When you’re standing at the rental car counter, the salesperson is trying to do what salespeople do best – upsell you. A more expensive car, joining their rewards program, downloading the app… and rental car insurance.
The problem is that alongside all these upsells, the insurance looks no different. That smooth-talking salesperson can lead you to wonder, “Is rental car insurance necessary? How does rental car insurance work? What rental car insurance do I need” Today, we’ll help you take a deep dive into rental car insurance so you can make a confident decision with your car rental – suave salesperson or no.
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How Does Rental Car Insurance Work?
First, let’s take a look at how rental car insurance works. Don’t worry – it’s not complicated. In fact, rental car insurance works pretty much the same as any other insurance. You pay a certain amount (the “premium”) so that in the event of an accident, you don’t have to pay out of pocket for the full cost.
Rental car insurance is different from your regular auto insurance in a couple of main ways. First, it covers a vehicle you don’t own. Rental insurance is usually priced per day, while regular auto insurance is priced per month or year.
Secondly, you don’t need to go through an insurance company for it. You can buy rental car insurance policies through the rental agency or even a credit card company. It’s important to be informed about these options, though, because they can be sneaky.
If you choose to buy through the rental agency, your buying process might be a little more streamlined. However, you’ll pay for that with a higher per-day premium.
On the other hand, if you buy a policy through your credit card company, what you’re buying is a secondary policy. Basically, it’s a “back-up” in case other insurance doesn’t cover the full cost. Buying this secondary policy is a great idea for business trips, or to get more points on your credit card.
Is Rental Car Insurance Necessary?
If a credit card company’s insurance policy is secondary, does that mean rental car insurance is necessary? Nope!
Most people don’t realize that their regular auto insurance policy covers rental cars. You’ll want to call before renting your car to make sure you’re covered, but in most cases, you will be. So why does rental car insurance exist?
First, your current auto policy will likely only cover the US and Canada. So if you’re driving around Los Angeles in your rental, you’re good to go. If your vacay takes you to Europe, though, you’ll need a different policy.
Second, there’s the issue of deductibles. As a quick refresher, a “deductible” is the amount you pay before insurance kicks in. So if your regular auto policy has a $6,000 deductible, that means you have to pay for $6,000 in damages before insurance will help out.
Rental car insurance doesn’t have deductibles. That means that if you get into a car accident, your insurance policy will kick in right away. This, coupled with a secondary policy like the one you can get through your credit card, means that you likely won’t have to pay any of the damages in the case of an accident.
What Rental Car Insurance Do I Need?
The kind of policy you need will depend on what you want to protect and how much coverage you want. (As a reminder, your “coverage” includes the amount the insurance company will pay and the kinds of damages they’ll pay for.)
Rental car insurance usually protects a few main things. First, and most obviously, it protects the car. No matter what coverage you get, it’ll protect against “not-at-fault” accidents. These are accidents caused by another person. So if you’re in Italy and another driver dents the car door, that’s a “not-at-fault” accident.
You can also get collision coverage that will pay for “at-fault” accidents. An “at-fault” accident is anything within your control. For example, backing into a light post because you’re unfamiliar with the area, or getting in a head-on collision going the wrong way down a one-way street.
Finally, a comprehensive coverage policy will protect the car against natural disasters. So if you’re in Hawaii and an earthquake wrecks your rental, comprehensive coverage will pay for the repair.
Next, rental car insurance policies may protect you and your passengers. So if you need medical care after an accident, your insurance policy could pay for up to 100% of that cost.
Finally, rental car insurance can protect against theft. This means theft of the car, of course, but also theft of your belongings. Yep, if your stuff gets stolen from your rental car, insurance can help cover the cost of replacements!
It’s important to note that your regular insurance likely has these kinds of coverages already in place (depending on your policy). Call or start a chat with your insurance company to see what kinds of coverage you’ll have in a rental car.
Depending on how much coverage you want, you can use your current provider or look at some rental-specific insurance policies.
Rental Car Insurance Companies
Most big-name insurance providers will have a rental car add-on you can buy. If you’re looking to shop around, though, specialists are the way to go. When you buy from a company that specializes in rental car insurance, you may get a better deal and your claims process will likely be smoother since they only deal with rental cars.
Here are our top four picks for rental car insurance you can trust to keep you covered without breaking the bank.
First up, a specialist who aims to make rental car insurance cheaper and easier than anyone else on the market. If you want a policy that costs up to 50% less than what that rental car salesperson can offer with no deductible and multiple-driver coverage, you’ve got to try RentalCover.com.
They automatically cover everything from towing fees to lost keys and try to get all claims processed within 7 days of the accident. That means less time on the phone getting a claim resolved and more time enjoying your ride.
They have a stellar 5-star rating on Trustpilot and millions of satisfied customers across the globe, making them our top pick for rental car insurance.
Looking for a rental insurance specialist who’s been serving up great value for more than 10 years? Look no further than Bonzah. The founder and CEO of Bonzah started the company after being frustrated with the policies he was offered at the rental counter.
He felt that up to $40 a day was unreasonable, and he’s right! With Bonza, you have multiple-driver, zero-deductible, cost-effective coverage, every time. Hundreds of happy customers have contributed to a 4.5-star rating on Trustpilot.
As one of their reviews states: “You can’t beat $7.99 a day for rental car insurance!”
Sure is another specialist that deserves a place on this list due to their stellar rental car insurance policies. If you want a company that gives you a user-friendly mobile app and an instant quote, look no further than Sure.
Sure outshines the rental company’s insurance by a mile. One user left a 5-star review on Trustpilot where he said, “I completed it right in front of the Car Rental guy, and saved myself $200 bucks, he was shocked.”
$200 in savings on one trip? Sure!
4. Allianz Global Assistance
Allianz Global Assistance provides a simple car collision damage waiver that costs just $11 per calendar day and covers your rental car almost anywhere in the world. It gives you primary coverage and offers free access to our emergency assistance hotline.
Cruising With Confidence
Rental insurance is the one insurance you may not need. If you’re staying in your hometown, there’s no need to buy a rental policy. Your regular insurance will cover you, and your familiarity with the roads means you can take safe routes and drive (mostly) worry-free.
If you’re traveling, though, you’ll want to look at a rental policy. The lack of deductible means you can hit your vacation savings goal sooner since you don’t have to save up in case of an accident. No matter what happens to your rental car – from losing your keys to a cracked windshield to theft – you’ll definitely be covered with a rental insurance policy, where you might not be ordinarily. Finally, when you double up with credit card policies, you can have total coverage and complete peace of mind for just a few dollars a day.
Those couple of dollars now can save you a lot of headaches later. There’s nothing like realizing after the fact that the damage to your rental car isn’t covered. Nothing ruins a vacation quicker than being told that you owe thousands of dollars in damages due to a fender bender or hail damage.
Buying a rental car insurance policy will only add a few dollars to the cost of your trip, but being able to cruise with confidence is priceless. Meanwhile, if you’re looking for tips and tricks on where and when to cut costs, subscribe to Penny Calling Penny’s newsletter. We do the research, the comparisons, and the math, and then tell you where and when you can skip an extra cost.