Do You Need Rental Car Insurance? How To Decide

do i need rental insurance

The choices are seemingly endless at the rental car counter – Do you want an upgrade? A navigation system? A car seat? As they run through your options, the final one is usually the hardest. Do you need rental car insurance? That can be one where you stop to think because who’s going to turn down protection, especially when you are driving an unfamiliar car in an unfamiliar place?


But it can be pricey, too, especially if you opt for all the coverages, including collision/loss damage waiver, liability, personal accident, and personal effects (this is for the goods in your car). The good news is that you might not need it. Let’s walk through how you can make that decision.

When should you pass on rental car insurance?


There are several scenarios where you are likely covered, which means the rental car policy would duplicate what you are already paying for.


  • If your own personal car insurance policy covers it: The most important thing to do is read your personal car insurance policy carefully – or call your friendly local insurance agent before you leave on your trip. Typically, that coverage will extend to a rental car. But note that it will be the same type of insurance you currently have. So if you don’t have collision coverage on your personal policy because your car is old, for example, then you wouldn’t be covered for a rental car either. And of course, don’t forget you will still need to pay your deductible.


As for the “personal effects” coverage, your renter’s or homeowners’ insurance is liable to cover anything that is stolen out of the car; again make sure to check.


  • If your credit card includes it as a benefit: Your credit card probably does wonderful things these days, from giving you a free bag check when you fly to, yes, insuring your rental car. Many credit cards have some level of collision insurance as part of their package of perks so check your card agreement. Remember that you must use that card to reserve and pay for the car in full; the coverage won’t extend just because you are a cardholder if you don’t use the card for that particular rental. 


Note that this coverage is secondary to other coverage, in most cases. So that means if you do take the rental car insurance, that policy will come first before your credit card coverage kicks in. It’s not a bad idea to call your card company and walk through the particulars and any limits, such as the type of car you are renting or the number of days it covers. There may be exclusions and you don’t want to have an unpleasant surprise by assuming this coverage would kick in.


  • If you are traveling for business: Most business travelers use a corporate card to rent their vehicle, which means that it likely covers it. However, it’s always smart to double-check to make sure that even if the business does have coverage, that you won’t somehow be on the hook if it’s found that you were at fault.

When should you take rental car insurance?

While that car rental insurance can seem pricey, it is cheaper than not being covered at all. That’s why you might want to spring for it in several situations:


  • If your personal policy or credit card doesn’t cover rental cars or that type of rental car. Again, it’s always wise to double-check the details to make sure that your particular incidence is being covered.


  • If your deductible is high and you don’t want to risk having to tap emergency funds to pay it, assuming that the car rental’s deductible is less.


  • If you are only insured under a company policy; for example, if you only drive a company car at home but are renting a personal vehicle while traveling.


  • If you don’t want to tie up your credit card availability, as a rental company may put a “hold” on your credit card for all or a portion of the expected costs to repair any damage.
  • If you want to use a debit card or other card that doesn’t include coverage.


  • If you are traveling internationally, which is rarely covered by your personal car insurance policy or a credit card.


The costs to travel can add up, and the last thing you want to do is add an unnecessary one to your budget. But it’s vital to remember that being uninsured can cost far more than covering your car rental insurance, provided you aren’t covered by other avenues. Just do your research first to confirm with your agent, and you can be on your way in no time…and for no additional money.


Want to talk through policies with a trusted local San Francisco insurance agent? Call O’Kane and Tegay Insurance Brokers today.