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Rental Car Insurance: To Buy or Not to Buy

If you’re confused about whether you should purchase additional insurance on a rental car, you’re not alone.  Getting a good answer requires you understand what the rental company is offering, what your current auto policy covers, and what coverage you really want or need.  

Types of Rental Car Insurance

Before you can determine whether you should buy additional insurance, you need to know what they’re offering.  The most commonly available coverages are liability, personal effects coverage, personal accident, and collision (or loss) damage waiver, which is not exactly insurance but can help protect you from out-of-pocket expenses. 

  • Liability insurance helps to cover the expenses relating to damage to another person’s personal property or the cost of providing medical services to another person who you injure in an accident. 
  • Personal effects coverage may provide money to help pay for personal items which someone may steal from your rental car. 
  • Personal accident insurance covers the medical bills for someone inside your car who could get hurt during an accident. 
  • Collision/loss damage waivers are perhaps the most confusing option. These waivers will prevent the rental car company from charging you for repair costs or loss of revenue caused by a lengthy repair.

Given the above, are any of the coverages worth paying for?  Before you can decide you'll need to know what your existing auto policy covers.  You may already be covered for most of the same situations as a car rental company’s insurance policy.

Take liability insurance. Most drivers with decent insurance policies don’t need to purchase additional liability insurance for their rental car since their own policy covers any car they drive. Collision coverage also can be waived as long as you have it as part of your existing policy – unless you want to be sure your insurance company won’t raise your rates due to a claim on the rental.

What about an injury to the people in your own car or the theft of your personal property?   Many drivers already have personal injury protection or medical payment coverage as part of their existing policy. If you do then you don’t need personal accident insurance from the rental company. 

Theft of your personal property – check to see if your renter’s or homeowner’s policy covers partial compensation when a thief steals “off-premise” items. If yes, then this also isn’t needed unless you want additional coverage.  

Finally, take a look at losses your credit card may cover.  Most provide additional car rental insurance as a benefit as long as you use the card to pay for the full cost of rental. If in doubt call the credit card company for details.