Car Insurance Myths: Do I Need Rental Car Insurance?

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.

first things first: does my car insurance cover rental cars?

The limits and deductibles on your regular car insurance policy typically 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.

However, be sure to check your car insurance policy or call your insurance company to find out which coverages extend to your rental car.

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

There are generally 4 coverage options available when you rent a car.

• 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

• Liability coverage
  • 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

Basic car insurance typically covers you in the event you cause injury or property damage while driving a rental. Likewise, comprehensive and collision coverage guard against damage to the rental car itself. But if you don’t have those 2 optional protections, consider the loss-of-use waiver, which, of the 4 rental car insurance add-ons above, offers the most protection.

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 auto insurance, renters/home insurance, and health insurance, you can save a good chunk of change by declining the other 3 coverages. Here’s why:

• When you buy auto 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 occurs.
• 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.

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 collision coverage
• 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 coverages can be a waste of money if your auto insurance policy already provides the coverage you need. Take a few minutes to find out if your existing auto 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.

Related links

Rental car reimbursement coverage
This coverage is optional wherever Esurance is available.

International car insurance
Whether it’s a weekend trip or an extended stay, Esurance can help you find Mexico car insurance options that are right for you.