Do You Really Need Rental Car Insurance? Or Is It a Huge Waste of Money?

Many credit card companies offer free rental car insurance as one of their cardholder benefits, especially popular travel credit cards such as Chase Sapphire credit cards and American Express credit cards. In order to get the coverage, most credit card companies require you to pay for either part or all of your rental car with your credit card. You’ll also have to reject any insurance offered by the rental car company. One of the most important details to note is whether your credit card offers primary or secondary insurance. If it offers primary insurance, you don’t need to have any other kind of car insurance available. You will need some kind of primary insurance if your credit card doesn’t offer that.

If you have great credit card benefits, be sure to read the exceptions. For example, 15-passenger vans aren’t covered under my credit card. I discovered this after renting a 15-passenger van and confidently rejecting the insurance offered by the front desk. Don’t be like me. If you need time, just excuse yourself to hide in the bathroom and do research until you feel confident making a decision. You’ll be grateful for it later, trust me.

Do you buy travel insurance? If so, congratulations. You’re on the adult side of travel and there are many perks on that side! Rental car insurance is included in many travel insurance packages, but it only protects you in certain situations. Typically, the rental car insurance that comes with travel insurance doesn’t include liability or personal loss. That means if you hit someone else’s car, the insurance won’t be able to cover the damage on the other car.

If you have great car insurance, you might want to check if it extends to rental cars as well. Most regular car insurance policies have some kind of coverage for rental cars, but you’ll want to supplement it as you see fit. On a business trip? It doesn’t hurt to double-check, but you’ll probably have to look for something else. Most car insurance policies don’t cover business-related (or commercial-use) rental car insurance.

I know you’re probably getting the gist of this, but there are a lot of variables when it comes to rental car insurance and whether or not you should get it. An important factor that you shouldn’t miss is the length of your rental time. That two-month car rental? Your car insurance policy is most likely not going to cover it. Most max out at 30 days, and some even at two weeks. Check your policy before making plans for a long-term rental.

When you sign the agreement to get your rental car, there are often multiple add-ons for insurance. Each of these covers a different aspect of your rental experience, and you can pick and choose what coverage you want. For some, it may be unnecessary to add on coverage in case of a medical emergency. For others, that could be the only type of coverage that makes sense to buy. Knowing what each add-on provides can help you confidently accept or reject each of them.

Collision Damage Waivers (CDW), also known as Loss Damage Waivers (LDW), cover a lot. As the names suggest, they waive your liability if you lose the car or damage it to a degree. Let me tell you what they don’t cover: windshield damage, tire damage, lost keys, a dead battery, etc. That means that even if you do pay for CDW, you may still have to pay for repairs if a rock makes a crack in your windshield. And yes, that has happened to me before.

If you hit another car, someone has to pay for the damages that you’ve done to the other vehicle. The liability waiver protects you when you’ve damaged someone else’s car. Personal effects coverage protects you in case of theft—like if someone breaks into the car and steals your camera. It’s often combined with Personal Loss Accident Insurance, which covers you if you get hurt while driving the rental car.

Does the insurance option cover the loss of use of your rental car if something does happen? I’ve had multiple rental car agents reference “loss of use” in an ominous way when I’ve declined their insurance. What exactly is it? When a car is returned in a damaged condition, the rental car company loses out on potential business because the car must be fixed. For example, if the car will be in the repair shop for three days, that’s three days that it can’t be rented out. If your insurance doesn’t cover loss of use, you may be liable to pay out of your own pocket for those three lost days. Ominous indeed.

Regardless of the kind of rental car insurance you end up going with, this is the most important thing to do before driving a rental car off the property. Make note of any scratches, stains, or dents in and around the car, on video, in the parking lot of the rental car company. This way, you’ll have proof that you received the car exactly as shown. Inspect the oil, lights, tires, and windshield wipers. If anything comes up while you’re examining the car, ask to switch cars. If you’re lucky, you just may get an upgrade. At the very least, you won’t have to make a pit stop to get your oil changed during a 500-mile road trip.