Do You Need Rental Car Insurance? Here's What Dave Ramsey Thinks

Don't make a decision on rental car insurance without reading this.

Whenever a driver rents a car, they have a choice to make. The rental car company will offer to sell insurance on the rented vehicle, and the driver will need to decide whether to purchase it.

Rental car insurance can cover costs if the driver of the rented vehicle causes an accident. It can also pay for personal items within the car if personal effects coverage is chosen, and for medical bills if the driver opts to buy personal accident insurance.

While getting these added protections may seem smart, it's important to carefully consider whether purchasing this specific kind of auto insurance is worth it. Finance expert Dave Ramsey has weighed in on this issue.

Ramsey's advice on rental car insurance

When it comes to whether you should buy rental car insurance, Ramsey believes it depends on what other types of insurance coverage are already in place.

"The bottom line when it comes to rental car insurance is to make sure you don’t pay for something you don’t need," the Ramsey Solutions blog states. "But it’s also not worth taking unnecessary risks to save a buck."

Ramsey indicates that in many cases, drivers already have insurance in place that will provide the same protections that the rental car company is trying to get them to buy. "In general, your auto insurance will cover your rental car the same way it covers your own car. So you probably don’t need rental car insurance," Ramsey said. This is especially true for drivers with comprehensive coverage, sufficient liability insurance, and also health insurance to cover medical bills in the event of a crash.

Are there times when buying coverage is a good idea?

Although Ramsey says many people likely can forgo rental car insurance because their own auto policy already offers the same coverage, there are exceptions. In particular, he makes clear that drivers should buy rental car coverage if their standard auto insurance excludes rentals or has a high deductible.

Those who don't have a car and who are thus uninsured should also buy rental coverage, as should individuals who are traveling for business, because their personal insurer may exclude coverage due to the commercial nature of the trip.

However, for those who do rent cars regularly but who don't own a car of their own, Ramsey suggests looking into non-owner car insurance instead of routinely paying for rental car coverage. Non-owner insurance can be less expensive and provide more comprehensive protections than the policy offered by the car rental company.

Ramsey's advice on this issue is worth listening to, as there are definitely times when added protection may be needed -- but it's not worth paying for redundant coverage outside of these circumstances. Drivers should check the terms of their own auto insurance policies before renting a vehicle in order to decide if it makes sense for them to buy the insurance the rental car company offers. In many cases, they'll find no additional coverage is needed.