Should I buy insurance for my rental car reservation?

As you stand at the rental car desk completing your forms, the agent asks, "Would you like rental car insurance today?" You might feel pressured. What should your response be?

This guide will clarify how rental car insurance operates, helping you decide when to utilize your credit card rental car benefits, rely on your current car insurance, or opt for a rental-specific policy.

According to Ryder Pearce, CEO and founder of Skip, a service that aids people in navigating government services, car rental companies cannot mandate that you buy insurance when picking up your vehicle. Furthermore, most rental agencies don't require proof of existing car insurance to rent a car.

However, rental agencies can request a deposit for the vehicle, as Pearce informed TPG, and they may ask that you pay for your booking with a credit card. (These companies do not necessitate a credit card for making a reservation.)

What is rental car insurance?

As the name suggests, this form of auto insurance is distinct from the coverage you have for your personal vehicle. Rental car insurance safeguards your temporary vehicle throughout the duration of your rental agreement.

Rental car insurance plans often consist of various components, allowing you to select the coverage that suits your needs best. While the terminology may differ slightly between insurance providers, here are the key aspects of what they typically include:

• Collision Damage Waiver (CDW)
  This protection ensures that the rental car company cannot hold you accountable for repair or replacement fees if your rented vehicle gets damaged while in your care. Collision damage can range from a minor dent to a major accident; you won't be responsible for covering those repair costs. It's important to note that rental companies carry damage insurance on their fleet, as explained by Riley Spiller, a founding partner of insurance brokerage Noble House. Therefore, if you damage the car without having CDW, the rental company's insurance will cover the costs initially, and you will need to reimburse the rental agency for those expenses.
• Supplemental Liability Protection (SLP)
  Collision damage coverage only addresses issues pertaining to the vehicle itself. In the event of an accident involving other parties, you could be held responsible for medical bills and property damage to others. SLP helps cover some or all of these costs, depending on the coverage level you choose.
• Personal Accident Insurance (PAI)
  The first two coverages pertain to expenses involving the rental company’s property or injuries and damages to third parties. PAI, however, covers any medical expenses incurred by you and your passengers in the event of an accident.
• Personal Effects Coverage (PEC)
  Finally, PEC insures your belongings against theft from the vehicle.

Do I need rental car insurance to pick up my vehicle?

You are not required to buy any of the rental car insurance options offered by your rental agency. If you already have an active auto insurance policy or a premium credit card, you might have sufficient coverage for your rental needs.

Additionally, you aren't limited to purchasing rental car insurance from the rental company itself. There are specialized providers such as Bonzah, InsureMyRentalCar.com, and Sure, that focus solely on rental car coverage. Allianz is a more traditional insurance provider that also offers a policy specifically for rental cars.

Be sure to familiarize yourself with the requirements regarding the minimum insurance coverage needed, both in your home state and your travel destination(s), as well as any states you may pass through. You can refer to this state-by-state guide from Bonzah, a rental car insurance company, to understand a state's minimum liability requirements, which represent the amount you must pay to someone injured or whose property was damaged in an accident you caused.

What should I anticipate from a rental car insurance policy?

Obtaining a rental car insurance policy is quite simple. You can receive a quote online in just a few minutes by entering your basic contact details, along with your travel locations and dates.

Here’s an example from InsureMyRentalCar.com:

After that, you will usually see several price options that outline the various coverages included in the quote. You'll then need to complete the online form with your address and other personal details, which typically involves a quick four- or five-step process.

Will my current auto insurance policy extend to cover my rental car?

The response to this question hinges entirely on the specifics of your insurance policy. It’s advisable to contact your provider prior to your trip to determine what coverage may be available under your current plan, particularly if you intend to travel internationally. If you’re uncertain or if your rental coverage limit is quite low, consider purchasing a rental car insurance policy or reviewing your credit card benefits.

How do primary and secondary coverage differ?

A credit card with rental car insurance generally provides either primary or secondary coverage. Primary coverage activates first, ahead of any other insurance like your regular auto policy, travel insurance, or homeowners insurance in case of theft. On the other hand, secondary coverage takes effect only after you've submitted a claim with your other insurance providers.

Both primary and secondary coverages often come with limits on the maximum amount you can claim for any incident, so it’s essential to review these limits to ensure they are adequate for the value of your rental car in the event of damage.

In certain situations, secondary policies may switch to primary coverage if your main insurance doesn’t apply. For example, if your personal auto insurance policy excludes international rentals, your credit card’s secondary coverage will automatically act as your primary coverage, given that you lack any other policies to support a claim. Furthermore, if you do not own a car and therefore do not have an auto insurance policy, your secondary benefits will operate as your primary coverage for rental vehicles.

Is it possible to utilize credit card benefits for rental car insurance?

Numerous credit cards provide rental car insurance as part of their benefits package. The Chase Sapphire Preferred Card stands out as an excellent all-around option since it offers primary coverage for car rentals. In contrast, many American Express cards lack primary coverage for rental cars.

