You’re standing at the rental car counter at the airport when the agent looks at you and asks that age-old question: “Would you like the rental car insurance?”
Sweat starts forming at your brow. Is rental car insurance worth it? Am I just throwing money away? Does my regular car insurance cover me? Can I phone a friend?
We’ve all been there. But don’t worry. We’ll break down whether you actually need rental car insurance, so next time you’re at that counter, you don’t have to sweat over your answer!
What Is Rental Car Insurance?
Rental car insurance is an add-on you can get when you rent a car. It gives you extra coverage if you were to get in an accident while driving a rental.
Here’s a breakdown of what rental car insurance usually covers.
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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. It won’t cover you if the accident was caused by your carelessness (like speeding). And the rental company could still charge you for other things, like towing expenses or loss of use—the money they lost because they couldn’t rent out the car.
Supplemental liability coverage covers you if you damage other people’s vehicles or property. (Liability limits for rental cars are usually between $300,000 to $1 million.)
Personal accident insurance covers medical bills for you and your passengers if you’re injured while driving the rental. It even includes death benefits for worst-case scenarios.
Personal effects coverage will pay for any of your personal property (up to a certain amount) that’s stolen from the vehicle. It’s the same kind of coverage you get from your renters or homeowners coverage, so you probably don’t even need this protection.
Does My Car Insurance Cover Rental Cars?
In general, yes, your auto insurance will cover your rental car the same way it covers your own car. So you probably don’t need rental car insurance.
For instance, if you have comprehensive or collision coverage, you won’t need the collision damage waiver. And if you have the right amount of liability coverage, you don’t need rental car liability either. Skip it.
Also, you probably won’t need personal accident insurance. Your health insurance or the personal injury protection on your auto policy probably provides enough coverage. As far as death benefits, you’re better off buying term life insurance.
It’s still a good idea, though, to understand your personal car insurance policy before paying for your rental car. Don’t assume you’re covered. Check your coverage policy.
When Do I Need Rental Car Insurance?
Are you still wondering, Is it necessary to buy 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 cars a lot but don’t carry your own auto insurance policy, you might consider non-owner 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 to use your own insurance instead of buying 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 doesn’t cover vehicles like moving trucks. In that case, you should buy insurance from the truck rental company.
One last thing: Certain credit cards also offer some protection against rental car incidents, but they shouldn’t be your go-to solution. Credit cards come with so many downsides they’re simply not worth using—ever! Also, credit card protection is secondary, so it’ll only kick in after your personal policy pays out.
Do I Need Rental Car Insurance for International Travel?
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 contact your insurer 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.
How Much Does Rental Car Insurance Cost?
The cost of rental insurance varies, but 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 a third party (like Bonzah or Insure My Rental Car) if you don’t want to buy at the counter. It’s cheaper than buying the often-overpriced rental car insurance (that’s why the rental car folks are pressuring you to buy it!). But for most people, it’s usually better to just use your own auto insurance policy.
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 when you travel—or at least once a year.
As long as you have a solid auto insurance policy, 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 working with an independent insurance agent who’s part of our Endorsed Local Providers (ELP) program. They’re 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!