Do You Need Rental Car Insurance?

rental car insurance

You're renting a car, and after picking out which vehicle you want and securing the rate, the issue of rental car insurance comes up. Should you sign up for it?

In many cases, people spend as much as $15 - $30 a day on rental car insurance on top of the rental fee. Before you accept or decline the supplemental insurance offered by rental companies, there are a few important things you need to consider.

Coverage From Your Car Insurance

If you own a car, then you should have an insurance policy. However, this doesn't mean that you should automatically ignore rental car insurance options. Before you contact any rental company, review your personal insurance policy carefully or call your agent to find out which coverages apply to your rental car (it's always a good idea to review your insurance periodically anyhow to make sure you are adequately protected).

In most instances, the limits and deductible on your personal policy will extend to a rental car. If you're renting the vehicle for business or commercial purposes, your insurance policy may not apply.

Coverage From Your Credit Card

Visa, American Express, MasterCard, and Discover all provide some form of rental car insurance. Note that MasterCard issues some cards that don't offer insurance coverage, and all major credit card issuers have certain restrictions and requirements. You should never expect a one-size-fits-all policy when it comes to credit card coverage.

Review your credit card documents carefully, and keep the following in mind:

1. You have to charge the entire car rental on the credit card and decline the supplemental collision damage coverage offered by the rental company for the credit card insurance to apply.

2. Insurance offered by credit cards doesn't include certain vehicles – like trucks with open beds, off-road vehicles, and exotic or expensive cars such as Ferraris or Jaguars. Furthermore, American Express doesn't cover some SUVs, like Chevy Suburbans and Ford Expeditions.

3. Visa and MasterCard may not cover damages that occur on dirt or gravel roads. Other cards won't cover wheels and rims. Furthermore, some of the card issuers have a max rental period of 15 days, after which insurance coverage lapses. None of the major credit card companies will insure a rental car for more than 30 days straight.

4. Some cards only provide "secondary coverage," which is protection that kicks in after your personal car insurance policy has paid out its limits. In addition, you may have to pay the full amount of damage upfront and file a claim for reimbursement later.

Third-Party Rental Car Insurance

Another option that's available is third-party rental car insurance. It is a policy separate from your personal policy and from coverage sold by the rental company. You can obtain third-party insurance through a number of sources, including some credit card companies and travel sites.

Just be careful with these – they may offer no deductible and reasonable charges, but their coverage may not be adequate in the event of an accident. Many of these plans offer collision and damage coverage but do not include liability coverage, which applies if you damage another vehicle or injure another person.

Before signing up for third-party rental car insurance, double check the coverages to make sure you will actually be protected if your car is damaged or you (or someone else) are hurt.

Insurance From the Rental Car Company

rental car insurance

Rental car companies typically offer four types of coverage:

Liability – This covers damage to any property (including other cars) you might cause. It also covers medical expenses for any injuries you cause to others.

Loss-Damage Waiver – This covers damage to the rental car and also includes towing costs.

Personal Accident Insurance – This covers medical costs for you and your passengers if you're in an accident. Keep in mind: if you have your own auto insurance policy, there is likely some form of medical coverage that will apply in the event of an accident.

Personal Effects – This covers the property you keep in the vehicle if the car is broken into or stolen. Keep in mind: if you have renter's or homeowner's insurance, it could cover the theft of property from a rental car.

So who should think about signing up for these policies? They are worth considering for people who have no other source of insurance and whose credit card doesn't provide adequate coverage.

And, as we stated before, it's always best to check with your own auto insurer before you head to the rental counter to make sure you have the best coverage possible.

Car Accidents Can Happen Anytime

It doesn't matter if you're in your own car, a friend's, or a rental, car accidents can happen anytime. Nobody wants to think about what they would do if faced with the consequences of a serious accident, but the reality is that after the accident happens, you can't go back and change your insurance to give yourself better coverage. Medical bills, missed wages, and car repairs add up quickly – and often overwhelmingly – and the right car insurance can help relieve a great deal of that burden.

We're here to help with that burden, too. If you've been injured in a car accident, we can help. Contact us 24/7 to get started.

“Why You Don’t Need to Buy Extra Car Rental Insurance.” June 30, 2014.
“Rental Car Insurance.” July 28, 2015.
“Rental cars: Third-party insurance works.” Chicago January 13, 2015.