Here are some of our top recommended credit cards for rental cars:

• Chase Sapphire Reserve
• Ink Business Preferred Credit Card
• Ink Business Cash Credit Card
• Ink Business Unlimited Credit Card
• United Explorer Card
• United Business Card
• Capital One Spark Miles for Business

Be aware that there are crucial details in the fine print regarding rental coverage. For instance, the benefits associated with the Chase Sapphire Preferred Card (along with the higher-tier Chase Sapphire Reserve) are only applicable to rentals booked for 31 consecutive days or fewer for international travel. If you require a longer rental period, it may be wise to look into obtaining an independent rental car insurance policy.

You can navigate this issue in several ways. For example, TPG's Scott Mayerowitz successfully arranged for a rental car for 110 consecutive days during the summer of 2020. He accomplished this by getting his rental agency to set up four distinct reservations, which allowed him to maintain the same vehicle while making it appear as four separate transactions, thus satisfying his credit card's maximum rental duration.

Are damages to other people or myself covered by credit card rental benefits?

Recall the supplemental liability protection and personal accident insurance coverage types mentioned earlier? Your credit card benefits do not encompass either SLP or PAI. This means you will be liable for any damages to another person's vehicle and personal property, along with medical costs for yourself, your passengers, and any other affected individuals.

For example, the auto collision benefits provided by the Chase Sapphire Reserve do not cover expenses related to injuries suffered by anyone or anything inside or outside the vehicle, nor do they compensate for the loss or theft of personal items.

Therefore, it’s essential to review the fine print of your current car insurance policy to determine your coverage. If you find you need extra protection, consider acquiring a rental car insurance plan for added peace of mind.

Is it possible to use my credit card benefits if I opt for insurance from my rental car provider?

According to Chase's comprehensive guide to card benefits, you cannot take advantage of both your credit card's auto collision benefits and an insurance policy from the rental car company. Opting for rental coverage will negate the benefits provided by your credit card.

What additional information should I be aware of when using credit card auto collision insurance?

Typically, credit card insurance will not cover claims arising from the following situations:

• Any breach of the auto rental agreement.
• Vehicles not obtained from a rental agency.
• Personal liability claims.
• Costs that are already covered by your own insurance, employer, or the employer's insurance.
• Theft or damage resulting from reckless behavior, illegal activities, or driving under the influence of drugs or alcohol.
• Normal wear and tear, gradual deterioration, or mechanical failure.
• Items that weren't installed by the original manufacturer.
• Damage from off-road driving unless the vehicle is designed for such use.
• Theft or damage caused by hostile actions (including war, invasion, rebellion, insurrection, or terrorism).
• Confiscation by governmental authorities.
• Vehicles that don't meet the criteria for covered vehicles.
• Theft or damage claims reported more than 60 days after the incident.
• Theft or damage claims for which the form has not been submitted within 100 days of the incident.
• Theft or damage claims that lack all necessary documentation submitted within 365 days after the incident.

What is the appropriate amount of insurance coverage I should have?

If you choose to buy an independent rental car insurance plan, it’s important to understand the legal minimum insurance requirements in both the state where you rent the car and any other states you plan to visit. Additionally, consider enhancing your coverage for added security.

For example, you might opt for a basic policy for a trip to Arizona that covers the state’s minimum requirement of $15,000 for each individual injured in an accident you cause. However, if the medical costs for the injured party exceed $15,000, you will be responsible for covering the additional expenses out of your own funds.

Thus, it often makes sense to invest a little more for maximum coverage.

At the very least, you should look for a policy that provides coverage for some of the following expenses to ensure your protection:

• Insurance for damages and medical costs incurred by a third party if you are found liable in an accident.
• Insurance for damages to your own vehicle and possible medical expenses for yourself and any passengers.

This checklist is relevant whether you use your current auto insurance, obtain a policy from your rental agency, or utilize your credit card benefits.

Is my rental car insurance valid for international trips?

Whether your rental is covered depends on the type of policy you choose: your current auto insurance, an independent coverage plan, or your credit card benefits.

As noted earlier, your current policy will indicate if it covers international rentals. If you're uncertain, it's best to contact your provider for clarification. An independent coverage plan sets your rental destination in advance, ensuring that your quote automatically includes international coverage.

The rental car benefits offered by your credit card can be a bit more intricate. Typically, these benefits apply to both international and domestic rentals, with some exceptions. For instance, many Visa credit cards provide both domestic and international rental car insurance as part of their cardholder perks. However, Visa's terms specify that they do not cover theft or damage for rentals booked in Israel, Jamaica, the Republic of Ireland, or Northern Ireland.

Therefore, before you depend too much on your credit card for international coverage, it's crucial to review the fine print associated with the card you intend to use to ensure your travel destinations are included.

In summary

There are many scenarios where the benefits from your credit card will adequately cover a car rental. Nonetheless, you should definitely consider getting an independent rental car insurance policy if you anticipate needing extra coverage, especially when facing challenging weather conditions.

For Capital One products mentioned on this page, some of these benefits are provided by Visa® or Mastercard® and may differ by product. Please refer to the respective Guide to Benefits for specifics, as terms and exclusions may apply.