Last updated: October 2023

Rental Car Insurance

You're standing in the airport, relieved to have made it to your destination. With luggage in tow, your pen is poised to sign the rental car agreement, and you're almost ready to be on your way and explore a new city. But then you’re asked if you want to add rental car insurance to your agreement. Do you need insurance for a rented car? Does your existing car insurance cover rentals? Is spending the extra money worth it?

The answer to these questions isn't always clear cut. Fortunately, a bit of research before you set out on your travels can help you be more prepared at the rental car counter and ensure you have the coverage you need.

Rental car insurance: when you may not need it

When your credit card company or auto club offers rental coverage

Some credit card companies and motor clubs provide members with free rental coverage when you use their card to pay for the rental, according to the Federal Trade Commission. Look on the back of the card you’ll be using to pay for your rental and look for the customer service phone number. Before the rental agency can convince you that you need their additional coverage, ask your credit card company or auto club if they already provide it and at what level.

When your personal car insurance offers rental coverage

Even if your credit card doesn't offer insurance for rented cars, comprehensive and collision coverage for cars rented for personal, pleasure use (for example, a car you rent while on vacation and not one you rented for a business trip) may already be included in your existing auto policy for your vehicle.

Also, many car insurance policies will provide both liability and physical damage coverage to a rental car you need as a temporary substitute for your covered auto if it is unavailable due to a loss or due to its mechanical breakdown or servicing. If this is the case with your auto insurance policy, it might not be necessary to buy extra coverage at the rental counter.  Then again, certain low cost auto insurance policies do not provide physical damage coverage for any vehicle you do not own, so purchasing at the counter might be a worthwhile expense for peace of mind.

To avoid unnecessary spending, it's important to verify if you have insurance for rental cars before you pack your bags and head out on your trip. Call your current car insurance company to inquire exactly what type of coverage you would have on a rental car under your circumstances.

Does car insurance cover rental cars?

Contact your insurance provider or agent to ask about the specifics of your current auto policy. Find out if your plan only applies in certain countries, and whether or not you’d be covered for driving accidents in your destination country.

Even if your current policy extends to rental cars, you could still be responsible for the cost of some rental car repairs in the event of an accident. That's because you might still have to pay the deductible on your existing auto policy if you get into an accident in a rental car.

You don't want to risk getting in an accident and not having coverage, so it's best to know for sure what type of coverage you'll need—if any—ahead of time. Read on to find out what kinds of policies may be offered to you at the rental car counter, and which ones may or may not apply to you when you take a trip.

Do I need rental car insurance?

Let's say you choose to purchase rental car insurance because a rental is not already covered by your existing policy. Now, the question is, what kind of rental car insurance do you need?

According to Consumer Affairs, buying all of the offered coverages can add up to $30 a day to your rental car bill. That’s some serious cash that you could use for souvenirs or a delicious meal. Check out a brief overview of types of rental car insurance before you commit to any of them:

Collision Damage Waiver (CDW)

This type of rental car insurance can cover you in case your rental car is stolen or damaged. As long as you don’t drive the rental car recklessly or allow another driver who’s not on your rental agreement to get behind the wheel, this coverage will help protect you from having to pay for some or all of the costs in the event of vehicle theft or damage.

Supplemental Liability Protection (SLP)

Legally, rental car companies must provide some coverage under an SLP policy to protect themselves and you from lawsuits resulting from accidents involving the rental car. Purchasing a supplemental policy means you're covered for a higher dollar amount.

Personal Accident Insurance (PAI)

This coverage can help offset the costs of ambulance, medical, or death related bills in the event of an accident. Many health insurance, auto insurance, or life insurance policies already cover these types of expenses.

Personal Effects Coverage (PEC)

This type of rental car insurance covers applies to your personal belongings, like laptops or smartphones. These items may already be covered in your homeowner or renters insurance policy. If they aren't, this coverage may be worth purchasing if your personal belongings are stolen while you’re using the rental car.

Do I need insurance to rent a car?

Save yourself the blank stare, the awkward silence, and the potentially pressured purchase at the rental car counter. Do your research ahead of time so you can confidently answer the question, “Do I need insurance to rent a car?” when you're standing at the airport counter.

Call 1-877-GO-DIRECT, click, or come into a Direct Auto location today to learn more about the ins and outs of car insurance while traveling. Or, get started now with a free auto insurance quote online.

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