Do I Really Need Rental Car Insurance?

Lifestyle and

Dear Driving for Dollars,

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I'll be heading on a vacation next month and I've already reserved a rental car at my destination. I declined the rental car insurance, but a friend just told me it was worth the extra cost to eliminate the headache if there is a problem. Now I'm wondering: Do I really need rental car insurance?


Dear Jay,

That's a good question because it really depends on what your car insurance covers. The stated rule of thumb previously was that rental car insurance could be declined as long as you had your own car insurance. But car rental companies have upped the ante more recently, with some charging not only for damage to the car, but also for the rental car company's loss of use of the car at the going rental rate.

Your personal auto insurance may not provide compensation for loss of use, or it may not be at a rate as high as what the rental car company charges. That could leave you on the hook for part of the bill.

Check with your car insurance company to see exactly what is covered. Then, when it comes time to pick up your rental car, read the rental agreement thoroughly and be sure you understand what you are responsible for if you decline the insurance coverage. As long as your personal auto insurance policy covers you, you can feel confident in saying no.

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