How Necessary is Insurance for Car Rentals


insurance for car rentalRenting a car is a common part of going on a trip. Whether you are going on vacation or on a business trip, renting a car is one of the first things that people do once they arrive to their destination. And, you know that when you get up to the counter you are going to be asked one very important question – “Do you want to add rental car insurance coverage to your agreement?”

If you are like many people, you probably are not sure if you need to get the extra insurance coverage or not. Are you covered by your current car insurance provider? Does your credit card offer you coverage? What about your travel insurance policy?

The truth is that depending on who you talk to, they will tell you a different opinion on whether or not you need insurance for car rentals. Some people think it is good to have, while others think that it is a scam by the rental car companies. So, asking around may not be of much help.

What you can do is do your homework before you get to the rental car desk. Talk to your auto insurance provider and ask them if you are covered for rental car insurance. You can also talk to your credit card company to see about your options. Either way, you need to find out if you are covered or not before you rent the car. This is why it is best to figure out your insurance needs when you are in the process of planning your trip.

But, if you do find yourself in a situation where you are not sure if you need the coverage, go on the side of caution. If you get into an accident and then come to realize that you actually don’t have insurance coverage and declined the coverage option from the rental car company, you will be personally liable for the damage. And, for most of us, the odds are that you can’t afford to take on that expense.

If you do opt for the rental car insurance coverage, there are a number of benefits that you will get out of it:

  1. Peace of mind: Accepting the coverage from the insurance company, especially if you are not sure if you are covered by your auto insurer. This will give you peace of mind in knowing that you will be covered if something does happen to the car.
  2. No Surprises: Opting for the coverage will ensure that you won’t have any surprises when you return the car. The last thing you want to deal with is a damage claim from the rental car company.
  3. Coverage is not that expensive: When you look at it on the surface, opting for the coverage is not that expensive, especially when you consider the potential repercussions if you get into an accident and don’t have proper coverage in place.

The need for rental car insurance will vary from person to person. Do your homework and talk to your insurance company about your coverage options before you get to the rental car counter.

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9 Responses to How Necessary is Insurance for Car Rentals

  1. WILD about Finance 02/25/2013 at 7:09 am #

    Personally I think its a big waste of money. I once heard that they make more money out of the insurance than they actually do hiring you the car!

  2. Jules@Fat Guy,Skinny Wallet 02/27/2013 at 5:27 pm #

    I would definitely get it. The day I denied that coverage is the day I would need it. This is something I never thought about, glad I read this before I am in that position!

  3. Barry 03/01/2013 at 7:31 am #

    It also depends on where you travel as well. The cost of the rental insurance on my car rented in Las Vegas cost more than the rental fee itself! Calling around and getting the low-down from your insurance provider can save big bucks at some destinations.

    • Paul 03/03/2013 at 9:24 am #

      Most personal auto policies provide coverage for car rentals however you need to notify your agent ahead of time. Also, these policies almost always provide coverage in the continental U.S. only and you will need a separate temporary policy for international coverage.

  4. AWB 03/05/2013 at 10:42 pm #

    Even if rental car insurance is bought, the contract itself may be secondary. For example, when your primary insurance and credit card covers your car rental, then the rental insurance becomes secondary in some cases.

    There is also the issue of dealing with the insurer if something bad happens. As the article suggests, it’s a good idea to make a couple of phone calls and possibly some Internet research ahead of time. This helps verify the reliability and credibility of the rental insurer, especially if they are a third party and if you even need the insurance.

    • Paul 03/08/2013 at 9:07 pm #

      Good point about the rental policy being secondary. Under most circumstances it is best to decline the rental insurance and use your own auto policy.

  5. Johnny Moneyseed 03/08/2013 at 8:20 am #

    Renting a car soon for a trip to Florida so this is pretty good info. I have 5 major credit cars, all of which offer some form of insurance or another. I think we should be covered :)

  6. Mike Swenson 03/15/2013 at 9:19 pm #

    For those that will be taking on coverage through your credit card instead of from the rental car company – make sure you read the fine print from your credit card company before you rent. There are often multiple instructions in setting up the rental that you have to comply with for them to cover you (i.e. certain types of vehicles, not having additional drivers, declining coverage from the rental company, etc). If you don’t comply with every one of those points, they will deny a claim and you’re on the hook for the damage. I handle all insurance claims for all corporate rentals for the company I work for full-time. In almost all cases, the credit card company has covered our claims and it has worked out very well, but they are definitely making sure you’ve dotted all your “i’s” and crossed all your “t’s.” If not, they won’t hesitate to deny your claim.

    All in all, we’ve had great experiences using the insurance that the credit card provides. If you understand what they are covering, you’re paying for extra insurance you don’t need if you take it out from the rental company and they’re just making more money off of you. If you know your coverage well, you can save a lot of money on unnecessary insurance.

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