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Do I need rental car insurance to rent a car?

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If you travel often, you may have wondered if you require a rental car insurance policy to rent a car. The answer isn’t as clear-cut as other forms of insurance. Let’s take a look.

Imagine this scenario. You’re at the rental car counter, and there’s a large line behind you. You found a terrific deal on a car for the week, and you’re excited to spend time with your family. Then you’re handed a clipboard containing an intimidating contract with several insurance options. You suddenly wish you’d spent less time packing and more time looking into rental car insurance.

Since most of us do not deal with rental car insurance daily, it is easy to become overwhelmed when presented with this type of coverage option. Often, your rental car company may be coercing you to sign up for coverage you don’t require, which in turn drives up your rental bill. 

So, do you require rental car insurance?

The answer is: it depends. While it is important to ensure that you and your rental car are protected, you don’t want to pay for unnecessary insurance coverages that might increase the cost of your rental. 

Before you start ticking all the boxes on your rental car contract, we advise you to call your insurance provider. Ask them if you need any additional coverage while renting a car.

If you have liability and comprehensive coverage on your own vehicle, your coverage will likely extend to your rental car within the country.

If you rent a car that has a similar value as your own, your car insurance coverage will most likely be adequate for the rental. However, if you’re renting something flashy, like a Corvette, we advise getting the extra car insurance coverage given by the rental company.

Read: 10 things driving a Corvette says about you

It would help if you also verified with the credit card company—the one you’ll be using for the car rental. If your personal auto policy has any gaps in coverage, the credit card company may be able to provide supplemental coverage.

What are the different types of rental car insurance?

In general, there are four types of rental car insurance. They are:

  • Collision damage waiver
  • Supplemental liability coverage
  • Personal accident insurance
  • Personal effects coverage

What is a collision damage waiver?

Collision damage waiver or loss damage waiver is a type of rental car insurance coverage offered by the rental car company. This coverage lets you off the hook for damaging the rental car. However, these exemptions often include a deductible.

Should I opt for a collision damage waiver?

It is wise to purchase this form of coverage. While your standard car insurance policy may offer collision coverage for rental cars, it will almost always include a deductible. It may not cover all of the rental car company’s charges. 

While your credit card may provide free collision damage coverage, credit card rental car insurance is often secondary coverage, which means that you must file any claims with your auto insurance provider first.

What is supplemental liability insurance?

Liability insurance often covers damage to other people’s property (such as their cars) as well as medical expenses for other people’s injuries in an accident for which you are legally responsible.

Because every state in the United States requires a minimum amount of liability insurance on car insurance policies, you may already have liability coverage through your personal auto insurance.

Do you require supplemental liability insurance?

Someone seeking to sell you rental car insurance may tell you that your liability coverage is insufficient and persuade you to purchase additional coverage. However, there is a better approach to protect yourself if you are concerned about responsibility. 

The Insurance Information Institute recommends purchasing umbrella liability insurance, a low-cost policy, for your car and homeowners (or renters) insurance to provide additional protection whether driving your car or a rental.

Since most car insurance policies do not provide coverage abroad, you may want to obtain liability insurance when traveling abroad.

What is personal accident insurance?

Personal accident coverage includes medical, ambulance, and death benefits for you and your passengers. Liability coverage, on the other hand, covers other people’s property damage and injuries in an accident.

Is personal accident insurance necessary?

Most likely not. Your health, life, or car insurance policies may already include the benefits that a personal accident insurance coverage offers. Traveling to a country that does not accept U.S. health insurance? You should carry travel insurance that includes emergency medical and emergency transportation benefits. 

These benefits are more comprehensive than personal accident insurance. They can pay your medical expenditures in an emergency abroad, whether or not it was caused by a car accident.

What is personal effects coverage?

Personal effects coverage pays for the theft of personal belongings from a rented car up to a certain value.

Do you require personal effects insurance?

Most likely not. If you have a homeowners or renters insurance policy, you may be covered for the loss of personal items from your car. To be sure, double-check your policy documentation. You could also use your travel insurance policy to cover the cost of stolen baggage while you’re on the road.

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The bottom line

The simplest approach to determine how much rental car insurance you require is to do your homework before arriving at the counter. Go through your car insurance and credit card coverage and learn more about what they cover. 

We recommend buying a low-cost collision damage waiver in advance. And if you tick “yes” on all of the insurance choices offered by the rental car company at the spur of the moment, don’t let buyer’s remorse ruin your holiday. You may be able to cancel the coverage if you return to one of the company’s offices the next day.

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