Rental Car Insurance: Is It Worth The Extra Cost?

When renting a car, you may be pressured into buying the rental company's insurance. However, in most cases, your personal auto insurance policy will cover rental cars, so you won't need to pay for duplicate coverage. There are exceptions, though, and it's important to review your personal auto coverages. If you don't have a personal auto policy, you will need to purchase liability coverage through the rental car company.

Rental car insurance typically includes a loss/collision damage waiver, liability coverage, personal accident insurance, and personal effects coverage. These cover damage to the rental vehicle, damage or injuries you cause to others, injuries to you and your passengers, and your personal items if they're stolen from the rental car, respectively.

Credit cards often provide rental car insurance if you used the card to pay for the rental, and travel insurance policies can also be extended to include rental cars.

When is rental car insurance necessary?

Rental car insurance is typically unnecessary if you already have a personal auto insurance policy, as there is often significant overlap between the two. However, there are certain situations in which purchasing rental car insurance may be beneficial or even essential.

Firstly, if you don't have a personal auto insurance policy, you will need to purchase liability coverage, either through the rental car company or a third-party insurer.

Secondly, if you have high deductibles on your auto policy, rental car insurance can be useful as it often carries no or low deductibles, potentially saving you money in the event of a claim.

Thirdly, if you want to avoid making a claim on your auto policy and risking a rate increase, rental car insurance allows you to file a claim with the rental car company instead.

Fourthly, if you don't carry comprehensive or collision coverage on your personal auto policy, adding a loss-damage waiver from the rental company can protect you against physical damage to your rental car.

Fifthly, if you carry a low liability coverage limit, purchasing additional coverage from the rental company will offer greater protection in the event of an at-fault accident.

Lastly, if you're travelling abroad to a country where your personal auto policy doesn't provide coverage, purchasing rental car insurance is recommended.

In summary, while rental car insurance is generally unnecessary for those with comprehensive personal auto insurance, there are several scenarios in which it can provide valuable additional protection.

When is your personal auto insurance enough?

Your personal auto insurance will usually be enough when renting a car, as long as you have sufficient coverage. It's important to review your personal auto coverages before renting a car to ensure you have adequate protection. Here are some scenarios where your personal auto insurance may be enough:

• Comprehensive and Collision Coverage: If you carry comprehensive and collision coverage on your auto policy, it typically extends to rental cars. This means you're protected against physical damage to the rental vehicle, such as theft, vandalism, or accidents. However, you will still be responsible for your deductible, and filing a claim may lead to a higher premium.
• Liability Coverage: Your personal auto policy's liability coverage usually applies when driving a rental car. It covers damages or injuries you cause to others while driving the rental vehicle. However, if you only have the state minimum liability limit, consider purchasing additional coverage for greater protection.
• Personal Injury Protection: If you have personal injury protection or medical payments coverage through your auto policy, you may not need additional personal accident insurance when renting a car. This coverage typically includes medical costs for you and your passengers in the event of an accident.
• Credit Card Coverage: Some credit cards offer rental car insurance if you use the card to pay for the rental. This can be a useful option, especially when travelling abroad, but it's important to contact your credit card company to understand the specific coverage and restrictions.
• Homeowners or Renters Insurance: If you have a homeowners or renters insurance policy, it generally covers your personal belongings even when travelling. So, in the event of theft from a rental car, your belongings may already be covered under your existing policy.

However, it's important to note that there are situations where adding rental car insurance could be beneficial. For example, if you have high deductibles on your auto policy, want to avoid claims on your auto policy, or are travelling to a country where your personal auto policy doesn't provide coverage.

When is rental car insurance a waste of money?

Rental car insurance is a waste of money when you're already covered by your credit card or auto insurance. Before opting for coverage when renting, it's essential to check whether you're already covered. Rental car insurance provides essential protection, but it's not necessary if you already have insurance that covers losses incurred while driving a rental car.

In most cases, your auto insurance policy will provide equivalent coverage for a rental car, as long as you're using it for personal purposes. For instance, if you have comprehensive and collision insurance, your rental car will likely be covered if it's damaged, stolen, or totaled, as long as the rental is of similar value to your vehicle. Your deductible will still apply if you file a claim with your insurer.

Additionally, your credit card may provide rental car insurance if you used it to pay for the rental and the rental is in your name. This coverage is usually secondary, meaning your auto insurance policy will pay out first if it's available.

Rental car insurance is also unnecessary if you've purchased standalone coverage through a separate company. Some companies sell standalone policies for rental cars, which can be a good option if you don't want to buy insurance from the rental company.

Therefore, before renting a car, it's crucial to review your existing coverage to avoid wasting money on redundant insurance.

What are the different types of rental car insurance?

There are four main types of rental car insurance:

Liability Coverage

If you cause an accident while driving a rental car, this insurance covers other drivers' property damage and injuries. If you have personal liability insurance, your own policy will provide this coverage as long as the trip is not for business purposes.

Loss Damage Waiver (LDW) or Collision Damage Waiver (CDW)

This option waives your responsibility to pay for a total loss, accident damage, environmental damage, theft and vandalism. If you already have comprehensive and collision insurance, you probably don't need this. However, an LDW or CDW will not require you to pay a deductible, which is another thing to consider.

Personal Accident Insurance

This type of insurance covers medical expenses for you and your passengers, regardless of who is at fault for an accident. If you already have medical payments (MedPay) or personal injury protection (PIP) on your standard vehicle insurance, you don't need personal accident insurance.

Personal Effects Coverage

This insurance covers your personal belongings, such as electronics, luggage and clothing, if they are stolen from a rental car. If you have a homeowners or renters insurance policy, it will typically cover personal items stolen from a rental car as well.

Other types of rental car insurance include credit card rental car insurance and travel insurance plans. Premium credit cards often include primary rental car coverage, while standard cards usually offer secondary coverage. Travel insurance programs can also cover collision and loss of use at a cheaper price than rental car companies.

How much does rental car insurance cost?

The cost of rental car insurance varies depending on the company and the type of coverage you choose. On average, it can range from $40 to $94 per day. Some companies may offer a flat fee for certain types of coverage, such as a collision damage waiver, which can range from $8 to $30 per day. It's important to note that the cost of rental car insurance can also depend on the type of vehicle you rent and other factors.

When considering the cost of rental car insurance, it's worth mentioning that you may already have coverage through your personal auto insurance policy or credit card. In most cases, your personal auto insurance will provide similar coverage for a rental car, as long as you use it for personal purposes. However, it's always a good idea to review your policy and confirm the details with your insurance provider before renting a car.

If you don't have personal auto insurance or prefer to have additional coverage, you can purchase rental car insurance directly from the rental car company or through a third-party insurer. The cost of third-party rental car insurance is often much lower than purchasing it directly from the rental car company. For example, a quote from Allianz for a day trip was $55, which is approximately $11 per day.

Additionally, credit cards sometimes provide rental car insurance if you use the card to pay for the rental. This coverage is typically secondary, meaning it fills in any gaps in your primary auto insurance policy. It's important to review the terms and conditions of your credit card to understand the specific coverage offered.

In summary, the cost of rental car insurance can vary depending on the company, the type of coverage, and the vehicle you choose. It's important to review your existing coverage and weigh your options before making a decision.

Frequently asked questions