When do you need car rental insurance?

Tamara E. Holmes

When you’re shelling out money for a rental car, the last thing you want is to be on the hook for damage caused by an accident. While your rental car company will gladly sell you rental car insurance to pay for such a loss, you first should make sure buying it won’t duplicate coverage you already have.

car rental insuranceDo you need car rental insurance?

Chances are you have every intention of bringing your rental car back in the same shape it was in when you got it. However, bad things do happen. For example, you could get involved in a wreck, spill hot coffee on the passenger seat or become the target of a car thief. Car rental companies offer a number of products designed to cover losses associated with mishaps involving rental cars.

  • A loss damage waiver (LDW), also referred to as a collision damage waiver (CDL), will pay for expenses that arise if you damage your rental car or if it is stolen. Waivers aren’t technically insurance; instead, they relieve free you of responsibility for financial losses.
  • Supplementary liability insurance will pay for property damage or injuries caused by you to someone else while you’re driving a rental car. 
  • Personal accident insurance typically pays for medical expenses or accidental death of the renter and passengers in a rental car.
  • Personal effects protection typically pays for damaged or lost possessions of the renter and his or her passengers.

The costs associated with rental car coverage are tacked on by the day.  For example, car rental company Budget charges a minimum of $9 a day for the damage waiver and $15 a day for supplemental liability insurance.

How to insure your rental car

While buying insurance from the rental car company may give you additional peace of mind, you already might have all of the coverage you need.

If you have a car insurance policy, your comprehensive and collision coverage may take care of damage caused to the rental car, and your liability coverage could cover the property damage and injuries of others. It’s always a good idea to call your insurance agent or company and ask what benefits you have under your policy, says Russell Longcore, author of “Insurance Claim Secrets Revealed.” Before you approach the rental car counter, know what your policy will cover. 

If you’re not satisfied with the coverage under your car insurance policy – or if you don’t have car insurance – check your credit cards. Most credit card issuers offer some type of rental car coverage if you use a particular card to pay for the rental.

However, the coverage differs by location and varies by card, says Sarah Ely, a spokeswoman for MasterCard Worldwide. For example, one card might cover damage to the rental car but not liability for injuries to other drivers. For that reason, credit card customers should review the terms of their credit card coverage or contact their card issuers to find out the specifics, Ely says.

Even if you’re covered by your car insurance policy or a credit card, there are some instances when you may want to buy supplemental coverage from the rental car company:

  • Certain fees may not be covered by your car insurance policy or credit card so supplemental coverage from your rental car company could pick up the slack. For example, some rental car companies charge the renter a fee for the loss of rental income if the car is in the repair shop, and your car insurance policy or credit card may not cover that. Be sure to find out what fees may be excluded from coverage, State Farm  says.
  • If you don’t have comprehensive or collision coverage, consider buying the damage waiver from the rental car company to pay for property losses.
  • If you have a high deductible on your car insurance policy, you may want to buy the car rental insurance so you don’t have to pay a deductible if a mishap occurs.
  • The type of vehicle you rent may not be covered. For example, a 15-passenger van or a large truck may not be covered, “as there are limitations on the weight and number of wheels on the vehicle,” Allstate spokesman Justin Herndon says.

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