When renting a car, you'll often be asked if you'd like to pay an additional fee to cover the vehicle's insurance. If you thought you could rent a car for seven days for $7 per day, what would you do? Think again! 

Paying for the additional insurance coverage quickly puts the price of the vehicle out of control, prompting you to consider booking a new trip where you won't need a rental car. You're in luck if you have cheap auto insurance on your car and are renting it within the same region!

If you've ever looked for a rental car online, found a good deal, and then been asked if you want to pay extra per day for insurance, you know how difficult it can be. 

Is it, however, necessary to buy additional rental car insurance to cover it? Isn't it true that you already have insurance on your car? You might be asking yourself right now, "Do I really need rental car insurance?"

Basics of Rental Car Insurance

Although rental car companies often offer absurdly high levels of coverage that make you feel all warm and fuzzy inside and like you're getting a good deal, you might not actually need it. Why would you pay for anything you don't need (and might already possess)?

If you have a paid-off vehicle, you are responsible for liability insurance from your auto insurance company. If you haven't paid off your car or have a mortgage, however, you're probably familiar with the coverage options because you have them all!

Find out what is - and, more importantly, what isn't - covered by your car insurance policy before accepting or declining rental car insurance at the car rental counter or when renting a car online. If you are taking a rental car for personal use, the car insurance policy that you have would most likely cover some of the basic protections provided by the rental company. 

We'll go through the different types of insurance rental companies provide, as well as what your policy already covers and any holes you may need to fill. Suppose you have liability, accident, and comprehensive insurance for your car. In that case, you'll already be covered for much of the coverage provided by rental companies, at least up to the policy's maximum. 

Furthermore, most landlords' or homeowners' insurance plans will cover personal belongings stolen from your rental. Before you decide to buy coverage at the rental counter, you should check your policies.

What to Check Before Purchasing Rental Car Insurance

If you do have car insurance, review your policy or contact your provider for details on coverage and ask the following questions:

  • Is rental car coverage included in this policy?
  • What and who is covered by your policy?
  • Is it possible for someone else to drive the vehicle?
  • Is there compensation for liability, personal property, and theft, in addition to collision damage?
  • Is the coverage sufficient for the vehicle you want to rent?
  • Is your new policy the primary insurance for the rented property?
  • What is the deductible on your policy, and is it the same for rental cars?

Rental Car Insurance with Your Credit Card

Car rental insurance is available on many credit cards, including all Bank of America consumer credit cards. Note that if you do have a personal auto insurance policy, this plan is secondary. To learn more about the particular terms, conditions, and exclusions, contact your card issuer or consult your card benefits guide.

Physical damage to or theft of the rental vehicle is usually covered by credit cards with this benefit, with no deductible. Any damage to the rental car is insured if you get into an accident, as long as the rental agent verifies the damages and coordinates with the benefit provider. 

Most cards, however, do not compensate for damage to other cars or goods, as well as any liability that might occur, including personal injury.

To be covered by your credit card, you must make and pay for your car reservation with the card. You must also reject the rental agency's crash damage waiver, as well as any third-party insurance discounts you might receive while booking the vehicle.

If you use the credit card for insurance, some rental companies will ask for a letter of eligibility. If you need one, contact your card issuer to find out how to get one. Even if anyone else is driving the vehicle, double-check how the coverage works. The majority of credit card coverage applies to all drivers approved by the car rental company, but you should always double-check.

Additional Protection with a Credit Card

Consider if you want any extra protection provided by the rental car company if you have the insurance. The rental car insurance can be purchased through your car insurance or credit card. 

If you don't have a personal policy, you might want to consider supplementary liability insurance. If you're concerned about getting things stolen from your rental car, you might buy personal effects insurance.

The extra costs are generally not worth it if your credit card or personal insurance plans have enough coverage. If you should plan to buy insurance from the rental company, make sure you understand the terms and conditions.

  • What exactly is covered?
  • Who are the drivers?
  • What isn't included?

Whatever decision you make, it's essential to know what you're paying for and what you're responsible for when renting a vehicle.

In addition to personal auto insurance and landlords or homeowners insurance, most significant credit cards have additional coverage if the rental is paid in full with the card. 

However, this insurance is often referred to as "secondary," meaning that it only exists after the personal insurance policies have been applied. Furthermore, it also comes with additional restrictions, such as a condition that you refuse the rental policy's Collision Damage Waiver. 

Rental Car Insurance from a Rental Car Company

Even if your plans do not protect you, there are a few situations in which you may want to buy insurance from a rental company. For example, if you're just covered for liability insurance or you only have the bare minimum liability insurance required by the state.

A few other situations may include if the deductibles on your personal auto insurance plans are very high, you're a high-risk driver or want to keep your personal auto insurance premiums down, or your collision and comprehensive insurance policies have shallow limits.

Remember to always find out the necessary information about your rental car insurance options before you are at the counter of the rental company.