Do I Need Insurance to Rent a Car?

You’re standing at the rental car counter at the airport when the agent looks at you and asks that age-old question: “Would you like the rental car insurance?”

Sweat starts forming at your brow. Doesn’t my regular car insurance cover me? Am I just throwing money away? Can I phone a friend?

We’ve all been there. But don’t worry. I’m going to break down if you actually need rental car insurance, so next time you’re at that counter, you don’t have to sweat over your answer!

Do I Need Insurance to Rent a Car?

You do need insurance to rent a car. But there’s a deeper question behind that question—which kind of insurance do you need to rent a car? That’ll depend on your situation.

You’re not likely to need car rental insurance because your own auto insurance will generally cover a rental car too—assuming you have that coverage. That’s the short answer. I’ll get into more of the details below.

But maybe you don’t even own a car and don’t need car insurance. (You’re probably in great shape from all that walking.) If that’s you, the rental company will require you to have liability coverage—but you don’t have to buy it through them. (I’ll share some options later.)

Here’s a scary thought: Maybe you do own a car, and you’re acting a fool, driving around without any coverage at all. In that case, rental car insurance is the least of your problems—but you’ll definitely want to buy it before renting (and go ahead and get standard car insurance in place, ASAP!).

Does My Car Insurance Cover Rental Cars?

In general, yes, your auto insurance will cover your rental car the same way it covers your own car. So you probably don’t need rental car insurance. There are a few situations when buying it might makes sense, though.

Let’s compare the two kinds of policies to see how they overlap.

Rental Car Insurance vs. Your Auto Insurance Policy

Most of what rental car insurance covers is already covered by your standard auto insurance, like:

• Comprehensive coverage
• Collision coverage
• The right amount of liability coverage (but be sure you’re really covered)
• Health insurance
• Personal injury protection on your auto policy
• Renters or homeowners coverage

If you have any or all of those coverages—and most people do—you can safely skip all or most of what a rental car insurance package is designed to cover.

Do You Have the Right Insurance?

Take the coverage checkup to find out what insurance coverage you should add, tweak, or drop based on your individual needs.

Now that we’re clear on the low probability that you’d need rental car insurance, I’ve still got to say: It’s always wise to get a good understanding of your personal car insurance policy before paying for your rental car.

Let’s get some specifics about the common rental insurance options, and which ones are probably already covered in your personal auto policy.

What Does Rental Car Insurance Cover?

Rental car insurance gives you extra coverage if you get in an accident while driving a rental—but like I said earlier, you’ll rarely need this kind of coverage.

Here’s a quick-hit table of the options that car rental insurance usually includes. (I’ll break down the options even more below and talk about what each one corresponds to in your regular auto coverage.)

Collision Damage Waiver

Also called loss damage waiver, the collision damage waiver covers damage to the rental vehicle in a collision or theft. But it’s not really insurance, though. For real.

This thing is just a waiver that says the rental car company won’t hold you responsible for all the damage. That may sound nice, but it won’t cover you if the accident was caused by your carelessness (like speeding). And the rental company could still charge you for other things, like towing expenses or loss of use—the money they lost because they couldn’t rent out the car.

And even though it’s not real insurance, you’ll for sure pay real dollars to the rental company if you buy this “service.” Hard pass.

Supplemental Liability Coverage

This option covers you if you damage other people’s vehicles or property. (Liability limits for rental cars are usually between $300,000 and $1 million.) But the same’s already true of your normal liability coverage, otherwise known as the most important kind of car insurance everyone should have!

Personal Accident Insurance

A way to cover medical bills for you and your passengers if you’re injured while driving the rental. It even includes death benefits for worst-case scenarios. But you already know what I’m going to say—this is something you’re probably already paying for in other ways. Save your money.

Personal Effects Coverage

Personal effects coverage will pay for any of your personal property (up to a certain amount) that’s stolen from the vehicle. Don’t sign up just yet.

I hope you have renters or homeowners coverage, not just because it’s smart (it is) but also because it means you don’t have to pay for personal effects coverage when renting a car. And as far as death benefits? You’re way better off buying term life insurance.

Do I Need Rental Car Insurance?

In most cases, you can rent a car without buying rental car insurance coverage. In fact, in most cases you should skip rental car insurance. That’s because (like I’ve explained a few times) most of what rental car insurance protects you from is either kind of pointless or covered by other policies you probably already own.

On the other hand, I can never repeat this too often: If for some reason you don’t have auto insurance, the rental company will require you to get liability coverage. You sure as heck don’t want to be on the hook financially for damages you caused while you were driving a rental.

