Do you need insurance (personal or rental) to rent a car?

With online bookings, renting a car has become easier and more convenient. You’d think it would also take away the nightmarish experience of the car rental counter, where you often end up coughing out more money than you’d like to for CDW and other car rental insurance add-ons. 

But it seems there is no escaping the rental car company’s additional insurance charges, only now it is online. If you’ve ever tried to book on any of the major rental car company websites, then you’ve probably asked yourself: Should you or should you not tick off the box asking if you’d like additional liability or personal accident or personal effects insurance? 

In this post, we’ll help you answer that question so you can easily decide the next time you book your rental.

Do you need insurance to rent a car?

For the record, you do not need to have insurance to be able to rent a car. 

However, rental companies often use strong-armed tactics to compel renters to avail of optional collision damage waivers (aka CDW). Alamo, for instance, even goes as far as having the price of the CDW built into the price of the rental car so you really don’t have a choice anymore. By booking with them, you’re automatically opting into Alamo rental car insurance! What this means is that your rental quote is automatically jacked up, often doubled, by the cost of the CDW policy.

Rental car companies: what they require

Only a few rental companies - if any at all - would actually ask you if you may already be covered by auto insurance, a credit card or travel insurance. And in some cases, they will try to convince you that your existing auto insurance - whether from your personal, credit card, or travel policy - does not qualify as rental car insurance coverage so they can sell you their own insurance add-ons. 

While this can be infuriating from a customer perspective, it’s also important to note that there is some sense in the rental companies’ reluctance to rent a car to someone who may not have adequate insurance. For instance, a renter could cause $10-$20K in damage to the rental car, and not personally have the funds to pay for the damage repairs. So if you are renting a car and don't have adequate insurance, don't be surprised if you get turned away at the rental counter, or be required to purchase very expensive (2-3 x more expensive) insurance directly from the rental provider.

Coverage gaps: what to watch out for

What’s clear is that you always have the right to look for a rental car company that would respect your decisions when it comes to insurance, or to say no to optional add-ons that may duplicate your existing coverage. 

That said, you should make sure that you are adequately covered for unforeseen events. First, check your personal auto insurance policy. Many policies extend to rental cars, so you may already be covered. If not, consider purchasing a policy that does.

Next, learn about credit card coverage. Many cards offer rental car insurance as a benefit, so be sure to check with your issuer before buying additional insurance policies. 

If you already have car insurance or rental car coverage through your credit card, then rental car insurance may not be worthwhile. There are a few instances, however, where adding rental car insurance could be beneficial and worth considering:

You have high deductibles on your auto policy - Rental car insurance coverage often carries no or low deductibles (eg. Bonzah has zero deductible for liability claims), so you could pay much less or nothing out of pocket on a claim compared to a high deductible with your personal auto policy.

You want to avoid claims on your auto policy - With rental car insurance, you would file a claim with the rental car company, which avoids a potential rate increase on your personal auto policy.

You don't carry comprehensive or collision coverage - If you don't carry comprehensive or collision coverage on your personal auto policy, you can buy rental car insurance to make sure you don’t end up paying for damages.

You have a low liability coverage limit - If you carry the state minimum liability limit on your auto policy, adding supplemental liability coverage will offer greater protection if you're involved in an at-fault accident.

You're traveling - Most U.S. auto policies only provide coverage in the U.S. and Canada. If you're traveling to a country where your auto policy doesn't provide coverage, then rental car insurance may be essential.

The bottom line: when you need insurance

In general, it's a good idea to have some sort of insurance on a rental car. Whether it's through your personal auto policy or a separate rental car policy, make sure you're covered in case of an accident.

Rental car insurance is not required in all states. However, even if it's not required, it may be a good idea to purchase rental car insurance. This is because your personal auto insurance policy may not cover damage to a rental car, may have a high deductible, or may only pay up to a certain limit. 

If you’re interested in getting additional rental car insurance, check out Bonzah’s affordable damage and supplemental coverages!