The Pros and Cons of Extra Insurance: Why Is It Necessary to Buy Rental Car Insurance?

June 1, 2022

Renting a car can be a necessity or a luxury. Whether you plan a business trip, a vacation, or need a temporary vehicle to move around, it is a common practice for drivers to use rentals. The companies providing car rental services tend to offer rental insurance policies typically sold over the counter.

However, an offer like this might cause confusion and many questions. Do you have to buy the policy? When renting a car, is insurance needed? How does rental car insurance work? And if you already have coverage, does it extend to rentals? Understanding your policy and various aspects of rental car policy is the key to making the right decision.

How Rental Car Policy Works

Car rental companies typically offer several insurance options that might or might not work well with your insurance coverage. However, you should remember that personal coverage kicks in only if the rental is used for non-business purposes. When it comes to business-related rentals, the rules depend on the specific policy and the insurance company. Therefore, contact your agent or the insurance carrier to ensure that you are fully informed on the matter.

Over-the-Counter Options vs. Personal Coverage

One of the insurance options offered by the car rental companies is called an LDW, also known as a loss damage waiver. Its purpose is to cover the theft of the rental car or its damage. It is not a full-on insurance policy. Just as the name suggests, it is a waiver that guarantees that the rental company will not pursue you as an at-fault party.

If you have a personal comprehensive or collision coverage, it typically extends to your rental. But it is crucial to remember the deductibles that come with any of these insurance policies. If you are uninsured, be prepared to pay for the damage out of your pocket. Since taking out insurance online requires no additional effort or time-consuming calls, you can use professional insurance comparison to choose your insurance type. Besides, insurance coverage quotes are now available online. And this fact makes it reasonably simple not only to identify the most suitable options fast but also to safeguard your personal or rental vehicle.

The other insurance policy available at the counter is called supplemental liability coverage. Its purpose is to cover the damage you might cause to other cars or property. It is a perfect choice for drivers who do not have auto insurance and do not own a vehicle. If you already have personal liability coverage, you should be aware that it typically extends to rentals. In other words, you can rest assured that you are appropriately covered and opt-out of the over-the-counter offer.

What Else Is There?

If you assumed that there was another alternative option, you were right. Apart from all the insurance policies mentioned before, you can also use your credit card to get rental coverage. If the credit card is in your name, you used it to pay for the rental, and the company offers automatic insurance enrollment as a benefit, you are all set. However, keep in mind that this type of coverage requires declining over-the-counter offers.

While it might seem like a perfect option, credit card coverage also has peculiarities. Your credit card can offer primary or secondary car rental insurance. What is the difference between them? To begin with, most credit cards offer secondary coverage when it comes to rental cards. This coverage kicks in only after the driver’s primary policy has covered its part. It means that all the car insurance claims have to be addressed to the insurance company first. And since this process is typically time-consuming, you will have to spend a lot of time waiting for the issues to be resolved and for money to be paid.

The primary coverage eliminates the need for any personal car insurance since it applies first. In other words, it is a handy option (if available) that guarantees that the claim is filed right away after you dial a number placed on the back of your credit card.

Should You Purchase Rental Car Insurance?

Naturally, there is no universal answer. And every driver should base their choice on the type of personal insurance policy, the purpose of renting a car, and benefits provided by over-the-counter offers or credit card policies.

While it might make sense for a specific driver to purchase an LDW today, the same driver might make a different choice in a week. In a nutshell, it depends on a variety of individual factors. But one thing is sure: devote your time reading a car rental insurance agreement carefully and following the rules. Otherwise, you might pay out of your pocket for any violation or damage caused.

Victoria Berezhetska

Victoria Berezhetska is a Content Lead at and an expert contributor to CoverExplore. She has a Bachelor of Science degree in Business Administration, with extensive working experience as a PR specialist and content writer. At CoverExplore, she helps customers find the right educational material through easily digestible blog posts and buying guides backing their insurance coverage choice. Victoria covers diverse topics around digital and insurance marketing, including auto, home, health, and life insurance.


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