Do I Need to Buy Extra Insurance When I Rent a Car?

It’s time to discuss the years-old debate on rental car insurance.  Everyone who has rented a car has been asked to buy the rental companies insurance. Renting cars can be expensive. So naturally, skipping out on the add-ons can be an easy way to lower your costs.  And if you have your own car insurance policy, do you really need it? 

Here are the facts:

Most full coverage policies extend coverage to non-owned vehicles.

This means when renting a vehicle, your liability, collision, and comprehensive coverages are extended to the rental car. If you are involved in an accident or incur damages to the rental car, you can still file a claim on your policy. This is subject to the same deductibles and limits as your personal vehicle.

If you do file a claim for a rental car, it will show on your driving record, as any and all claims do. 

One reason to buy the additional insurance is to avoid having to file a claim on your personal insurance for any damages to the car.  

What your personal insurance policy won’t cover on a rental car.

Rental car companies only make money when their cars are out on the road. If you damage one of their vehicles, they are going to lose money for the time it is off the road being repaired. Some companies will attempt to recoup the money they have lost by charging the one who was renting the car when it was damaged. A rental car often will lose value once it has been in an accident, and they can stick the driver of the vehicle with this cost as well. Your personal auto policy does not cover loss of use or diminished value for non-owned cars. If you do plan on purchasing additional rental car insurance, make sure to ask about these add on coverages. 

Another helpful add on coverage can be “loss of personal effects”  This will often cover you if your personal belongings are stolen while renting a car.  If you carry comprehensive coverage on your policy and your rental car is stolen, your insurance policy will pay to replace the stolen car, but not any of your property. 

What’s the conclusion?

Some credit cards offer rental car insurance as a benefit. They will offer some of the same additional coverages rental car companies sell, but without cost to the cardholder. Check with the bank that issues your credit card for more details. Some cards may only offer actual cash value for the rental car and not replacement cost. Ensure that your card benefits are comparable with what the rental car company offers before you use it as a substitute. 

While you do not always have to purchase additional insurance to rent a car, their policies do offer more than a standard “full coverage policy”. By getting the additional coverage, you are ensuring that you won’t be hit with any additional out of pocket costs if your rental car is damaged. 

Always check with your personal insurance agent to find out specifics of your policy and situation.