Gaps in Your Coverage? When to Buy Rental Car Insurance

When renting a car, being prepared is essential. This includes evaluating your insurance options. If you don’t have personal car insurance, you might need to rely on the rental company’s policy—or your credit card might offer some coverage. Here’s what you need to know to stay covered.

Do I Need to Be Insured to Rent a Car?

In the U.S., legally driving requires insurance or proof that you can cover damages financially. This means you’ll need coverage when renting a car—whether from your own policy, the rental company, or another source. Here are some common ways to secure coverage:

• Your personal auto insurance (if you have one).
• Rental company coverage offered at the time of rental.
• Credit card benefits with rental car insurance features.
• Short-term or non-owner car insurance policies.

Tip: Rental insurance costs can vary significantly by location. Using a VPN to check rates from different regions may help you find a better deal.

Does My Auto Insurance Cover Rentals?

Most personal car insurance policies extend coverage to rental cars, at least for personal use within the U.S. However, it’s always wise to confirm with your insurer. Typically, your existing policy will include:

• Liability coverage: Pays for injuries or property damage you cause to others.
• Medical payments (MedPay) or personal injury protection (PIP): Covers medical expenses for you and your passengers, regardless of fault.
• Collision coverage: Covers repair or replacement of the rental car if you’re in an accident.
• Comprehensive coverage: Protects against theft, fire, vandalism, or non-collision damage.
• Uninsured/underinsured motorist coverage: Helps if an at-fault driver can’t pay for damages.

Did you know? Your homeowner’s or renter’s insurance might cover personal belongings stolen from a rental car. Check with your insurer to confirm.

What About Credit Card Coverage?

Many credit cards, such as those offered by Capital One, include rental car insurance benefits. This coverage, often a loss damage waiver (LDW) or collision damage waiver (CDW), protects against theft or damage to the rental car. However, credit card coverage usually excludes liability, medical expenses, or stolen personal items.

Steps to use credit card coverage:

1. Read your credit card’s benefits guide to understand the coverage. Determine if it’s primary (applies first) or secondary (kicks in after your personal policy).
2. Pay for the rental in full with the card.
3. Decline the rental company’s collision insurance at the counter.

For liability and medical coverage, you’ll still need other insurance.

What Insurance Do Rental Companies Offer?

If you don’t have personal or credit card coverage, rental companies provide these options:

• Loss Damage Waiver (LDW): Covers theft or damage to the rental car. Costs range from $15 to $30 per day, sometimes including extra services like towing.
• Liability Insurance: Covers damages or injuries to others. Additional coverage typically costs $8 to $17 per day.
• Personal Accident Insurance (PAI): Covers medical expenses for you and your passengers, costing around $1 to $5 per day.
• Personal Effects Protection (PEP): Reimburses for stolen personal items, usually costing $1 to $2 per day.

While convenient, these options may be more expensive than third-party insurance.

When Should You Buy Rental Insurance?

Rental car insurance may be a smart choice if:

• Your personal policy is limited or doesn’t cover rentals.
• You prefer not to file claims through your own insurer.
• You’re driving internationally, where your insurance may not apply.
• You don’t have personal car insurance at all.

You can skip rental insurance if:

• Your personal policy includes comprehensive and collision coverage.
• Your credit card provides sufficient protection.
• You’ve purchased third-party rental car insurance in advance.

In Summary

Before you rent a car, review your insurance options. Check what your existing auto policy and credit cards cover to avoid unnecessary expenses. Still unsure? Opting for the rental agency’s insurance is always a reliable fallback.