Do I Need Rental Car Insurance if I Already Have My Own?

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When you rent a car, one of the things you must do before signing the paperwork is decide whether you want to purchase the rental car company’s insurance or just stick with your own insurance (if you have it). Called a collision damage waiver (CDW) or loss damage waiver (LDW), such insurance covers any damages that might happen while you are driving the rental car.
Many drivers are left wondering, “Do I need rental car insurance?” If you do decide to get rental car insurance, you might also ask yourself, “What car rental insurance do I need?”
Before opting for the rental car company’s insurance the next time you rent a car, make sure to educate yourself on what your own insurance will cover, your insurance options when it comes to renting a car, and the possible consequences of not getting rental car insurance coverage.

Do You Need Rental Car Insurance?

If you already have car insurance, why would you need rental car insurance too? It actually depends on the type of coverage you have and where you plan on driving the rental car. For the most part, many drivers are covered by their own car insurance when driving a rental car. And if you have collision coverage with your current auto insurance plan, then your policy should cover any damages that happen to a rental car you are driving.
Keep in mind that most U.S. car insurance companies only offer coverage while you are driving in the U.S. or Canada. This is not the case in Mexico or overseas in Europe and elsewhere.

What Car Rental Insurance Do You Need?

If you do decide to use the car rental company’s insurance, you can choose from up to four different types of coverage, including:
  • A collision-damage or loss-damage waiver: This is the typical coverage that many car rental companies offer. With this type of coverage, the rental company waives any responsibility you might have if the car is damaged or totaled in an accident.
  • Liability or supplemental liability insurance: This type of coverage helps protect you from a lawsuit if another driver takes you to court if you have an accident while driving the rental car.
  • Personal accident insurance: This insurance coverage helps pay for any medical costs that you or your passengers might have as the result of an accident while in the rental car.
  • Personal effects coverage: This insurance coverage is like personal accident insurance, except it covers any personal belongings you might have in the rental car with you during an accident.

How Much Does Rental Car Insurance Cost?

The most expensive rental car insurance is CDW, usually costing $30 to $40 a day, or more, for coverage. This can quickly add up if you are planning on renting a car for multiple days or even weeks. Other types of car rental insurance are not as expensive. Here’s a breakdown:
  • Liability or supplemental liability insurance: This insurance usually costs anywhere between $7 and $15 a day.
  • Personal accident insurance: This insurance is not too expensive, costing between $1 to $7 a day.
  • Personal effects coverage: This insurance is also relatively inexpensive, costing around $1 and $5 a day.

What Are the Alternatives to Rental Car Insurance?

In addition to your personal car insurance coverage, you also have other options when it comes to insuring your rental car. Just make sure to research all of your options before you go to rent the car to ensure you are covered in case you have an accident while driving the car.
If you have a credit card, it might provide coverage for a rental car, especially if you use the card to rent the car. Many credit cards provide free collision coverage as long as you don’t opt for the rental company’s insurance.
In addition, some credit card insurance coverage does not cover any diminished value or administrative costs associated with a rental-car accident. You also will have to pay the rental company up front. And you’ll still have to file for a reimbursement from the credit card company afterwards.
Online travel agencies also offer rental car collision coverage, which costs around $10 a day. This coverage is provided by a third-party insurance company, but just like with insurance through a credit card company, you have to pay for damages up front and get reimbursed later.
Your best bet before renting a car is to make sure that you at least have basic liability coverage, which is required for drivers in most states. If you also have a net worth of six figures or more, you should also have a good umbrella insurance policy to protect your assets. And if for some reason you don’t have collision insurance, then you might be better off opting for the rental company’s insurance coverage.

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