Should You Get Extra Rental Car Insurance? Your Options Explained

Ugh, the upsell. No one likes being upsold, especially when you're at the car rental counter trying to get on with your vacation. Maybe you chose that rental company because you saw the ad for its $29 daily-rate special, and now the rental agent is trying to convince you to add on $40 a day for the insurance, on top of a bunch of other rental car fees. They can get aggressive about it, too. We've had rental agents try to convince us we had to get their insurance even though we could prove we were completely covered by our personal insurance. This pushiness might be why so many customers decline their insurance.

But don't let the aggressive upsell make you so annoyed that you dismiss the extra insurance out of hand. There may be times when you need it. For example, do you only have liability coverage with your personal insurance? Then the rental car itself isn't covered, just as your own car wouldn't be. Or maybe you have collision coverage on your 1993 Geo Metro, but you've decided to rent a Lambo to cruise Miami Beach. You can be almost certain your personal insurance won't be enough. Could you afford to pay the deductible on your personal insurance if you total the rental? Then you might need the extra rental insurance. The same is true, of course, if you have no insurance at all.

If your personal insurance covers all of those things, then you're set. Another option is to use a credit card that covers rental damage, but check to see what exactly it covers. You even have options within the rental company's policies. You may be able to choose only policies that fill in gaps left by your own insurance.

So you've rented a new Ferrari for the day to trick your social media followers into thinking you really are successful and they should definitely buy your online course about getting rich. Who hasn't been there? The insurance you have on your 2006 Honda Civic isn't going to cover the Ferrari, though, and you'd have to sell a lot of courses to cover it if anything happened to it.

Another case where you might need the extra insurance is if your personal insurance just covers liability. That only covers damage you cause to other people's vehicles or property, not damage to your rental. (Sometimes car rental companies will surprise you with damage claims.) Or maybe besides liability, you also have collision. If that policy has a high deductible, you might consider the extra insurance. Or perhaps the only personal coverage you have is through your credit card, which likely does not cover liability. Then you might be able to forgo the rental company's collision policy and only buy its liability, which is usually not very expensive. You should also keep in mind that your personal insurance may not cover RV rentals, rentals for business, or rentals for more than 15 days.

You'll also want to be covered for "loss of use." If your rental car is damaged, it will take time to get it repaired, time the rental company will not be able to use it. Companies typically recoup this loss of revenue by charging for "loss of use," something not covered by most personal coverage or credit card coverage.

You don't always need the rental car company's extra insurance. For example, if between your credit card and your personal insurance, you have collision and liability covered, you might not need it. Maybe you can afford the deductibles in your own insurance, which cover all that might happen to your rental car. You even have coverage that would cover "loss of use." Then you're golden.

Besides offering liability coverage and a collision waiver, the company might also offer personal effects coverage. Unless you're carrying goods that are very valuable, you may not need this one. The other kind of coverage rental companies offer is for personal injury, which covers harm and hospitalization your actions caused to yourself and others. But this is probably covered by your liability insurance, in the case of what you caused to others. Your own health insurance or personal injury protection policy may cover your own situation, if you have either of those.

There are other ways to save on car rentals besides skimping out on insurance (like renting your car through Costco). But it all boils down to making sure you're covered. Remember, the rental company will hold you responsible for any damage to its vehicle during your rental period, regardless of whether you're at fault. So make sure to read the fine print in whatever coverage you have, whether it's your own personal coverage, your credit card's coverage, or the rental company's coverage.