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.