Do I Need Rental Car Insurance? 

You finished all your paperwork and are ready to walk away with the keys when an agent asks, “Would you like to purchase rental car insurance?” The question might throw you for a loop, but a rental, just like any other car, needs to be insured.

Rental agencies offer insurance to protect their fleets in case of accident, theft, or damage. However, your existing car insurance could adequately protect your rental car. You may also be covered by your credit card company if you used a card to pay for the rental.

Here we’ll go over what rental car insurance covers and how it works, so you’ll have an informed answer next time an agency offers you its waiver.

What Does Rental Car Insurance Cover? 

Before you add rental car insurance to your fees, find out what that company’s rental car insurance covers. It could fill gaps in your personal auto policy, particularly if you’re in another state with different insurance regulations. Below are a few common clauses you can expect to see in a rental car insurance policy.

  • Liability coverage protects you in case you injure someone else or damage their property while driving your rental car. Buying this coverage is a must if you don’t already have it. Your personal auto insurance might include sufficient liability coverage, but if you purchased a cheaper policy with lower limits, you might want to supplement it with rental insurance.

  • Collision/loss damage waiver “waives” renters of responsibility if the car is damaged or stolen. It could also protect you from being charged for “loss of use.” This is when the rental car company charges you for the time the damaged car can’t be driven. You may already be covered for damage if you carry comprehensive and collision auto insurance.

  • Personal effects coverage protects you in case of theft from your rental car. This can be important, as cars parked at tourist sites can become targets for thieves.

  • Personal accident coverage protects both you and your passengers if you get in an accident and require medical assistance and/or an ambulance. Consider adding this coverage if you carry a high-deductible medical plan, or the medical coverage provided by your car insurance is low.

  • Roadside assistance/towing is often included for free with rental car insurance. It’s also included for rental cars if you have an AAA membership. Personal auto insurance may or may not include roadside assistance/towing, depending on the policy and company. 

Rental Car Coverage Through Your Personal Insurance or Credit Card  

Many “savvy” travelers skip the rental company’s insurance waiver, assuming their rental car is already covered. In many scenarios, this is true. Most auto insurance policies extend coverage to rental vehicles, and credit card coverage can supplement your personal insurance. 

Typically, you can expect to be covered up to your policy limits if you cause an accident. Your liability coverage will pay for another driver’s injuries or damages, collision coverage will pay for damages to the rental car, and comprehensive insurance covers theft or vandalism of the rental. 

Credit cards offer secondary coverage on rental cars, stepping in to fill the gaps after you’ve filed a claim with your auto insurer. They’ll help pay towing fees, your auto insurance deductible, and some rental car agency fees. The best credit cards offer this perk automatically.

When to Buy Party Rental Car Insurance From the Agency 

If you don’t own a car (and therefore don’t have personal auto insurance), you’ll likely need to purchase coverage through your rental agency or a third party insurance company. If you do have personal insurance, but carry lower liability limits, you might consider supplementing that policy to make sure you’re fully protected in case of an accident. Many auto insurance companies won’t cover you at all if you’re driving abroad or using the car for business purposes.

While credit cards usually cover theft protection and collision damage, they don’t always cover personal injury or personal liability. Your credit card company might also restrict the types of vehicles covered. Forbes reports that many credit cards don’t protect rentals of luxury cars, motorhomes, trucks, or motorcycles. 

And if you plan on renting a car in a foreign country, your personal insurance or credit card coverage might not apply. Before boarding your flight or hitting the road, contact your credit card company to get the details about its rental car coverage. If you rent cars abroad frequently, consider that when selecting an auto insurance policy.

Rental Car Insurance for International Travel 

Your personal auto insurance or credit card insurance might not apply if you’re traveling abroad. When preparing for an international trip, call your auto insurance company and credit card to find out if your rental car is still covered. If you bought international travel insurance, it could include your rental car.

It’s always a good idea to check this before standing at a rental car counter in a foreign country. If the decision to rent a car was impulsive, you might be better off buying the international rental company’s rental car insurance just to be safe.

How Much Does Rental Car Insurance Cost? 

The average cost of rental car insurance is about $10 to $40 per day, depending on the coverage you select.  Rates also vary if you buy through the rental company or from a third party such as Allianz or Traveler’s, both of which offer insurance for rental cars.  

You could have the option to purchase one clause, such as a comprehensive damage waiver, and forego the rest. The typical costs per clause is around $8 to $12 per day for supplemental liability coverage, $20 to $30 per day for a loss damage waiver, $3 per day for personal accident insurance, and $2 per day to cover your personal effects. If you’re at an airport counter, they often charge more for rental car insurance.

What’s Next?