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Do I Need Rental Car Insurance?

When you rent a car, the car rental company often tries to sell you rental car insurance to cover any damages that may occur to the car as well as injuries.  You may wonder whether you should purchase this insurance. Your auto insurance policy typically provides coverage for you when you drive other vehicles, including rental cars.  Therefore, you may already be paying for some level of protection against damage occurring to a rental car. Furthermore, many credit card companies provide coverage for rental cars. However, if damage occurs in a rental car, you may find it easier to go through rental car insurance.

4 Types of Rental Car Insurance

Collision/Loss-Damage Waiver

A loss-damage waiver covers you if the rental car is damaged or stolen.This coverage keeps you from having to pay for repairs or replacement of the rental car. Depending on the type of car that you rent, this coverage typically costs between $9 and $19 a day.

If you do not have auto insurance, you definitely need this coverage. If you do have auto insurance, your comprehensive and collision coverage which covers damage and theft probably covers the rental car as well.  Your auto insurance policy, however, probably comes with a deductible. Furthermore, filing a claim in the instance that something happens to the rental car can cause your car insurance rate to go up.  Moreover, it is much easier to simply use the loss-damage waiver than to go through your car insurance company in the event that something does happen to the rental car.

Supplemental Liability Protection

Just as general liability protection covers damage and injuries that you cause to others and their property, so does supplemental liability protection.  This coverage typically costs between $7 and $14 a day.

Your own liability protection will almost definitely cover damage that you cause to others while driving a rental car. This type of coverage is typically not required unless you do not have automobile insurance or your own liability insurance covers the very minimum.

Personal Accident Insurance

Personal accident insurance pays medical bills for you and passengers in your car if you are injured in an auto accident while driving a rental car. This type of coverage is generally inexpensive. It typically cost between $1 and $5 a day.

Your own auto insurance should already cover your medical bills. The types of coverage you may have that will cover these costs include health insurance, MedPay, personal injury protection (PIP) coverage, and uninsured/underinsured motorist personal injury. If you do not have any of these coverages or you only have health insurance with a high deductible, you may want to consider this coverage.

Personal Effects Coverage

This type of coverage covers your personal belongings that are left in the vehicle in the event that they are stolen. These belongings may include a laptop, suitcase, or other costly items. Personal effects coverage covers you up to a certain amount for these items. This coverage is also inexpensive, costing between $1 and $4 a day.

You may also have “off-premises coverage” through your renters or homeowners insurance policy that covers your personal property. With renters and homeowners insurance, however, you generally have to pay a deductible. Personal effects coverage may pay out faster if your items are stolen from a rental car and you generally do not have to pay a deductible. Thus, the price of this coverage makes it worth it to purchase through the rental car company unless it is covered by your credit card company.

Does Your Credit Card Offer Car Rental Insurance?

If you rent a car with a credit card, your credit card may provide you with rental car protection. Check the credit card policy to see if this applies and what coverage is provided. There are two types of credit card coverage, secondary and primary. Secondary coverage kicks in after your regular car insurance policy. This leaves open the chances of a rate increase since you have to file a claim with your auto insurance company. Primary coverage, on the other hand, is applied without going through your auto insurance. Be sure to call the number on the back of your credit card before purchasing extra insurance to save money and avoid redundant coverage.

When Does Your Auto Insurance Not Apply to Rental Cars?

If you rent a car for business purposes, your auto insurance may not apply. This may be important to know if you rent a pickup truck to transport materials. Check with your auto insurance carrier to see whether you are covered.

When you are driving in other countries, with the exception of Canada, your auto insurance may not cover accidents or damage.  Therefore, when traveling abroad, you generally should get car insurance through the rental car company.

Even If Your Auto Insurance Applies

You should get the rental car insurance if you have a high deductible. In addition, paying an extra $25/day can keep your insurance rates from going up due to filing a claim through your insurance company. If you are in an at-fault accident, however, the accident is still on your record. Remember, that a rental car is a car that you are not as familiar with driving. You may have a slightly higher chance of being involved in an accident. The loss-damage waiver is especially good protection that you may want to have, either through the rental car insurance or your credit card company.

>> MORE: Does Geico Cover Rental Cars?

Final Thoughts

When you rent a car, the car rental agent often tries to push you into buying rental car insurance. Even though they tend to oversell it at the counter, it may be a good idea for you to consider. You should at least purchase the loss-damage waiver and the personal effects coverage. This can help you avoid having to file a claim with your auto insurance company which can lead to paying a high deductible and taking the chance that your rates will increase. Furthermore, it is far more convenient to go through the rental car company’s insurance for any damage that occurs to the rental car. The one exception is if your credit card company covers you with primary insurance.

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