Rental Car Insurance

Not everyone needs to cover a rental car, but do you know if you do?

Feb 23, 2014 at 4:00PM

If you've ever rented a car, you've probably been confronted by energetic salespeople, warning you of the consequences if you don't buy their company's rental car insurance. Put on the spot, you may not be confident in exactly what your insurance covers -- and that's what rental companies are counting on. You could cough up as much as $50 a day for coverage that you may or may not need. Want to be prepared next time you're renting? Here's what car rental insurance you need -- and what you don't.

What does rental car insurance cover?
When you're at the rental car counter, you'll typically be offered the following four types of coverage:

  • Loss-damage waiver. This policy covers damage to the rental vehicle, as well as towing costs and related expenses. Rental companies usually push this coverage the hardest, and it's often the most expensive, between $10 and 20 per day.
  • Liability. This policy covers damage to any property -- including other cars -- you may cause while behind the wheel of your rental, as well as medical expenses for passengers in the other vehicle. It's usually a little less expensive, between $5 and $15 per day.
  • Personal accident insurance. This policy covers medical costs for you and your passengers if you're involved in an accident. At most, it costs around $5 per day.
  • Personal effects. This covers items you keep in the vehicle, should the vehicle be stolen or broken into. This is the least expensive coverage and usually costs less than $5 per day.

If you don't have insurance coverage, or have very little, any or all of these options may come in handy. However, if you are covered by some form of auto insurance, health insurance, and/or homeowner's or renter's insurance, rental car companies probably duplicate coverage you already have.

Do I need rental car insurance?
Whether you need rental car insurance depends, both on the kind of coverage you already have, and how much risk you're willing to assume. You might want to purchase at least some coverage at the counter if:

  • You don't have collision or comprehensive coverage. If you have an older model car, you may have decided these policies were no longer worth the expense -- or maybe you never carried them in the first place. However, considering the consequences for damage to a rental car, it might be worth opting for the loss-damage waiver if you're without coverage.
  • You don't own a car. Almost all states require a minimum level of liability coverage for all drivers, but if you don't own a car, you may not have a non-owner insurance policy. You may also want to purchase additional coverage if you have only the minimum.
  • You have a very high deductible. Now that health coverage is mandated, buying additional medical insurance is most likely not a necessity. But if you have an extremely high deductible -- on either your health or auto insurance policy -- rental car companies may have a lower one, or none at all.
  • You don't have homeowners or renters insurance. Homeowners or renters policies cover your property, whether it's in your home or in your car. If you don't have one, though, you might consider personal effects coverage, especially if you're traveling with expensive electronics or jewelry.
  • You're traveling abroad. Most policies don't cover you outside the United States (and sometimes Canada), so if you're in this situation, opt for at least some coverage.

If you do have any of these policies, you probably don't need to buy additional coverage -- especially not for the premiums you'll be charged by a rental company -- but it's always best to check with your insurance company first. And remember that if you're traveling for business, you'll have to ask about your company policy, rather than your personal one.

Are there other types of rental coverage? 
You can also buy rental reimbursement coverage as an optional feature of many insurance plans. Rental reimbursement will actually pay -- or pay you back -- for a rental car if yours is in the shop, because of a covered accident.

  • Geico: Geico's car rental insurance partners with Enterprise, so if you choose it for your rental needs, Geico will pay Enterprise directly. If you use another provider, Geico will reimburse you, up to coverage limits. 
  • Esurance: Rental reimbursement is available for Esurance customers holding collision or comprehensive policies. In some states, customers are also eligible for its CarMatch service, which covers a rental car comparable to the owner's original vehicle, up to 45 days or $3,000. 
  • Allstate: Allstate's rental reimbursement operates similarly to other major rental policies. It helps defray the cost of renting a car if you suffered a covered loss. You won't be covered if your car is in the shop for routine maintenance or mechanical repairs. 
  • State Farm: State Farm's rental policy covers rental reimbursement, as well as some travel expenses. If you're away from home when your car needs to be repaired, State Farm may reimburse you for lodging, and other expenses you encounter, while it's in the shop. 

Keep in mind that all rental reimbursement plans have limits and don't cover gas or excess mileage fees, to name a few. If you're not prepared to pay for extra days or costs, time your rental so that you can minimize them. 

Even if you have the minimum level of auto coverage, you may still not need to shell out for insurance at the rental counter. Many credit card companies provide secondary insurance for rental cars, albeit with a number of conditions. As with your auto policy, consult a customer service representative at your card issuer if you're hoping to rely on credit card rental car insurance.

In short, if you rent cars regularly, or know you'll need to rent for an extended period of time, plan ahead so you're not caught off guard at the rental counter. If you need supplementary coverage, it might be cheaper to buy it elsewhere.


The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers