What Insurance Do I Need to Rent a Car?

Car insurance Q&A: “What insurance do I need to rent a car?”

It’s no different driving your own car than it is a rental car – you need car insurance. The real question here is; do you need to buy the “insurance” from the rental car company?

Your insurer or insurance agent will likely tell you to buy the coverage to stay on the safe side. After all, they see denied insurance claims every day and understand the downside of skimping out on coverage only to be sorry at insurance claim time.

On the other hand, the extra coverage is expensive and you’re not made of money…and possibly willing to accept a little risk.

The reality is you can probably statistically “get away” without paying through the nose for all of extra options the rental car company will try to shove down your throat. That is, if you already have an auto insurance policy in-force.

You see, most auto insurance policies will cover you for the use of a rental car, including coverage for your liability and any physical damage you may cause to the rented car and other vehicles/people, assuming you have high enough liability limits.

However, there are some potential pitfalls that come with renting a car, even when you have the appropriate coverage in place. We will list them below and let you decide on what your comfort level is.

Here’s What Can Go Wrong

1. You have minimum limit liability car insurance – if you are skating by with state minimum coverage, but like to travel in style while on vacation, keep in mind that your property damage liability limit must be higher than the value of your rental car. You will be paying the difference if you total the rental car that happens to be something pricey like a Corvette convertible.

2. The rental car company requires “full value” coverage – car insurance policies pay out on an actual cash value basis. This means they will pay THE LESSER of the cost to repair or replace a car you damage. If the car you rent has depreciated 30% due to the 50,000 miles put on it in a mere six months, your insurer is NOT going to pay the “full value” stipulated in your rental agreement.

3. You damage the rental car and it’s fixed BEFORE your insurance adjuster gets a chance to see it – every car insurance policy (or property policy) includes a contractual obligation that permits the insurer to review any property damage in order to determine how much they should have to pay out. If the rental car company fixes the car before you adjuster sees it…you may be seriously out of luck.

Final Word

So, there you have it. You don’t necessarily HAVE to buy the rental car insurance add-ons, but you are taking a certain amount of risk if you don’t.

Read more about exactly what insurance the rental car company is offering you. Again, it’s not absolutely necessary to purchase this type of coverage, but it may be a good idea to avoid headaches and uncertainty.

As we all know, paying for insurance is a huge waste of money…until you need it.