Do You Really Need Rental Car Insurance?

At the rental car counter, you will be offered several different types of coverages which will add money on to your base rental rate. What many people may not realize is that most of these are often already covered by your personal auto insurance policy. The best thing to do is to check with your insurance agent or carrier before you rent a car and find out exactly what is covered under your existing policy. This should help you avoid shelling out extra money for things that are already covered.

As discussed above, many of the coverages offered at the rental car counter are often already covered by your personal auto insurance policy. One exception to this is what is called Collision Damage Waiver, or CDW. This extra daily charge covers both the cost of damages to the rental car if you are involved in an accident and the “loss of use” that the rental company will charge you.

“Loss of use” means the time and money the rental car company lost since the vehicle could not be rented. While the damage to the vehicle itself may be covered by your personal auto insurance policy, the “loss of use” very likely will not be.

Also, many rental car companies will expect payment right away, meaning if you did not purchase CDW you may have to pay out of your pocket and then wait to be reimbursed by your personal auto insurance company. For these reasons, it may make sense to pay the around $8-11 extra per day that most rental car companies charge you for CDW.

Note: When renting a car in another country, your personal insurance coverage probably will not extend to a car rental. In this case, your best option is to at least buy the Collision Damage Waiver (CDW) from the rental agency.

Credit Card Car Rental Coverages

Some credit cards may offer coverage for damage or theft to your rental car if you use that card to rent the vehicle. This could replace the need to purchase CDW; if your credit card does offer this feature, this in addition to your personal auto insurance policy could mean you are covered and do not need to purchase any extra coverages through the rental car company.

However, most credit cards that offer this feature only cover basic models of rental cars, and do not include upgrades such as SUVs and luxury cars. Check with your credit card company to see if they offer this feature, and if so, exactly what it covers. Make sure to ask if it provides for the “loss of use” that the rental car company will charge if you damage the car.

Rental Car Reimbursement On Your Existing Auto Insurance Policy

This optional coverage offered through your personal auto insurance company or agent will reimburse you for a rental car if your primary vehicle is disabled due to a covered loss. This coverage will pay all or part of your rental car costs. This is an add-on to your auto insurance policy, as opposed to the extra coverage you purchase from a rental car company to cover you when you are in a rental car, as discussed above.


If you have any questions about what is covered on your auto insurance policy, be sure and ask your carrier or agent before you drive off in your rental car. You may be surprised as to what is already covered in your auto insurance policy, or you may consider upping your coverage (which usually costs less than you may realize) well before your trip to make sure you have all your bases covered.

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