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Do I Need Rental Car Insurance?

Every time you rent a car, the rental agent tries to sell you extra “insurance” for the vehicle. But, you already have car insurance, so do you really need any more just because you’re renting a car? Well, the real answer is…maybe.

Your liability insurance for your personal car should extend to your rental car as long as your policy is valid. So, you should have as much protection from lawsuit in your rental car as you do your own. Just how much physical damage coverage you have on the rental car is a trickier question. Most reputable insurance companies will extend your comprehensive and collision coverage on your personal auto policy to the rental car. So, if you have “full coverage” on your personal policy, you should have it on the rental. However, some cheaper insurance companies lower the cost of their policies by omitting features like covering your rental car. If you currently only carry liability on your personal car, then you would probably pay for any damage to the rental car from your own pocket.

The rental car companies offer two types of coverage for the rental car. The first is supplemental liability insurance. This covers injury or property damage that you cause to someone else while operating a rental car. If you have no liability insurance, or your insurance is from another country, this coverage is a must. If your insurance is tied to your company car, this coverage can prevent an accident causing a problem at your job. The second option for your rental car is not actually insurance, but rather a “damage waiver” that says you are not responsible for damage to rental car while it is in your care. If damage does occur to the vehicle, it is usually just a matter of filling out a form and dropping off the keys, and you are off the hook. No insurance claim is made, so your rates won’t be going up for the next three to five years. That’s nice benefit.

So, if you don’t have your own personal auto insurance, you need both coverages when renting a car. Even if you have insurance, these options may prevent a long-term increase in your insurance rates if you have an accident in a rental. Like any other buying decision, you have to weigh the costs and the benefits, and decide what is right for you.