If you have car insurance do you need rental insurance

Rental car insurance: do you need it?

Understand your coverage before signing any rental insurance agreement.

Table of Contents Show

Rental car insurance: do you need it?
Talk to your insurance agent
Call your credit card company
Review your rental coverage options
Renting for work or play?
Rental Car Coverage on a Personal Auto Policy
Types of Rental Car Insurance
Liability insurance coverage for rental cars
Personal accident insurance coverage for rental cars
Personal effects insurance coverage for rental cars
Loss damage waiver (LDW) for rental cars
Paying for a Rental Car With a Credit Card
Protect Your Rental Car

It's a standard question at a rental car company counter: "Do you need rental car insurance?" The answer can be muddy, which is why preparation is key. Here's how to sort out the specifics.

Talk to your insurance agent

Most vehicle insurance policies already include some sort of rental car insurance coverage — so if you purchase a rental car policy, you're paying extra when you may not have to. Ask your State Farm® agent these key questions:

Do liability, comprehensive, and collision coverage and any deductibles extend to rental car agreements? Coverage may not apply if a rental car is stolen or damaged; in that case, you may need supplemental insurance from the rental car company.
Are administrative or towing fees for rental cars covered?
Does homeowners or renters insurance extend to personal items in a rented car? This is sometimes referred to as off-premises coverage.
Does your auto policy offer loss of income coverage? The rental car company may charge you for what they could have earned had a damaged car not needed repair.

Call your credit card company

If you pay for a rental car with a major credit card, there's a good chance that the card issuer offers secondary car rental insurance at no charge. This typically helps only with additional expenses and the deductible beyond your existing auto policy.

Review your rental coverage options

Never sign anything or agree to coverage without reading the policy thoroughly, and know that insurance requirements and rules vary from state to state.

Unless you have full auto insurance coverage, including liability, comprehensive, and collision, you may need to get some kind of insurance coverage from the rental organization. In place of collision or comprehensive, you may be able to obtain a rental car company loss damage waiver, or LDW, which can help cover damage-repair costs, administrative fees, and towing. However, a rental car company generally limits how and when the LDW can be used — for example, if you were speeding, coverage may be negated.
If you don't have health or medical payments coverage on an existing policy, you may be able to purchase personal accident coverage.
If you're renting from a nontraditional car sharing company, review the agreement. While insurance is often included in the fee, there may be restrictions or extra costs, particularly if the car is stolen.

Renting for work or play?

Coverage extensions from your existing policy or your credit card may not apply if you're renting a car for business. In that case, review the coverage options through your employer.

Say you’re taking that long-anticipated vacation and will be using a rental car to zip around to new and exciting places. Fun!

But when the salesperson at the rental car counter asks you about buying rental car insurance, you might not know what to do. On the one hand, you’ll want to make sure you’ve got the right coverage so you can enjoy your vacation carefree. But you’ll also want to avoid spending your hard-earned cash on car insurance you might already have.

We understand your dilemma, and we’re here to give you the confidence and know-how to make smart choices when it comes to rental cars and insurance.

Rental Car Coverage on a Personal Auto Policy

If you have a personal auto insurance policy, that coverage will most likely extend to your rental car. That means your rental car can be covered by optional auto insurance coverages you may have like collision and comprehensive car insurance, in addition to your bodily injury liability and property damage liability coverage.

If you’re unsure if your personal auto insurance carries over to rental cars, one of the best ways to learn is to reach out to your insurance agent. You’ll save time and money if you know before renting a car whether your personal auto insurance policy actually covers your rental.

Types of Rental Car Insurance

Rental car firms typically offer four insurance coverage options:

Liability
Personal accident
Personal effects
Loss damage waiver

If you already have car insurance, it might cover some or all of these options if you’re using the rental car for personal, non-business-related reasons. That’s why it’s important to reach out to your agent first.

In the meantime, here’s a deeper dive into each of the main four coverage types for rental cars. You’ll also learn the options you should consider to make sure you’re protected, while avoiding duplicating coverage you might already have.

Liability insurance coverage for rental cars

Also known as supplemental liability coverage, liability coverage helps pay for the costs of damage to other cars and property, or injuries to others, if you cause an accident in your rental car.

Liability insurance also is the foundation of personal auto insurance, and most states require every driver to carry it. Although your car insurance policy usually is tied to a specific vehicle, it also can also give you coverage when you drive other vehicles. So, if you already have car insurance, any car you drive is typically covered by your existing liability policy — including a rental car.