Rental Car Insurance vs. Your Auto Insurance Policy

It’s always a good idea to understand your personal car insurance policy before paying for your rental car. Here’s a quick reference that shows which events are covered by your rental car insurance versus your auto insurance policy.

I know you want to save money (who doesn’t?), but don’t assume you’re covered. Check your insurance declaration page.

When Should I Get Rental Car Insurance?

Are you still wondering, Do I need rental car insurance? Let me sum it all up. You’ll only need it in these situations:

• Your personal insurance policy doesn’t cover rentals.
• You don’t own a car and don’t have auto insurance.
• You rent cars more than the average person.
• You’re worried about paying a high deductible.
• You’re traveling for business and your company doesn’t cover you.

If you rent cars a lot but don’t carry your own auto insurance policy, you might consider non-owner car insurance. It covers bodily injury and property damage if you’re in an accident when you’re driving a car you don’t own. It’s also less expensive than standard insurance, which is good for your budget. (Didn’t I say I’d save you some cash?)

If you decide to use your own insurance instead of buying the rental company’s extra coverage, you’re making a smart move (for most situations). But be aware of a few things:

• If the rental car is damaged or stolen and you have to file a claim, it’ll affect your premium the same as if the incident involved your own car.
• The rental company may charge a deposit on your debit card and then refund the money when you return the car in good condition.
• Your personal auto coverage doesn’t cover vehicles like moving trucks. If you’re moving, you should buy insurance from the truck rental company.

Do I Need Rental Car Insurance for International Travel?

Renting a car outside the U.S. brings its own challenges. (But getting access to authentic sushi and tacos justifies it—hopefully not at the same restaurant.) Fewer insurance companies cover customers who rent cars internationally. So contact your insurer to see if your rental is covered.

Some people like to buy the extra coverage when traveling abroad because of the increased risk of accidents from unfamiliar driving conditions and traffic laws. The additional coverage will also help you avoid the hassle of filing a claim in a foreign country.

How Much Does Rental Car Insurance Cost?

The cost of rental insurance varies, but typically, full coverage insurance costs $30–60 per day. If you choose to shop a la carte, here’s about how much each will cost:

• Collision or loss damage waiver: $20 per day
• Liability insurance: $15 per day (for $1 million in coverage)
• Personal accident insurance: $5 per day
• Personal effects coverage: $2 per day

Do I Have to Buy Rental Car Insurance Through the Car Rental Company?

No. You can also purchase rental car insurance through a third party (like Bonzah or Insure My Rental Car) if you don’t want to buy at the counter. It’s usually cheaper than buying the often-overpriced rental car insurance (that’s why the rental car folks pressure you to buy it).

But for most people, the cheapest route will usually be just to use your own auto insurance policy. If you don’t have rental coverage on your auto policy or you can’t add it, the next best choice will be using a third-party provider.

The most expensive option will be buying it there at the counter—the salespeople are highly incentivized to sell you all the bells and whistles on a car you’re already renting from them.

Do I Have to Use a Credit Card for Rental Car Insurance?

No way—you do not have to use a credit card for rental car insurance. In fact, I’m against using credit cards for any reason, to be 100% clear. But even if I didn’t feel that way, it’s just a fact that you don’t need plastic to get that optional rental car coverage.

Maybe you’ve heard a rumor that you need a credit card to rent a car at all. That’s a myth a lot of people have fallen for. The truth is, plenty of car rental companies will rent to you without a credit card. Just look up the debit card policy for the company and location you’re looking to rent with beforehand.

And if you don’t need a credit card to rent, guess what else you don’t need it for? The optional (and usually unnecessary) rental car insurance.

Certain credit cards do offer protection against rental car incidents, but they shouldn’t be your go-to solution. Credit cards come with so many downsides they’re simply not worth using—ever. Also, credit card protection is secondary, so it’ll only kick in after your personal policy pays out.

Should I Get Rental Car Insurance?

There are two important things I want you to keep in mind when it comes to rental car insurance:

1. You don’t want to pay for something you don’t need. But also . . .
2. It’s not worth taking unnecessary risks to save a buck.

For almost any normal rental situation, you’re not going to need the extra coverage they’re trying to sell you. Save your precious dollars. But don’t make any assumptions! Just go over your personal auto policy and verify it covers you for rentals. And if it doesn’t, buy the rental car insurance all day, every day.

If you can keep those principles in mind, you’ll be able to make the right call on whether to get rental car insurance.