rental counter knowing
you made the right decision.