Where, When, and Why to Buy Rental Car Insurance

What should you do when you’re offered rental car insurance at the rental counter? It’s designed to protect you if you crash your rental car or it is stolen/vandalized, but do you really need it, is it worth the extra cost, and can you find it elsewhere?

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What is Rental Car Insurance?

Car rental insurance is offered to renters as a way of protecting them from damage done to a rental vehicle. If the driver doesn’t have insurance and damages the car, the rental company may chase them for compensation as they seek to cover the repair costs.

Rental car insurance covers the following:

  • Loss and Damage Waiver: This type of insurance will cover all the damage done to a vehicle if it is involved in a car accident. It will also include losses accrued when the car is stolen or vandalized, as well as something known as loss of use, which is the money lost by the car rental company when the car is getting repaired.
  • Supplemental Liability: If you are at-fault for an accident then you may be liable for damages, including medical expenses and property damage. Supplemental liability covers you for these claims.
  • Personal Effects: Protects you from loss of personal items. If, for instance, you leave a laptop in the car only for the car or laptop to be stolen, you will receive a payout relative to the value of that item.
  • Personal Accident Insurance: This coverage option will pay for medical bills if you are hurt in an accident. It will also cover your passengers.

You can purchase a waiver to make sure you’re protected and won’t be hassled for money. But if you have a full coverage car insurance policy, a premium credit card, and even a health insurance policy, you may already have cover.

Here are a few ways you can get car rental insurance:

1. Rental Car Insurance from Your Insurance Company

There’s a good chance you will already be covered by your personal auto insurance policy. Before you agree to any additional insurance coverage, scan your auto policy to see if you’re already covered. If you have the following, there’s a chance you will be covered. If not, and if you plan on renting a lot of cars in the near future, consider adding them to your personal auto policy:

  • Liability Insurance: The liability insurance you have on your personal car insurance policy will often cover rental cars as well. This type of coverage is required in most states, so as long as you are fully insured, there’s a good chance you won’t need to purchase any supplemental liability insurance.
  • Personal Injury Protection: PIP covers you even when you’re not driving your own car and may, therefore, supply you and your passengers with cover when driving a rental car. It won’t pay for property damage, but it will pay for any bodily injury that you and/or your passengers suffer. The same applies to medical payments cover, although this is much less common.
  • Comprehensive Coverage and Collision Coverage: Not everyone has collision and comprehensive coverage options as they are not required on older, high-mileage vehicles. But if you do have them, you should be covered in a rental car. Collision insurance will cover you for damages to personal property damage in a crash, regardless of who was at fault. Comprehensive coverage will protect you against damage caused by non-collision-related incidents, including vandalism and weather damage.

2. Rental Car Insurance from Credit Card Companies

Your credit card may offer you more perks than you realize. If you have a premium rewards card, you might be surprised to learn that its benefits don’t stop with generous reward schemes, account opening bonuses, and intro rates. In fact, in addition to offering rental car coverage, some top credit cards also provide roadside assistance services, travel protection, purchase protection, and more.

Here are just a few of the popular credit cards that have car rental insurance, along with the other lesser-known features they have:

Chase Sapphire Preferred Card

The Chase Sapphire Preferred is an accessible credit card for most consumers. It doesn’t require you to spend a lot of money every month and even small households will spend enough to make this a viable choice.

The Chase Sapphire Preferred offers complimentary rental car coverage when you use your card to complete the purchase. It will cover you in the event of an accident or theft, providing you supply them with details such as a police report, pictures of the damage, and proof that you paid the car rental company with your credit card.

This card also offers:

  • Travel protection benefits.
  • No foreign transaction fees.
  • Free DashPass subscription.
  • Purchase protection benefits.

Chase Sapphire Reserve

One of our personal favorite travel reward credit cards, the Chase Sapphire, offers a high rate of return every time you use your card to make travel purchases and then redeem your points for travel. The Chase Sapphire Reserve has an auto rental Collision Damage Waiver or “CDW”. It is a primary coverage option that covers you for theft and damage, and it applies to the cardholders as well as authorized users.

For this insurance to apply, you must use your Chase Sapphire card to cover the full cost of the rental car and decline all additional insurance offered to you by the rental car company. Other features you may not know about include:

  • Free credit with TSA PreCheck or GlobalEntry offered every 4 years.
  • Insurance for lost and delayed baggage.
  • Emergency medical coverage.
  • Access to travel lounges.
  • Travel insurance.

American Express BlueCash Everyday Card

AmEx credit cards offer car rental protection when you use your car to complete the sale. The Blue Cash card is one of the more accessible of these cards as it doesn’t have the high annual fees and welcome offer requirements found with the likes of the Gold and Platinum AmEx cards.

You will be covered for rental car damage up to a specific limit, providing your rental period does not exceed 30 days. 

This card also offers the following perks, in addition to no annual fee and a high rate of rewards:

  • 24/7 access to emergency medical care.
  • Access to ticket presales and other entertainment-based benefits.
  • Passport replacement assistance.
  • Missing luggage assistance.

3. Other Insurance Coverage

Health insurance won’t cover you for damage done to a rental car itself, but it will cover you for the medical costs resulting from a car accident. What’s more, if you have home insurance or renters insurance then you should be covered for loss of possession resulting from theft or vandalism.

Again, this won’t include the car itself, but it will include handbags, jewelry, laptops, and other expensive items you left in the car.

Last but not least, you may have extra coverage from your travel insurance. This form of insurance is always recommended if you’re taking long and expensive trips and if you check your policy you may find that it covers rental cars.

4. Rental Car Insurance from the Rental Agency

Car rental companies will encourage you to purchase a type of auto insurance policy known as a loss damage waiver (LDW) or collision damage waiver (CDW).

This will cover you in the event of an accident. It will also cover you if the car is stolen or vandalized. But it’s not necessary, and if you’re being offered cover by your credit card issuer, it’s important to reject this additional insurance.

Bottom Line: Do You Need Rental Car Insurance?

You should definitely consider rental car insurance. It can be expensive, but not if you do your research, look for the cheapest options, and check to see if you already have some areas covered. Furthermore, it provides peace of mind, which is often worth the additional cost.