Picture this: you’re visiting the family in another state for the holidays. After a long, less-than-comfortable flight you make a beeline for the rental counter to get some wheels. Within a few minutes, it seems like you’re good to go — but then the rental agent asks, “Would you like to buy rental car insurance?”

And all you can think is, “Do I?”

With Thanksgiving and the holidays just around the corner, we thought it would be the perfect time to answer this all-important question once and for all.

Know your coverage to see if you need rental car insurance

Knowing how to answer the rep at the rental agency is all about knowing the answer to an entirely different question: “What insurance do I already have?”

The fact is, for most people, insurance purchased from the rental company is unnecessary. Why? Because if you have car insurance, you likely already have all the coverage you need.

The following standard coverages will continue to protect you while you’re driving a rental:

  • Bodily injury and property damage liability
  • Comprehensive
  • Collision

Note that the existing limits on your liability coverages and the deductibles on your comprehensive and collision policies will still apply. Your comprehensive and collision coverages will pay up to the actual cash value (current market value) of the rental vehicle for repairs or replacement.

Sounds good, you might say, but what if someone steals my stuff from the rental? No worries: your existing homeowners insurance or renters insurance will, much like your car insurance, continue to protect you when behind the wheel of a rental.

Business travelers, beware

There’s another caveat, though: if you’re renting a car for business rather than personal use, there’s a chance that your personal car insurance coverage won’t protect you. If you’re just commuting to and from work or some work-related event, your personal policy should be sufficient. But if you’ll be transporting products or work-related equipment, you’ll want to check with your insurance company to be certain you’re covered.

Give your credit card company a ring

Another thing you may not know is that your credit card company might offer additional rental coverage as well. So before you fork over extra money for insurance, give your credit card company a call.

How a rental car claim could affect your premium

Keep in mind that if you have to file a claim to cover the cost of an incident in your rental car, that may affect your policy premium in the future. Thus, the advantage of buying the rental agency’s coverage is that you’ll be able to use it instead of your own coverage, thereby avoiding the need to file a claim on your personal policy. Plus you avoid needing to front your deductible.

Want to know more about rental car coverage?

Our myth-busting article on rental car coverage provides in-depth info on what coverages most rental agencies offer, why you might or might not need them, and what your existing insurance policies may offer when you’re behind the wheel of a rental.

Insurance 101 | Car insurance 101


about John

John Moore Williams has spent his writing career providing advice on everything from proper septic system care to where to eat in Nice (and, during his tenure at Esurance, how to find the right insurance coverages). An avid descriptive grammarian, he encourages you to end sentences with prepositions and to split infinitives whenever possible.