Do I need insurance for my rental car?

Key Takeaways:

• The insurance coverage you have with your personal vehicle will typically extend to a rental car.
• When traveling internationally, check with your auto insurer and credit card provider to confirm what is and isn't covered.
• If relying on your credit card for rental car insurance, check the fine print to make sure you understand how much coverage is provided and if you are comfortable with those amounts and types of coverage.

Rental car insurance when you already have personal auto coverage

We've all been there: you're tired from traveling and when picking up your rental car, you're asked if you want to add insurance to your contract. What should you do? Is adding it unnecessary if you already have your own car insurance, or could it come in handy if you get into an accident?

In most instances, your personal auto insurance will extend to a rental car, however, the level of coverage depends on your specific policy.

If your personal auto policy includes only liability coverage, that same protection should extend to your rental car. If you have “full coverage”—comprehensive and collision—those benefits usually carry over as well, covering damage from accidents, theft, or vandalism.

In short, your current auto insurance coverage—including deductibles—will typically apply to a rental car, as long as you're using it for personal use and not for business purposes.

Rental car insurance coverage from your credit card

At no additional cost, many major credit card companies offer some level of rental car insurance coverage. Just how much, however, will vary by issuer and card type. When considering insurance for a rental car that's offered by a credit card, be sure to always check the fine print!

In addition, here's what else you need to know about credit cards and rental car insurance

• Most credit card benefits act as secondary insurance coverage. This means that coverage only kicks in after your personal auto insurance has been exhausted. However, there are some premium credit cards that may offer primary coverage, which means they'll pay first.
• Typically, most credit card rental insurance doesn't include liability coverage for injuries or damage done to other vehicles.
• There can be coverage exclusions and limits for certain types of vehicles, such as luxury cars and trucks, as well as rentals in other countries.
• To activate rental car insurance from a credit card, you'll need to book and pay for the rental with said card and specifically decline the rental company's collision damage waiver.

What to do if you don't have a personal auto insurance policy

If you don't have an auto insurance policy and need to rent a car, you'll be required to purchase the minimum coverage mandated by law in your state through the rental company. Without personal auto insurance, you'd be responsible for any damages or injuries you cause while driving.

Coverage when traveling abroad

Your existing car insurance or credit card coverage may extend to international rentals, but that depends on your provider and the country you're visiting. In some places, local requirements may require you to buy insurance from the car rental company, even if you have an existing personal auto insurance policy.

Here's what you need to be aware of

• Many U.S. auto insurers won't cover rental cars outside the country, while some may offer limited coverage in Canada or Mexico. When traveling to other destinations, you may need to buy additional coverage.
• Some credit cards provide international rental car insurance, but coverage will vary and certain countries may be excluded.
• If your personal insurance or credit card doesn't cover international rentals, you may need to buy a collision damage waiver or loss damage waiver from the rental car company.

Understanding rental car insurance

In some cases, a rental car company will assign coverage that you don't recognize, such as a collision loss damage waiver. While not technically insurance, the waiver is an optional protection offered by rental car companies that waives your financial responsibility if the rental car is damaged or stolen.

Simply put, if you buy the waiver, the rental company agrees not to charge you for damage or theft (be sure to read the fine print for possible exceptions). If you decline the waiver and have a loss, you'll be responsible for repair costs—unless your full coverage personal auto insurance policy or credit card company provides coverage.

Rental car companies also offer personal effects coverage as an optional add-on, helping to protect your belongings in case of theft or damage while using the rental car. For instance, if your luggage or other valuables are stolen from the vehicle, this coverage can reimburse you up to a certain limit.

Rental car insurance exclusions to be aware of

Rental car insurance policies often have exclusions, meaning that certain situations or damages aren't covered.

Policies can include exclusions for:

• Causing an accident due to driving while intoxicated
• Allowing unauthorized drivers who are not listed on the rental agreement to drive
• Off-road driving
• Negligence (such as leaving keys in a rental and the car is stolen)
• Damage to tires, glass, and the undercarriage of the rental (most basic rental insurance policies don't cover these damages unless you buy additional protection)
• Driving in certain countries

Keep in mind that while the personal auto insurance you already have may extend to your rental car, it may not cover you in every situation. If you have concerns about certain risks and whether or not you are adequately protected, supplementing with the rental car coverage may be the way to go.

Also, consider asking your insurance company about rental car reimbursement. While this coverage doesn't provide insurance for renting a car, it helps cover the cost of a rental if your vehicle is damaged and must be kept in the auto repair shop for an extended period.