Should You Buy Car Rental Insurance?

Travel is expensive enough, even if you stick to the basics and forgo any upgrades. So when it comes to renting a car on your trip, you’re left with an often difficult choice: Is it worth it to pay more for rental insurance? On one hand, insurance provides peace of mind, but on the other, it may seem like an unnecessary expenditure that rarely comes in handy. Before you book your next rental vehicle, here’s how to decide whether adding car rental insurance is truly worth it.

The Basics of Car Rental Insurance

When you rent a car, you may be offered a number of upsell options such as satellite radio, GPS, toll coverage, and of course, insurance. There are several variations of car rental insurance to understand:

• Collision Damage Waiver: While sometimes included in the basic rental agreement, collision damage waivers (sometimes called loss damage waivers) provide coverage in the event of any damage to the bodywork of the rental car while it is in your possession. The CDW is not technically insurance, but rather an agreement for the rental company to waive your liability for the total cost of the damages.. Be sure to read the fine print carefully as to what is covered under the CDW — damage to features like the windows or wheels is sometimes excluded (but coverage may be available for an additional daily cost).

• Theft Protection: In the event a vehicle is stolen, you won’t be responsible for paying the entire value of the car. Just be sure to check your agreement carefully, as there are ways you can invalidate this coverage, such as by leaving the keys in the ignition.

• Personal Accident Insurance: If you or anyone traveling in your rental car is injured in an accident, this option provides coverage for medical costs, such as ambulance transportation to a hospital. 

• Personal Effects Coverage: While standard theft protection covers the car itself, you can also pay for personal effects coverage in order to protect your personal belongings inside the vehicle. If this is not offered by the car rental company, you can buy it through a third-party service provider.

• Third-Party Liability: This type of coverage partially protects you against any claims filed for damaging another person’s vehicle or property, or for injuring another person with your rental vehicle. Many companies offer a basic tier plus supplemental liability protection, which ups your coverage.

• Roadside Assistance: In the event your car breaks down, buying roadside assistance from the rental company can provide you with direct service to help you get back on your way.

Protections You May Already Have

If you have either a credit card or insurance for your personal vehicle, then you may be afforded certain protections that extend to your rental car. As Consumer Reports notes, many personal automobile insurance plans will cover incidents with your rental car. 

The amount of coverage varies from plan to plan, so contact your personal insurance provider for more details. You may still end up paying a deductible in the end, which is an additional factor to consider when weighing the daily cost of coverage from the rental company.

While most credit cards don’t offer primary rental car coverage (though there are exceptions, such as the Chase Sapphire Reserve), many card issuers provide card holders with a supplemental benefit known as secondary coverage. Once you’ve maxed out personal auto insurance coverage, your credit card company will cover some, but usually not all, additional claim charges. 

Check with your credit card provider to see if your plan allows you any type of primary or secondary coverage on rental vehicles. Note that typically, you’ll have to pay the entire cost of the rental with your card and decline coverage from the car rental agency in order for your credit card coverage to take effect.

Other Considerations

If you don’t have personal car insurance or a credit card that offers car rental coverage, then buying insurance from the car rental company may be a good option. Without any coverage to fall back on, you could be left on the hook for thousands of dollars in the event of theft or an accident.

Another circumstance in which you should purchase rental insurance is if the car you’re renting is worth considerably more than the one you own. Insurance provider Geico notes that “if you’re renting a car in the U.S. of similar value to your personal car, it is likely that your auto insurance coverage will be adequate for the rental.” However, expensive luxury vehicles such as sports cars wouldn’t be covered by your personal plan, unless you own a luxury car back home.

Additionally, while your existing insurance may provide adequate coverage if you’re renting in the U.S. or Canada, it can be a different story when renting a car abroad. Some countries, such as Italy, even require foreign renters to purchase a collision damage waiver. In some cases, your personal auto coverage may not be valid outside the U.S. or Canada, so it may be a good idea to add the collision damage waiver or other insurance options from the car rental provider to make sure you’re covered.

At the end of the day, while it’s an additional cost to consider, the most obvious benefit to purchasing additional rental coverage is the peace of mind that it provides. Without rental insurance, you may be left in a constant state of panic worrying about getting even the smallest scratch on your rental car. But if you do your due diligence, you may already be covered with your existing options and can forgo the extra cost.