Most everyone needs to rent a car at some time or another. Renting the car is the easy part; deciding on the age-old question that every rental agent asks—“Do you want car rental insurance?—is the part that has most people making an expensive last-minute decision.

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Is car rental insurance really necessary?

That’s the first question people ask. The short answer is “yes.” But that doesn’t mean that you need the expensive stuff that your rental car agency is trying to push. There are some important things you need to think about before you waive the right to car rental insurance on your rental car agreement, however.

First, we’ll talk about what car rental insurance purchased through the rental agency can cover:

  • Car rental insurance carries a waiver called a loss/damage waiver that releases renters from liability should their rental car be stolen, vandalized or damaged in a collision.
  • Car rental insurance policies can also include personal accident insurance, which covers medical costs for you and any passengers due to injuries sustained in an accident with your rental car.
  • Most car rental insurance policies carry personal effects coverage, which covers any personal items damaged in a collision or stolen from the rental car.
  • Car rental insurance policies also usually include liability insurance that covers third party costs for both medical care and property damage if another vehicle is involved in an accident and the fault for the accident lies with the rental car driver.

How much does car rental insurance cost?

Depending on what mix of policies you purchase through the car rental company, car rental insurance can cost anywhere from $10 a day up to $40 a day. All car rental companies have different prices and different rental insurance policy options, so it’s important to do your detective work and find out the details on insurance coverage before you leave for your trip.

Although car rental insurance policies can carry great coverage, the truth of the matter is that you don’t always need additional car rental insurance. Here are some things to consider before you purchase car rental insurance from the rental company you’re renting from...

Am I covered under my personal auto insurance policy?

Many personal auto insurance policies have addendums that cover a person if they’re renting a car from a car rental agency. Check with your carrier to see if your personal insurance policy contains this benefit before you go on your trip. Many of the best auto insurance companies offer this benefit to their clients.

As a side note, if you are covered for a rental car under your personal auto insurance policy, it’s important to make sure your personal auto loan coverage includes both liability and comprehensive/collision coverage for the rental car. Many people have liability-only auto insurance policies and that may mean you don’t have full coverage for rental car insurance either.

If you don’t have coverage with your current insurance provider, consider getting insured through a third-party site instead of with the rental car provider. The Chicago Tribune discusses why that might be your best option in some cases. InsureMyRentalCar.com is a site that you should look at to get quotes. It will be a much cheaper option than getting the overpriced insurance at the car rental desk.

Am I covered under my current credit card benefits?

Many credit card companies will offer free rental car insurance as an added benefit when you pay for your rental car fees with their credit card. Check online at your credit card company’s website under the card features and benefits section. You can also use the phone number on the back of your credit card to make a quick phone call to your credit card company to see if they offer this benefit.

Does my travel insurance cover my rental car?

Many people choose to purchase travel insurance when traveling, and many travel insurance policies do include coverage for rental car usage. Again, your credit card might offer travel insurance as well which could include rental car coverage. If you’ve already purchased travel insurance for your trip, check the policy terms to see if it covers the rental car(s) you’ll be using on your trip before you purchase a separate rental car insurance policy.

Am I self-insured?

While it’s vitally important to have proper insurance for all areas of life, I’m a big fan of working to become self-insured so that many insurance policies aren’t necessary.

What does it mean to be self-insured? Basically it means that you’ve saved and invested enough cash to where it wouldn’t be a big deal for you to fork over the money for the deductible to pay for any damage to a rental car or for medical bills.  But again, you’ve got to have a policy on your current auto loan to cover the rest of the costs for damage to property and people in case of an at-fault accident if you’re going to count being self-insured as a reason for not purchasing rental car insurance.

Conclusion

Car rental insurance is certainly necessary. You don’t want to drive without it and risk massive financial damage that could also ruin your credit. However, it is always a good idea to check other insurance benefits you might already have in place before you fork over the cash for an independent car rental insurance policy. And don't forget to shop around for cheaper insurance rates through reputable third-party sites to avoid paying the exorbitant insurance prices that the car rental companies charge.

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