Do I Need Rental Car Insurance?

The last thing you want to deal with on vacation or a business trip is a sales pitch for the CDW (collision damage waiver) and other temporary car insurance products at the rental car counter. This is not cheap car insurance! Rental car companies make a lot of money selling you these products, and the added fees can rapidly wipe out that low advertised rental rate. Save time, hassle and potential costs. If you’re planning a trip that involves renting a car, plan ahead. Check the fine print on your personal car insurance policy before you leave for your trip. If you have comprehensive and collision coverage on your personal automobile insurance, in most instances the coverage and deductibles will extend to your rental car…as long as you’re using the rental for personal rather than business purposes. You’ll also want to make sure the coverage you have on your personal car insurance is sufficient to cover your liability for damages to the rental car. For instance, your auto insurance may cover the cost to replace your 1998 Ford Fiesta, but not that 2009 Toyota minivan you rented. Be aware that if you’ve waived comprehensive and/or collision insurance on your personal automobile insurance, you will be liable for the cost of repairs to or replacement of the rental car if it’s damaged or stolen.

Here’s something else that could put a damper on your good times. Even if you have sufficient personal car insurance, it may not cover the rental company’s loss of use of the damaged car – the revenue they lose for every day the car you wrecked is out of commission. Worse, some rental car companies may expect you to pony up the repair or replacement costs on the spot. That’s money out of your pocket while you wait for your automobile insurance company to reimburse. This alone may seem like a good reason to bite the bullet and purchase the array of incredibly expensive rental car insurance products. If you’re an infrequent car renter (once a year or less), it might be worth the peace of mind to fork over the $9 to $20 per day fee for the CDW. But if you’re a frequent traveler, ask your automobile insurance company about a non-owner liability policy, which may prove to be a better deal in the long run than continually coughing up the CDW fee. (Note that if you have a major credit card, it may also provide some benefits; reads the terms of your service to see what is and isn’t covered.)

See our other entry on do I need insurance to rent a car.


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