Is Rental Car Insurance Necessary?

It's one of the great debates of our society: Do we really need rental car insurance? Well, the answer probably will frustrate you:

It depends.

Some folks consider rental car insurance a waste of money, or even downright sketchy. But the truth is that you are the person who will determine whether rental car insurance is with the investment. This guide can help you ask the questions you'll need to find out what's best for you.

So, what's in your policy?

If you know that you're going to be renting a car, it's time to get on the phone and talk to your insurance company. There should be an agent ready to help answer your questions. Simply put, you need to know if rental car insurance is necessary. As a rule of thumb, if you have comprehensive auto insurance you're probably not going to need the extra coverage from the auto rental company. Your insurance agent can help confirm this.

What about minimum coverage insurance?

If you purchased "minimum" insurance, or insurance that just meets your state's minimum requirements, you're probably going to need to spend the extra money. Why? Because minimum insurance only provides minimum coverage. And you might not be protected fully with a rental car.

So what's with this "collision waiver"?

The most common type of rental car insurance is a collision waiver, in which you're protected from damage to the car and/or theft. But if you already have a comprehensive insurance policy, you probably won't need this coverage. (If you have minimum insurance, you very well might need it.) It's important to remember, however, that the rental car insurance policy won't protect you if you're breaking the law (meaning, speeding, driving drunk, running a stop sign, et cetera). So drive safely if you decide to purchase this coverage.

What about my personal belongings?

Your existing homeowner's or renter's insurance policy (which you should have, no matter if you own a home or rent an apartment), you should be covered if your property is stolen from your rental car. But it's wise to call your agent ahead of time to find out if you're fully protected. This means: do not bring your laptop and assume it's covered when you leave it in the front seat of the rental car. Call and ask first. And stick the laptop safely in the trunk.

I travel a lot. What should I do?

If you're a frequent flier or renter, you should mot definitely look into augmenting your existing insurance coverage, rather than spending the $20-$30 on rental car insurance each time you rent. That's because your personal insurance is going to be better (better coverage for the money and probably better quality, too) and it's going to be something you can always rely on. Why give yourself complete protection only on the days you're away from home? Instead, make sure you're protected at all times.