Do I Need Car Insurance to Rent a Car?

Do You Need Insurance to Rent a Car?

You'll need some form of auto insurance coverage when you rent a car, but you don't necessarily need to have your own personal car insurance policy to rent a car.

Every U.S. state requires drivers to carry car insurance or proof of financial responsibility to drive legally. This means you'll need some form of coverage anytime you rent a car in the U.S. The car rental company will likely offer you a policy, but it's just one of several options you can use.

Typically, you can secure coverage in the following ways:

• Use a personal car insurance policy
• Buy temporary insurance from the car rental company
• Rent the car using a credit card that provides rental car coverage
• Purchase short-term car insurance or non-owner car insurance

Does My Insurance Cover Rental Cars?

Your personal car insurance policy may cover rental cars. Your existing policy will most likely provide adequate coverage for vehicles you rent for personal use in the U.S. or Canada. To be safe, check with your insurer to confirm your coverage before heading to the rental counter.

Basic auto policies include liability insurance and any other coverages required by state law. Full-coverage policies also include add-ons like collision and comprehensive insurance.

Here's what each type of coverage does:

Tip: Homeowners insurance and renters insurance often cover personal belongings even outside the home, like when you're in a rental car. Check with your insurance issuer to see if this extends to rental vehicles. This could be a lifesaver if your luggage or camera are stolen from the rental car during a trip.

Learn more: How Does Rental Car Insurance Work?

Does My Credit Card Provide Rental Car Insurance?

Many credit cards offer rental car coverage as a free benefit to cardholders if you use your credit card to pay for the rental car. You may hear it referred to as insurance, but the coverage actually comes in the form of a collision damage waiver or loss damage waiver (more on that later). These waivers release you from some or all of the financial responsibility if your rental car is damaged or stolen.

You'll need to check directly with your credit card issuer to determine whether you have coverage.

Learn more: How Does Credit Card Rental Car Insurance Work?

How to Use Your Credit Card for Rental Car Coverage

Here are steps you can take to use your credit card for rental car coverage:

1. Go over your credit card benefits. Log in to your online account, contact the card issuer or read the card agreement to find out whether your card offers this type of benefit. Also check whether it's secondary or primary coverage.
2. Determine if you need supplemental coverage. Credit cards generally don't cover liability, personal belongings, medical expenses or personal injury. For those, you'll need to rely on your personal car insurance or rental car insurance.
3. Pay for the car rental. Activating the benefit usually involves putting the car rental in your name and charging the costs to the credit card that offers the loss damage waiver.
4. Decline the car rental agency's collision insurance. If you've determined you don't need it, you can choose to decline insurance coverage the rental agency offers.

If you need to file a claim, contact your card issuer for next steps. You'll typically need to provide photos of the damage along with copies of the accident report form, police report, auto rental agreement, repair estimate and itemized repair bill.

Types of Rental Car Insurance

Between your auto insurance and your credit card, your rental car may be fully protected. If not, you can fill in coverage gaps with insurance from the rental car company.

Rental car companies typically offer four kinds of insurance:

Loss Damage Waiver

Also called collision damage waiver, this coverage is similar to collision and comprehensive coverage. It waives your financial responsibility for theft of or damage to the rental car. Some policies also cover towing, administrative fees or loss of use fees. This waiver typically costs $15 to $30 per day.

Liability Insurance

Liability coverage pays for your legal costs if you cause an accident while driving a rental car. By law, rental car companies must offer the minimum level of liability coverage required in the state where you're renting the car. You can raise your coverage limits with supplemental liability insurance, which typically costs $8 to $17 per day.

Personal Accident Insurance (PAI)

Like medical coverage or PIP, PAI pays medical expenses for you and your passengers. PAI averages $1 to $5 per day. You may already have enough coverage for medical expenses through your personal health insurance plan.

Personal Effects Protection (PEP)

PEP pays to replace personal property stolen from your rental vehicle. This might be covered by your homeowners or renters insurance, but you'll have to pay the insurance deductible if you file an insurance claim. Since PEP averages just $1 to $2 per day, a PEP plan with no deductible could be a good deal.

Learn more:What Are the Different Types of Car Insurance?

How to Buy Rental Car Insurance

You can typically buy rental car insurance from the car rental company ahead of time when you reserve your vehicle. If you're not sure if you need it, however, you can wait until the last minute and buy rental car coverage when you pick the car up. Even if you don't plan to buy rental car insurance, it will typically be offered at the time you get the car.

Buying Third-Party Rental Car Insurance

You can also purchase rental car insurance through third-party car insurance companies that sell insurance for rental cars, such as:

• Allianz Global Assistance
• Bonzah
• RentalCover
• Sure

Just keep in mind that, unlike the insurance you can buy directly from the rental car company, you'll need to buy third-party rental car insurance before you pick up your vehicle.

Should I Get Rental Car Insurance?

Buying coverage through the car rental agency can be a good option in some cases, but it comes down to the specifics of your situation.

When You May Need Rental Car Insurance

Consider buying rental car insurance if:

• Your personal policy has minimal liability insurance or doesn't have collision and comprehensive coverage.
• You want to avoid filing a claim through your personal policy.
• You plan to drive the rental car outside the U.S. or Canada.
• You don't have your own car insurance or a credit card that provides coverage.

When You May Not Need Rental Car Insurance

On the other hand, you may not need rental car insurance if:

• Your own auto insurance policy provides enough coverage.
• Your credit card offers supplemental coverage.
• You've purchased a stand-alone policy through a separate company.

The Bottom Line

Before leaving for your trip, research your auto insurance needs. Go through your personal car insurance coverage limits, and check whether you have a credit card that offers a car rental coverage benefit. Taking advantage of the protections you already have can help you safeguard your rental vehicle without paying for services you don't need. But if you want supplemental coverage, you can buy it through the car rental agency ahead of time.