Should I Buy the Rental Car Company’s Rental Car Insurance?

Written by Rachel Popkowski

Our agency in Columbia, SC, gets asked this question all the time.  And unfortunately, there is no simple yes or no answer. Whether you buy the rental car company’s insurance depends on your own personal auto insurance policy and your plans for the rental vehicle.  

First, let’s cover what rental car companies typically offer when you are picking up your rental.

  1. Loss-damage waiver – This covers physical damage to or theft of the rental vehicle while it is in your possession.
  2. Liability coverage – This provides supplemental liability protection to cover property damage and/or bodily injury to other vehicles and their passengers when you are at fault for an accident.
  3. Personal accident insurance – This covers medical costs after an accident for you and your passengers in the rental vehicle.
  4. Personal effects coverage – This covers damage to or theft of your personal belongings in the rental vehicle.

According to an article published by Richard Tay and Jaisung Choi, “ . . . relative to private vehicles, rental cars have been found to experience a higher collision rate per registered vehicle and these collisions often result in higher injury severity.”

So now that we know what rental car companies are offering and that there is a higher probability of an accident in a rental car, let’s consider your own personal auto insurance policy.

Most personal auto insurance policies will extend your auto insurance coverage to any car you rent, as long as you are using the rented vehicle for personal use (i.e. can’t rent it to make sales calls for your business or rent a commercial box truck to move across the country). However, your personal auto policy will only cover you in the rental car for the same coverages it provides to your personal vehicle. This means if you only have liability coverage on your personal  auto policy, the rental car will only have liability coverage extended to it from your personal auto insurance while you are driving. In addition, some credit cards provide loss-damage waiver coverage of $50,000 if the card is used to rent the vehicle. Contact your credit card company to determine if their plan meets your rental’s needs.

If you have personal health insurance and/or medical payments on your personal auto policy, that would cover your and your passengers’ medical bills that result from an accident in a rental car. Your personal items, if damaged or stolen, would be covered under your homeowners/renters personal property coverage up to the limit provided for items taken off premise and subject to the homeowners/renters policy’s deductible. 

Rental Car Insurance Outside the United States

In general, personal auto policies only provide coverage within the United States, its territories or possessions, Puerto Rico, and Canada.  So if you are traveling to Jamaica, you’ll need to purchase the rental car company’s insurance, because your personal auto policy will not cover you there.

The last thing to consider is how you plan to use the vehicle.

It could be worth purchasing some of the rental car company’s rental car insurance and transferring that risk from you and your personal policy to the rental car company. For instance, you are traveling a long  distance in a rental car through unfamiliar terrain, it could be worth deferring that greater potential for an accident to the rental car company’s insurance policy. If you are involved in an accident in a rental car and have to make a claim under your personal auto insurance policy, that claim will affect your personal auto insurance premium and possibly your own renewal eligibility. You will also have to pay your personal auto insurance deductibles in the event of a rental car accident where a claim is filed under your personal auto insurance. 

Sometimes the extra money spent for rental car insurance through the rental car company is worth the peace of mind on vacation! Other times, it’s worth the gamble for travel around town while your car is in the shop. 

Bottom line, check your own personal auto insurance coverage or call your personal lines agent  before heading to the rental car counter so you are prepared to handle those additional coverages!