Car Insurance for Rental Cars

Is My Own Insurance Policy Enough?

The first question is, do you have car insurance already and, if you do, what does it cover? Generally speaking, drivers who already have their own policy will find the rental company’s insurance option to be redundant.

Though it is always a personal choice, drivers with the state minimum in insurance may want to consider purchasing the rental policy, just to ensure that you are truly covered in the event of a serious accident. State minimum policies often only include a minimal amount of bodily injury liability and property damage liability. In contrast, here’s what the typical rental car coverage includes:

• Liability: This covers you if you cause property damage or bodily injury to someone else when driving. If you already have insurance of your own, you may not need this from the rental company, as this category should already be covered.
• Personal accident insurance: This will cover you and your passengers’ medical bills if you are involved in an accident. Health insurance, personal injury protection, and medical payments coverage can also work to cover this.
• Personal effects insurance: This will cover your personal belongings that are damaged or lost while in the vehicle. If you have homeowners' insurance, however, this may prove redundant.
• Loss/collision waiver: Technically not insurance, this is a waiver that cancels out any damage caused to the rental car while you are in possession of it. It is not valid when the damage is incurred while speeding, driving on unpaved roads, or otherwise being reckless with the rental car. If your car insurance policy already includes collision and comprehensive coverage, you probably don’t need to add this.
• Supplemental liability protection (SLP): Essentially an extra layer of liability protection, this will cover any injuries or property damage you cause. If you already have liability coverage but you’re worried your coverage level is too low, you might want to look into SLP. If you already have adequate liability coverage, however, this likely won’t be worth it.

When to Think About Extra Coverage

As we mentioned above, if you only have state minimum insurance, you may want to purchase one or more of the insurance types offered by the rental company, as your personal policy may not cover all situations.

Even if you do have a robust insurance policy of your own, some drivers choose to purchase rental car insurance in order to avoid any high deductibles associated with their own policies. Or perhaps the car you’re renting is more valuable than your own car -- classic cars and sports cars, for example, are much more expensive to repair if damaged. In this case, extra coverage from the rental car company may not be a bad idea.

Other considerations:

Rental Insurance vs Rental Reimbursement

Rental insurance and rental reimbursement are not the same. Here are the key differences:

• Rental insurance: Rental car insurance is separate coverage offered by a rental car company when you rent a car from them. This is typically optional.
• Rental reimbursement: Frequently included in personal insurance plans, this simply pays for you to rent a car in the event that your car is damaged or lost for a time. This does not cover damage caused to a rental car that you’ve chosen to rent on your own.

As we’ve already mentioned, most insurance policies allow your coverage to extend to borrowed or rented vehicles, but it’s important to check with your carrier beforehand to make sure this is the case.

Credit Card Insurance Benefits

Your credit card might offer rental car insurance as a benefit to cardholders. This insurance is frequently secondary, meaning it will only kick in once your own policy deductibles have been exhausted. Additionally, they may only offer one type of coverage, such as liability -- in this case, you’ll want to consider the other insurance categories on your own.

Note that you will most likely need to pay for the rental with the card you are using the benefits from. Always call your credit card company ahead of time to get the full details on what they have to offer when it comes to rental car insurance.

Driving Abroad

If you are renting a car abroad or renting a car within the U.S. but planning to drive it into another country such as Canada, your insurance may not cover you while there. If that is the case, you may actually need to purchase your rental company’s insurance.

As a sidenote, always check with your rental company before taking a car abroad -- many companies have policies against this altogether.

What if I’m Currently Uninsured?

If you are uninsured, you will have to buy coverage from your rental company. In most cases, the minimum requirement will be liability coverage. This is because almost all states require drivers to carry insurance anyway.

While rental insurance is fine for the occasion that you rent a car, regularly driving while uninsured is not only illegal in many jurisdictions but is financially dangerous. Consider comparing car insurance quotes with us today to see how inexpensive car insurance can be.

So, Should I Buy the Rental Company’s Insurance or Not?

If you already have insurance of your own, probably not. Your coverage will likely overlap with the rental company’s coverage anyway. Since you already pay for your own insurance, there’s no need to pay the extra few hundred dollars every time you rent a car as well.

However, if you are uninsured, underinsured, or simply worried that your own insurance may not be enough, this protection may well be worth investing in. We recommend calling up your insurer and discussing your policy before deciding, just to ensure that you’ve made the best choice possible.