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Should You Buy Rental Car Insurance on You Car Insurance Policy

So you are about to rent a car, and drive down to the beach, a couple of hours away for a great and fun vacation. As you stand at the counter of the car rental car company, they present you with a detailed contract and list down a number of insurance options. Hey, wait, insurance? You already have car insurance, so should you pay for coverage on a rented car as well? Let’s try to answer this question.

I already have car insurance – so why do I need rental car insurance now?

A common question, which is asked by so many of you. What’s the answer? It depends on your particular scenario. While you should be covered, it should only be minimal without you having to pay any extra charges. Or get duplicate coverage, which may not even be needed.

What should you do? Check the auto insurance policy, which you already have. Talk to your current insurance provider, and see if you are covered for rental cars. If you have a comprehensive policy, including liability coverage, chances are that the same policy, or at least some of the add-ons, would apply to rental cars as well.

But the car you rent also has an effect. If you rent a car which has a value in the same range as your current car, then coverage should be adequate. But, if you want to go on vacation in an expensive car much higher in value than yours, then maybe you should consider the extra coverage being offered by the car rental company.

What if you pay the rent with your credit card?

In that case, your car issuer may offer coverage for rental cars if the card is under your name. But, this is secondary, implying that your auto insurance will pay first.

What coverage does rental car insurance include?

You should know which coverage is offered by rental car insurance. Generally, most of the companies have a standard set of policies. We’ll list down all of these, but make sure that you don’t buy anything that you already have.

Coverage which may be included in your current auto insurance policy

  • Liability Coverage – The basic component of an auto insurance policy; skip this at the rental company if you already have it for your current car.

  • Personal Accident Coverage – This policy pays your medical bills if you crash the rented car. But if you already have this with your auto insurance policy, you won’t need it.

  • Personal effects coverage – Do you already have a homeowner, condo or tenant insurance policy? In that case, you may already be covered for belongings stolen from a rental car. Go through your policy again, just to be sure.

Coverage which you may need

  • Collision or Loss Damage Waiver – Not really a coverage policy; it’s just a waiver for transferring financial responsibility to the rental company if the car is stolen or damaged; ‘loss of use’ coverage is also often included.