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Should You Buy Extra Rental Car Insurance at the Counter?

Updated: May 2019

Before you rent a car, it's worth reviewing the coverage on your personal car insurance policy. In some cases, the coverage you have on your own car extends to a rental car. In other words, buying rental car insurance may duplicate the coverage you already pay for.

The extra cost of the rental company's coverage might make sense in a few cases, however. For that reason, it's important to understand what your car insurance covers, and what the rental agency is offering.


Video Transcript

If you've ever rented a car, you've gotten this question: Do you want to purchase extra rental car insurance?

You might not need to buy extra car insurance from the rental car company. That's because the coverage on your personal auto policy may extend to a rental car.

For instance, your auto liability coverage may help pay for another person's medical bills or damage to another person's property if you cause an accident in a rental car.

Do you have comprehensive coverage? If so, that may help pay to repair the rental car if it's damaged by things like fire, theft or hail. Keep in mind, you'll still have to pay a deductible.

What about collision coverage? If you have that on your personal policy, it may help pay to repair the rental car if it's damaged in a collision. Again, a deductible will apply.

Remember, if you damage a rental car and don't have comprehensive or collision coverage, you may have to pay out of pocket for repairs. That's why it's important to read your policy before you rent a car to understand what's covered.

Still have questions? Ask your agent about what coverage on your personal policy applies to a rental car.

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Understand Your Own Insurance Coverage

If you have a personal car insurance policy, it includes liability coverage and any additional coverages you've opted for, such as comprehensive or collision. Those coverages may extend to your rental car.

  • Liability coverage helps pay for another person's medical bills or damage to another person's property if you cause an accident in your vehicle (or your rental vehicle).
  • Comprehensive coverage helps pay to repair your vehicle (or your rental car) if it's damaged by a covered peril, such as theft, wind, fire or natural disasters. Your comprehensive coverage's deductible will apply.
  • Collision coverage helps pay to repair your vehicle (or your rental car) if it's damaged when you collide with another vehicle or object, such as a fence or a tree. Your collision coverage's deductible will apply.

In addition to your auto insurance, certain credit cards offer extra insurance if you pay for a car rental using that card, according to the Insurance Information Institute (III). If you have extra rental car insurance through a credit-card issuer, call the toll-free number on the back of your card and have them explain your options in detail before you reserve your car. For example, if your credit card provides collision coverage for rental cars as a benefit, then you might decide to opt out of purchasing that coverage from the car rental agency. The card issuer's insurance is typically "secondary," meaning that it may pay your deductible and expenses that exceed what your primary insurance company will pay, according to the III. Be sure to check your benefits before you rent. Forbes says some credit card providers may exclude coverage for certain types of rental vehicles, such as:

  • Luxury vehicles
  • Motorhomes
  • Trucks
  • Motorcycles

Understand the Rental Car Insurance Options

Rental car agencies typically break out their extra insurance offerings into four sections, according to the III:

  • Liability coverage
  • Collision/Loss Damage Waiver
  • Personal effects coverage
  • Personal accident coverage

Liability coverage is intended to help protect you if you injure someone or damage their property while driving. If you have sufficient liability coverage through your own auto insurance, you may not need to buy extra coverage from the rental agency. Your insurance agent can help you review your coverage so you can set the liability limit that's right for you.

Collision/loss damage waiver (also known as an LDW or CDW) isn't technically insurance. If you damage the rental car, this waiver may help cover the cost of repairing it. The waiver typically excludes coverage for damage caused by speeding or driving on unpaved roads.

An LDW may duplicate your existing coverage if you have collision and comprehensive coverage on your own car. However, if you've dropped collision or comprehensive coverage from your policy, and you don't purchase the waiver, you would likely have to pay for damage you cause to the rental car.

Additionally, a rental agency could charge you for "loss of use" of the car (lost rental income) while the car is in the shop being repaired. Your own auto policy typically won't reimburse you for that. Be sure to read your car rental agreement carefully to clarify what kinds of charges you could incur if you were to damage the vehicle.

Personal effects coverage may help cover your personal belongings, such as your laptop or clothing, if they're stolen from the rental car. If you have renters or homeowners insurance, the personal property coverage on that policy typically helps cover your personal items through what's known as "off-premises coverage." Off-premise items are usually only covered up to a certain percentage of your personal property coverage. The deductible on your homeowners or renters insurance will apply. Check with your agent about the limits of your coverage.

Personal accident insurance helps pay your and your passengers' medical bills if you're injured in a rental car accident. The III says if you have health insurance, medical payments coverage or personal injury protection on your car insurance policy, you may already have coverage comparable to what the rental company offers. Medical payments coverage and personal injury protection (not available in all states) may help pay for medical bills due to a covered car accident.

If you're not sure whether buying rental car insurance makes sense for you, it can help to first understand what coverages you already have. Talking to a local agent about your car insurance policy before you rent a vehicle may help you make an informed decision when you're at the rental counter.

Related Resources:

This content is for informational purposes only and may not be applicable to all situations.

Coverage subject to terms, conditions, and availability. Policy issuance is subject to qualifications. Allstate Insurance Company, Allstate Indemnity Company, Allstate Fire and Casualty Insurance Company, Allstate Property and Casualty Insurance Company, Northbrook, IL. © 2019 Allstate Insurance Company, Northbrook, IL.
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