Do You Need Rental Car Insurance?

Maybe you’ve been here before. You just got off the plane, picked up your bags, and gone to the rental car counter. You’re tired from the flight, about to begin an ambitious vacation or a challenging business project. This is the point at which you’re asked, “Do you want insurance with that?”

Most travelers, facing this question from the rental representative, have the vague notion that they don’t really need to buy rental car insurance – which somehow is covered already. With just enough doubt in their minds, and the need to make a quick decision, perhaps they buy it just to be safe.

So, which is it?

Do you need to buy rental car insurance or not?

Truth be told, there isn’t a one-size-fits-all answer. However, you can likely reach a conclusion you’re comfortable with by considering these questions.

1. What types of car rental insurance are available?

Typically, car rental agencies will offer you four types of insurance to purchase:

• Collision damage waiver – The rental car company won’t charge you for a damaged or stolen vehicle when you buy this.
• Supplemental liability protection – Electing this will ensure you’re covered for costs to others if you cause an accident in the rental vehicle.
• Personal accident insurance – This coverage will pay for injuries or death of the driver and passengers of your rental car.
• Personal effects coverage – Reimburses you for stolen personal items while renting the car.

2. What rental car coverage might I already have?

Start with your personal auto insurance. It’s likely that your policy will provide the same level of coverage for your rental as it does for your own car. That usually includes liability insurance, and, depending on the policy you purchased, may include collision, comprehensive and medical payments, too. There are exclusions, however. Most insurers won’t cover rentals in a foreign country, or rentals that are being used for business. Contact your independent insurance agent to verify your coverages.

Next there’s your credit card. Most cards offer some degree of coverage, but it varies widely. Coverage is usually secondary, designed to step in and pick up where your auto insurance leaves off, and it tends to be mostly confined to collision, damage, and theft. For coverage to apply, most cards require that you decline the rental company’s collision damage waiver and pay for the car in full with the card that provides the protection. Again, contact your card company to find out exactly what is covered.

Then, consider your health and life insurance, too. If you’re in an accident involving a rental car and you have these policies, you likely have coverage for your own costs. Plus, with your homeowners insurance, you may have personal property coverage to help repair or replace valuable belongings that are lost, damaged, or stolen while you are in a rental. Your deductible and policy limits will apply, and the same goes for renters insurance or condo insurance.

3. What rental coverage could be missing?

In the event something does happen to the rental car, you may be looking at loss of use which your regular policy may not cover. Loss of use is the income that the rental agency loses due to the vehicle being in the shop for repairs.

Another optional coverage to think about is roadside assistance. Some rental agencies offer this service as an add-on. However, before you buy that option, you may want to consider purchasing a membership from AAA if you don’t already have one. Services and membership levels vary by state. Basic memberships may include basic towing, flat services, fuel delivery, battery jump-start and replacement, vehicle lockout service up to a limit. Contact your automobile club to understand the full benefits of your membership.

4. Do I need insurance if I am renting a boat or RV?

Yes, always buy the collision damage waiver option when renting a boat or recreational vehicle. Boats and especially RVs require special driving skills. RVs are much larger than an everyday vehicle. It is easy to misjudge a corner and wipe out a mirror or worse.

A personal auto policy may extend to a recreational vehicle, but this depends on your insurance policy. Ask your insurance agent if your auto policy covers a RV rental and if it does, what coverage is included? If it does not, inquire about purchasing coverage through the rental company.

The same applies when renting a boat. A personal boat policy may provide some coverage for the rental. However, all policies and insurers are different. Always check with your insurance agent before renting a boat to understand what is covered and what is not. Often the boat rental agency or marina will require a renter to purchase a policy to cover the rented boat in the event of an accident.

5. Should I use a peer-to-peer car sharing service?

Car sharing platforms like Turo have become popular in the last several years. These types of services allow car owners to share their personal vehicle with another driver in exchange for a fee. If you decide to use a car through this type of service, insurance is a must.

Most auto insurance companies do not extend coverage to the vehicles or drivers used in these sharing services. Additionally, most credit card rental insurance benefits would be excluded too. Special auto protection plans must be obtained by the driver directly through the car sharing platform.

Give us a call and check with your credit card company about rental coverage. Armed with information, you’ll be ready to make an informed decision when you get to the rental car counter.

Portions of this article reprinted with permission from Safeco Insurance®.