You might also receive further coverage on your rental as a benefit from your credit card provider if you pay for the rental with their card. This may or may not include collision and liability coverage, which pays the excess beyond what your personal auto policy covers. So, if you carry a minimum amount of liability insurance, paying with your credit card possibly could add coverage to your existing plan.

Quick takeaway: Do you need rental car liability coverage? Probably not, if you have an existing auto policy.

If you have adequate personal auto insurance liability limits and secondary credit card coverage, the answer is usually, “No.” If you don’t own a car or have minimal auto liability insurance, consider the rental car offer.

Personal accident insurance coverage for rental cars

Personal accident coverage helps pay for the medical costs involved if you or the passengers in your rental car get hurt in a crash.

If you and your passengers are all covered by health insurance, this coverage is probably unnecessary. Medical expenses may also be covered by an inexpensive add-on to your auto policy, so it’s worth talking to your insurance provider if you’re concerned about this type of coverage.

Quick takeaway: Do you need rental car personal accident coverage? Probably not, if you and your passengers already have health insurance or you carry medical expense coverage on your personal auto policy.

Personal effects insurance coverage for rental cars

Personal effects coverage helps pay for the costs of replacing or repairing belongings in your rental car that were stolen or damaged. If you have homeowners or renters insurance, it most likely will cover your stuff if it’s stolen or damaged in your rental car, subject to your deductible.

A smart preventative measure is to remove your things from your rental car when you’re not in it. If you have very valuable items like jewelry, talk to your insurance agent to increase the limits your personal policy will pay if these items are lost or stolen.

Quick takeaway: Do you need rental car personal effects coverage? Probably not, depending on your existing homeowners and rental coverage.

But if you have high deductibles on personal effects losses, weigh the rental car cost for this coverage versus your potential loss.

Loss damage waiver (LDW) for rental cars

Also known as a collision damage waiver, a loss-damage waiver technically is not insurance; it basically gets you off the hook for costs involved if the rental car is stolen or damaged — as long as the damage isn’t caused by speeding, driving on unpaved roads, or other excluded activities in most contracts. It also may cover “loss of use” — which means the loss of income to the rental company — while the rental car is getting repaired.

If you have collision and comprehensive coverage as part of your auto policy, you may not need the loss damage waiver if it’s only limited to paying for repairs, or replacing the rental car if it’s stolen.

If you don’t have collision and comprehensive coverage, check to see if your credit card company would cover the costs of theft or damage.

However, when it comes to loss of use coverage, your auto policy or your credit card might not bail you out. Your insurance provider may challenge these charges by asking the rental car company to prove they had no other rental vehicles available while the vehicle you damaged was out of service. But you may want to consider purchasing the loss damage waiver for extra peace of mind.

Quick takeaway: Do you need a loss damage waiver? It depends.

If you have high collision and comprehensive deductibles on your personal auto policy or no coverage at all, you might opt for the rental car damage waiver. Most policies and credit cards also don’t cover you against loss of use, so a loss damage waiver from the rental company can provide peace of mind that there won’t be any extra charges.

Paying for a Rental Car With a Credit Card

The credit card you use to pay for your rental — and the benefits it provides — can be a determining factor for whether or not you purchase a number of these insurance products. So, it's worthwhile to make a thoughtful decision about how you'll pay for your rental.

In addition to the various card benefits, you should consider the amount of credit available on each card. The reason: In the event there are damages, a rental car company is likely to charge your card immediately — and let the coverage sort itself out later. Choosing a card with less available credit will limit what the rental car agency can charge on it.

Finally, be aware that most credit cards will require you to decline any rental car insurance coverage in order to receive benefits. Consider calling your credit card company to learn more about your coverage and credit limits before traveling, too.

Protect Your Rental Car

Whatever mix of coverage you choose, it’s worth ensuring that the car’s condition is assessed and recorded fairly and accurately before taking ownership of the vehicle. When you go pick it up, take pictures inside and out.

Inspect the vehicle with a rental car employee and be sure the rental agency records all prior damage, including nicks, dents and tears — no matter how small — before leaving the rental agency. If they tell you not to worry about small dings, ask them nicely to please note them on your paperwork anyway. That way you’ll have the paperwork to prove the damage was pre-existing.

Whether you’re off on a big adventure or on your way to relax on the beach, one thing’s for certain: you didn’t travel all that way to talk insurance with the agents at a rental car desk. Spending just a few minutes chatting with your insurance agent before you leave could give you all the information you need to confidently confirm or get extra coverage if needed, and get on with the fun!