If you have ever traveled and needed a rental car, you probably experienced the fear-driven sales pitch at the rental car counter. It may seem like you need rental insurance if something happens to your rental, but if you have auto insurance already, that coverage also applies to your rental car, subject to your policy terms and conditions. The amount of coverage you will have in your rental will depend on the amount of coverage on your current car insurance policy. If you plan to rent a car, make sure you double-check your own car insurance policy first.
Once you have a clear understanding of your current auto policy, you can decide what type of rental car insurance coverage you may need.
Types of rental car coverage
Liability coverage: This coverage will kick in if you damage another’s car or property while in your rental vehicle. If you have sufficient liability car insurance, you are already covered (after your deductible).
Loss damage waiver: Sometimes called a collision damage waiver, this type of coverage will cover you in the event there is any damage to the rental vehicle or theft. If you have comprehensive and collision on your current auto insurance policy, you will be covered for this type of damage or theft (after your deductible).
Personal effects coverage: This coverage pays for your belongings if they are stolen form the rental car (up to a set amount). If you have homeowners or renter’s insurance, you are protected. If you do not have either of these coverages and are driving around with valuables, this coverage may help depending on the type of policy you purchased.
Personal injury protection: If you are involved in an accident, this coverage will cover you in the event you or your passengers were injured in an accident (including ambulance, medical care, and death benefits). If you have health insurance and a life insurance policy, you don’t need to tack this coverage on. You are also covered if you already have personal injury protection on your auto policy.
Why would you need rental car insurance?
Though your own car insurance policy will protect you while driving in your rental, there are still cases where purchasing car rental insurance is a smart move.
- You have a high deductible: If you opt in to the rental car insurance, you can choose a lower (potentially no) deductible, which can help you save if you are in an accident.
You don’t want to file a claim through your car insurance company: If you want to avoid a potential increase in your rates, filing against the rental car insurance rather than your own can help you potentially save.
- You don’t have certain coverages: If you do not currently have certain coverages on your auto policy, such as medical payments coverage, you can add through the rental car insurance to make sure you are protected.
- You want to temporarily increase your coverage: If you are uncomfortable with driving an unfamiliar car in a potentially unfamiliar place, temporarily increasing your coverage can bring peace of mind.
If you are renting a car with a major credit card, keep in mind you may be able to take advantage of free insurance coverages. The coverage is likely limited and may vary from card to card, but it’s still worth knowing what you may be eligible for.
If you are still not sure what type of rental car insurance you may need, if any, reach out to your car insurance provider as they may be able to assist you. For tips on car rentals, read our blog posts on 15 Tips For Saving Money On Your Next Car Rental and The 10 Most Common Rental Car Insurance Pitfalls.