Do I Need Rental Car Insurance?

If you already have insurance for your own car, you might not need extra insurance for a rental car. 

But if you don’t have car insurance, the rental company usually provides basic coverage that meets your state’s minimum legal requirements. 

However, there could be times when you might think about getting rental car insurance. This might be necessary if you want more coverage or if you’re going to travel to a different country or for work. 

In these cases, having rental car insurance can make you feel safer and less worried about possible accidents. 

After all, it’s good to be careful, and having rental car insurance might give you that extra peace of mind.

Is my car insurance valid for rental cars?

The answer is yes. Your car insurance can also be used for a rental car, but only if you use it for a personal trip. 

The same rules of your policy, like the maximum amount it can pay and your share of the cost (deductible), will be used. 

However, if you’re using the rental for business, your own car insurance may not pay for any damages or injuries unless you’ve got business-related coverage. 

But your workplace might have a special insurance policy that covers cars for business use.

What about insurance for rental cars?

Suppose you’ve got insurance covering any harm you cause to others (liability) and damage to your car (comprehensive) for your personal car. 

In that case, this protection will likely be there when you’re driving a rental car, but only within the United States. 

So, if you’re renting a car in the US, your own car insurance policy is likely enough.

But other types of rental car insurance are also available if you need them. We’ll talk more about these in the following parts.

See Also: Does Car Insurance Cover Repairs?

Rental Car Insurance Types 

Rental car insurance comes in four main forms that your rental agency might offer: a loss damage waiver (LDW), liability coverage, personal accident insurance, and personal effects coverage. 

Check your rental agreement to see exactly what’s covered.

Rental Car Loss-Damage Waiver Insurance 

This waives your responsibility to pay for loss, accident damage, environmental damage, theft, and vandalism. It’s similar to a collision damage waiver (CDW) but without theft protection. 

If you have comprehensive collision insurance already, you probably don’t need this. Yet, it could save you from paying a deductible.

If your car is damaged and needs repairs, the rental firm can charge you for every day the car is unavailable. The loss damage waiver protects you from these fees, like full coverage insurance. But not all policies do, so it’s good to check yours before renting a car.

Liability Insurance for Rental Cars 

Car rental firms sell liability insurance too. This covers damages and injuries to other drivers if you cause an accident. If you have personal liability insurance, it covers this unless it’s a business trip. 

But if you’re driving around fancy cars, basic coverage might not be enough, and you might need to increase your policy limits. If you often travel but don’t own a car, you can also get non-owners car insurance for all driving situations.

Personal Accident Rental Car Insurance 

This pays medical bills for you and your passengers, no matter who’s at fault. It’s like the MedPay and PIP that you’d get on your standard car. If you have these insurance products already, you don’t need personal accident insurance. 

Your health insurance can cover medical costs after you pay your health deductible. Personal accident insurance doesn’t require a deductible.

Rental Car Personal Effects Coverage 

This extra option covers personal items like electronics, luggage, and clothing. A homeowners or renters insurance policy will also cover items stolen from a rental car.

Other Rental Car Insurance Types 

Besides rental company options, your credit card company or travel insurance plan might cover you.

Credit Card Rental Car Insurance 

High-end credit cards often cover rental cars fully. Unfortunately, this means your own insurance company won’t find out about the claim (and won’t increase your rates). 

But regular cards often give secondary coverage, which needs you to claim with your own insurance first. For either, you need to book the rental with the card to qualify for coverage.

Car Rental Travel Insurance 

Travel insurance plans cover collision and loss of use at a lower cost than the rental company.

International Car Rental Insurance 

If you’re going to Mexico or Canada, your personal insurance might not cover rental cars there. So it’s good to talk to your agent before you go. 

As a rule, regular US car insurance companies don’t cover rentals abroad, so you might need to buy rental car insurance in such cases.

How Much Does Rental Car Insurance Cost? 

The cost of rental car insurance can change based on the type of car and where you’re renting it. Simply put, it can be quite pricey. You could expect to pay somewhere between $31 and $60 each day for rental insurance from these providers.

Is It Worth Getting Rental Car Insurance? 

In many situations, you might find it cheaper to raise your own insurance limits for a whole year rather than getting rental car insurance for a two-week holiday.

To give you an idea, even if you have a complete coverage policy with high limits, you’re likely paying much less than $60 a day for your personal car insurance.

Rental car insurance can add to your costs — it could even double your rental expenses if you go for a full coverage package. Also, you don’t technically need to buy insurance as rental cars are already covered for the bare minimum required in their state. Yet, there could still be situations where it’s worth getting.

No state makes it a requirement to have any amount of collision or comprehensive insurance, which would cover repair costs for your own vehicle. 

So, if you only have minimum coverage in your state, getting rental car insurance could be a good idea. 

This is even more so because you’ll probably be driving a car you’re not familiar with in a place you’re not familiar with.

Do I Need Rental Car Insurance?

It depends on whether you want the reassurance that you’ll be covered in a worst-case scenario. If you want that coverage and don’t already have complete insurance, you might want to choose the rental agency’s collision damage or loss damage waiver.

One study in the Journal of Advanced Transportation found that people are more likely to drive poorly or aggressively or not pay attention as much when driving rental cars than their own cars. You might be a great driver usually, but driving can be stressful in a new situation.

Closing Note:

While rental car insurance may seem expensive and sometimes unnecessary, it can offer considerable peace of mind, particularly in unfamiliar driving situations. 

The cost can vary significantly based on various factors, such as the type of car and the location. It’s optional, especially if you already have comprehensive insurance, but its value becomes evident in worst-case scenarios. 

Before making a decision, you should weigh the potential expenses and risks, keeping in mind your existing coverage and the nature of your travel. The ultimate goal is to ensure a stress-free driving experience, even when you’re away from home.

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