Do I need to add insurance when renting a car?
Before you step up to the rental agency counter, here’s how to determine whether the extra protection is warranted.
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“Would you like to add insurance?”
If you’ve ever rented a car, you’ve no doubt been asked this question. And, if you’re like most of us, you may not be sure how to answer. In many cases, you may already be adequately covered by your auto insurance, credit card or other insurance policies. But to be certain you’re making the right choice, here’s what you need to know.
Does your auto insurance cover rental cars?
If you already have auto insurance coverage for collision damage, liability, personal property, theft and other areas, you probably can decline additional coverage. Check your policy or call your insurer to confirm. Ask them to provide details of your coverage. Can anyone else operate the vehicle? Does the coverage extend beyond collision damage? Are the amounts covered adequate for the type of vehicle you plan to rent?
And make sure you find out from the rental agency the amount of the rental car’s deductible—in the event of any damage, that’s the amount you pay out-of-pocket before coverage kicks in.
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Related content
Liability insurance provides coverage if you are at fault in an accident that injures another person or damages another vehicle or property. It’s required in most states and helps pay for medical expenses, lost income and repairs.
Uninsured motorist coverage protects you if you're in an accident with a driver who doesn’t have auto insurance.
Underinsured motorist coverage protects you if you're in an accident with a driver whose coverage is insufficient to pay for the damages or injuries caused.
Collision insurance helps pay for repairs to your vehicle regardless of who’s at fault. It also applies if you hit a stationary object such as a utility pole or a tree.
Comprehensive insurance helps cover the costs of damage not caused by a collision—for instance, losses like theft, vandalism, hail or hitting an animal.
This chart shows what coverage types might look like on a policy declarations page. Limits are the maximum amount insurance will cover per person and per accident. Deductibles are the amount you’re responsible for before your insurance starts paying.
| | |
|---|---|
| Bodily Injury Liability | |
| Bodily Injury Liability | $100,000/$200,000 |
| Property Damage Liability | |
| Property Damage Liability | $100,000 |
| Uninsured Motorists Bodily Injury | |
| Uninsured Motorists Bodily Injury | $100,000/$200,000 |
| Collision | |
| Collision | $500 Deductible |
| Other Than Collision | |
| Other Than Collision | $500 Deductible |
Do your credit card benefits include rental car coverage?
Most major credit cards offer some form of rental car insurance for cardholders. To take advantage of it, you usually have to pay for the rental car using the card and rent the car in your name. Credit cards typically cover physical damage to, or theft of, the rented vehicle. They don’t generally cover damage to other cars or property, or any liability that arises, including injuries to people.
The rental car Insurance provided by your credit card company is usually secondary insurance. This means if you get into an accident or the car gets stolen, your auto insurance company gets billed first, and your deductible may apply to the claim. Review your card benefits or call the card issuer to learn about specific terms, conditions and exclusions.
When does it make sense to get insurance from the rental agency?
You may want to add insurance if you’re not covered through your personal auto insurance policy or a credit card, or if you want more coverage than either provides. You also might consider it if you’re concerned about the potential of paying a deductible—or possibly increasing your auto insurance rate—if you damage a rental car.
If you do decide to purchase additional insurance from the rental company, be sure to ask about what’s included and excluded from the coverage, and which drivers are covered. Carefully consider if the expense of more insurance is in line with the risk of an accident.
The most common types of rental car insurance include:
Loss-and-damage waiver (LDW) waives your financial responsibility for any loss or damage incurred to the rental vehicle, provided you have not violated the rental agreement’s terms and conditions.
Supplemental liability protection covers damage you may do to other vehicles or property.
Personal accident protection covers medical costs if you or any passengers are involved in an accident.
Personal effects coverage helps pay for any belongings that may be stolen from your rental car. Your homeowner’s or renter’s insurance may offer similar coverage.
Quick tip
Rental car insurance isn't the same as rental car reimbursement coverage. The second is an auto policy option that pays for a replacement rental car while yours is being repaired following an accident.
How much does rental car insurance cost?
Prices vary, but full coverage typically ranges from about $20 to $50 per day. If you choose to shop a la carte, here’s about how much each type of coverage may cost. Be sure to consult your car rental agreement for exact costs.
Per day
Collision/loss damage waiver
Per day
Liability
Per day
Personal accident
Per day
Personal effects coverage
It's also possible to purchase rental car insurance through a third party at lower rates. In most cases, though, the best option is to use your own auto insurance policy.
Although it’s easy to give a simple “yes or no” on the spot when you’re picking up your car, the decision to accept or decline additional rental insurance can have real financial implications. Be sure to understand your existing coverage before you rent, so that when you walk up to the counter, you’ll know what you might need—and what you definitely don’t.
