You wouldn’t be the first to be caught off-guard by the on-the-spot barrage of questions at the rental car counter. Will you prepay for gas or fill it yourself? Is there more than one driver? Do you want to add insurance? No matter how long your journey, it’s enough to make anyone bleary-eyed.
Seasoned travelers may already know about perks that come with certain credit cards—airport lounge access, free checked bags—but deep in the fine print is a long list of other benefits. Rental car protection comes with many (but not all) cards. In addition to this credit card coverage, your regular auto insurance (if you have your own vehicle back home) will also cover a rental car. Given all that protection, do you really need to purchase rental car insurance at the counter, too?
The short answer is no, but only if you’ve used the qualifying credit card to pay for the rental and have reviewed your personal insurance policy to ensure that its coverage fits your needs. If the coverage doesn’t feel sufficient, or if you’re a worrier in general, however, you may want to consider opting in. Many drivers feel the added protection is well worth the cost for peace of mind.
We walk you through it all the nuances of rental car insurance policies below (it’s more interesting than it sounds, we swear).
Rental car insurance types
There are two types of rental car insurance categories—primary and secondary—think either a first or supplemental layer of protection.
While your own auto policy typically serves as the primary coverage for car rentals, you can choose to purchase a “collision damage waiver” from the rental company to serve as your primary insurance instead. It covers any damage in the event of an accident, avoiding the need for your own car insurance to get involved. It isn’t cheap—it can be around $20 to $30 per day—but if you’re trying to keep your personal car insurance monthly payments to a minimum, you don’t want to be filing a claim with it over a damaged rental car, which could lead to higher monthly rates long term.
If you don’t have home vehicle insurance or prefer not to use it, you’ll also likely want to pay for the supplemental liability insurance from the rental car company, another form of primary insurance, which covers you for liability or injury to someone else. This is separate from a collision damage waiver and can tack on another $15 to $20 per day to your bill.
Secondary insurance, normally available from many credit cards, covers what your primary rental car insurance does not (after the deductible is paid out on your primary policy, if applicable).
What your personal car insurance or credit card covers
If your personal auto insurance covers car rentals via primary insurance (as it generally does), buying it from the rental company is like paying for the same thing twice. Credit cards generally provide only secondary coverage, though some premium cards do package in primary rental car insurance, including Chase Sapphire Reserve, Chase Sapphire Preferred, Citi Prestige, and the United Explorer Credit Card.
If you don’t own an insured car or don’t purchase a primary policy directly from the car rental agency, your credit card coverage, which normally serves as secondary rental car insurance, automatically becomes primary coverage (since there’s nothing for it to be “secondary” to). In this case, the policy expands to include both collision and liability protection.
The three most common scenarios for rental car coverage
If you have personal car insurance and a regular or premium credit card, you’ll likely be fully covered. Your personal auto policy will serve as primary insurance, and your credit card should cover you with secondary insurance.
If you only have a regular credit card (and no personal car insurance), you may want to consider purchasing additional coverage from the car rental company as an added layer of protection. However, if your card comes with secondary insurance, it will automatically be converted to primary coverage if there are no other policies in place; check the fine print to ensure that the policy is robust enough to stand alone.
If you only have a premium credit card (and no personal car insurance), you are covered with primary insurance if you use the card to pay for your rental. Because these premium policies are generally more substantial, buying additional insurance from the car rental company may be unnecessary.
Regardless of what coverage you have in place, know that it may only apply to certain types of rental vehicles. Those pricier convertibles or SUVs may be off-limits when it comes to protection; other common exclusions are pickup trucks, vans, and motorcycles. Some credit cards detail specific car manufacturers that are not protected like Porsche, Tesla, and Jaguar. Stick to a midsize car, and you should be fine.
The risks of declining rental car insurance
If you are in an accident and under-insured, you could be liable for any expenses. Especially if city, highway, or long driving journeys are on the agenda, some type of protection is essential. If you’re relying solely on credit card benefits, consider adding supplemental primary insurance from the rental company for added protection in the event you cause damage or injury to another vehicle or person.
All U.S. states, with the exception of California, require car rental companies to provide minimum liability coverage in the regular rate of a car rental. Unfortunately, the minimums are very low and would always be secondary to your own personal car insurance.
“Many renters who don’t own a car don’t realize that damage to the rental vehicle is only half of the equation,” says Jonathan Weinberg, founder and CEO of AutoSlash.com, a website that helps consumers score car rental deals. “If you end up in an accident and are found to be at fault, you could be liable for damage you do to someone else’s property or injuries you cause. In a major accident, this could easily exceed a $100,000, so it’s important to understand exactly what you are and are not covered for.”
Weinberg recommends taking at least the liability insurance the car rental company offers if you don’t have auto insurance to avoid putting yourself at significant risk.
Purchasing rental car insurance from a third party
Companies like Sure and Allianz sell rental car coverage independently of the rental car companies that’s worth investigating in advance. Weinberg says that third-party rental car insurance for a short time is a great solution for those without primary coverage through a credit card or through their own auto insurance because it is often less expensive than what the rental companies charge. If you rent more than a few times a year, he also advises that it can be cheaper to purchase a nonowner’s policy through a third-party company, which typically covers you for both collision and liability.
Do you need rental car insurance when traveling overseas?
If you’re driving on the “other” side of the road or in other unfamiliar territory, insurance can be an especially helpful safeguard to protect you. Still, there are a few extra steps to take.
Most importantly, many credit card and personal auto insurance providers do not cover car rentals in certain foreign countries. Be sure to read the fine print to see if there are indeed any exclusions.
Also of note, some credit cards that offer secondary insurance may upgrade that to primary insurance (with additional benefits) if your own personal insurance would not cover you in that country. It is wise to contact your credit card benefits department to iron out this detail beforehand. Citi Prestige is one card that is well-known for providing primary insurance to most car rentals overseas.
You may also find having rental car insurance to be important because when you don’t live in the country you’re visiting, any formalities to handling car rental damage may be tough to deal with from overseas. In that case, having some type of insurance to take care of the details can be a real lifesaver.