You just landed and are standing at the rental car counter. The agent looks at you and asks that age-old question: “Would you like to purchase the rental car insurance?”
Beads of sweat start forming at your brow. You knew this question was coming, but you’re unprepared. You’re wondering, Is it worth it? Should I pay more? Or am I just throwing my money away? Does my personal auto policy protect me? Can I phone a friend?
We’ve all been there. But don’t worry. We’ve got your back. We’ll break down the mystery surrounding rental car insurance and whether you actually need it. So next time you’re at that counter, you’ll be prepared to answer confidently!
Does Your Car Insurance Cover Rental Cars?
In general, your individual auto policy will cover your rental car. So most people don’t need to buy rental insurance.
But it’s still a good idea to understand your personal car insurance policy before paying for your rental car. A lot of policies extend coverage to rental cars, so your rental may be covered.
Let an independent auto insurance agent find you the best deal. We get you quotes from all the providers. Get the right coverage at the right price!
Don’t assume though. Check your coverage policy. If your policy doesn’t extend collision or comprehensive coverage to your rental, you may have to pay out of pocket if you get into an accident. And no one wants that.
If you’re on business, check if your company has rental car insurance. If so, no need to buy rental insurance because you’re already covered. If your company doesn’t cover it, you might need the rental car insurance. This is because individual policies typically won’t cover you if you’re renting a vehicle for business purposes.
Rental Car Insurance vs. Your Own Policy
Here’s a helpful comparison of what’s usually offered by the rental car company versus what your policy would cover.
Accidents and Theft
Rental car company: The collision damage waiver (also called loss-damage waiver) covers theft or damage to the rental vehicle in a collision. It’s not really insurance though. It’s a waiver that says the rental car company won’t hold you responsible for all the damage. But keep in mind that it won’t cover you due to negligence (like speeding). And the rental company could still charge you for other things like towing expenses or “loss of use”—the money they lost while not being able to rent it.
Your policy: If you have comprehensive or collision coverage on your personal auto policy, you don’t need the collision damage waiver.
Rental car company: Supplemental liability coverage will cover you if you end up damaging other people’s vehicles or property. Liability limits for rental cars is usually between $300,000 to $1 million.
Your policy: If you have adequate liability coverage, this extra protection isn’t necessary. Skip it.
Personal Accident Insurance
Rental car company: Personal accident insurance takes care of medical bills for you and your passengers if you’re injured while driving the rental. It even includes death benefits for worst-case scenarios.
Your policy: Your personal health insurance or personal injury protection on your auto policy probably provides enough coverage. So you probably won’t need personal accident insurance. As far as death benefits, you’re better off buying term life insurance to protect your income and your family.
Personal Effects Coverage
Rental car company: This type of coverage will pay for any of your personal property (up to a certain amount) that is stolen from the vehicle.
What Does Rental Car Insurance Cost?
The cost of rental insurance varies depending on your state, who you buy it from and how much coverage you want.
Typically, full coverage insurance costs $30 to $60 per day. If you choose to shop a la carte, here’s about how much each will cost:
- Collision/Loss Damage Waiver - $20 per day
- Liability Insurance - $15 per day (for $1 million in coverage)
- Personal Accident Insurance - $5 per day
- Personal Effects Coverage - $2 per day
You can also purchase rental car insurance through third parties if you don’t want to buy at the counter. Some people do this since the rental car insurance is often overpriced (that’s why they’re pressuring you to buy it!). But for most people, it’s usually better to just use your individual auto insurance policy.
When Do You Need Rental Car Insurance?
If you’re still wondering, Should I get rental car insurance?—let’s sum it all up. You’ll need it in these situations:
- Your personal insurance policy doesn’t cover rentals.
- You don’t own a car and don’t have auto insurance.
- You rent cars more than the average person.
- You’re worried about paying a high deductible.
- You’re traveling for business and your company doesn’t cover you.
If you rent often but don’t carry your own policy, you might want to also consider nonowner car insurance. It covers bodily injury and property damage if you’re in an accident when you’re driving a car you don’t own. It’s also less expensive than standard insurance, which is good for your budget.
If you decide not to purchase the rental company’s extra coverage, be aware of a few things:
- If the rental car is damaged or stolen and you have to file a claim, it will affect your premium the same as if the incident involved your own car.
- The rental company may charge a deposit on your debit card and then refund the money when you return the car in good condition.
- Your personal auto coverage does not cover vehicles like moving trucks. In that case, you’ll need to purchase insurance from the truck rental company.
Certain credit cards also offer some protection against rental car incidents, but they shouldn’t be your go-to solution. This is because credit cards come with so many downsides they’re simply not worth using—even if they do give you some limited rental car insurance. Also, credit card protection is secondary, so it will only kick in after your personal policy pays out.
If you’re traveling internationally, should you get the extra car rental insurance?
Renting a car outside the U.S. brings its own challenges. Fewer insurance companies cover customers who rent cars internationally. So always contact your company to see if your rental is covered.
Some people like to buy the extra coverage when traveling abroad because of the increased risk of accidents due to different driving conditions and traffic laws. The additional coverage will also help you avoid the hassle of filing a claim in a foreign country.
Rental Car Insurance: To Buy or Not to Buy?
The bottom line when it comes to rental car insurance is to make sure you don’t pay for something you don’t need. But it’s also not worth taking unnecessary risks to save a buck.
If you rent cars often, you might want to update your personal policy to get more coverage while you rent. And even if you don’t rent often, it’s still good to review your personal policy once a year.
If you have a solid auto insurance policy in place, next time you’re at the rental agency counter you can simply smile and say, “No thank you.”
If you need to update your auto insurance policy, or want to make sure you have enough coverage, we recommend using an independent insurance agent who is part of our Endorsed Local Providers (ELPs) program. They are RamseyTrusted and will listen to your specific situation to get you coverage that suits your needs and your budget.
Connect with an ELP near you and start saving today!