Should I buy rental car insurance when renting a car?

There is no question car rental companies make a lot of money selling car rental insurance. In most situations buying insurance from the rental car company duplicates coverage you already have on your auto policy and credit card. Each situation is different, so it is important to check with your agent and credit card company before travelling but the basics are covered below.

In the United States and Canada the liability insurance protection from your personal auto insurance policy transfers to a rental car. You must have collision and comprehensive protection on your own auto insurance policy in order for any physical damage to a rental car to be covered. If you are in an accident or the vehicle is damaged a deductible will apply the same as it does on your own vehicle. If a rental car is damaged and out of the rental fleet while it is being repaired most rental car companies charge a “loss of use” fee to offset lost income while the vehicle is out of service and unable to be rented. Most insurance companies will not cover loss of use fees, however most credit card benefit plans do cover loss of use fees if the vehicle is reserved and paid for with a credit card.

Most auto policies are only valid in the United States and Canada, so you will need to do some additional homework if you are traveling internationally. If you have an personal umbrella policy it probably provides worldwide liability coverage. Most credit card benefits provide physical damage protection up to $50,000.  Credit card benefits are commonly excluded in a few foreign countries, such as Jamaica, Israel, and Ireland so you will need to check your benefits statement before traveling. You can definitely save some money by not buying duplicate coverage, but it each situation is different so it is important to check with your insurance agent and credit card carrier before your trip.

Definitions of insurance options sold by rental car companies.