If you’ve ever rented a car, you’ve likely been sold the auto insurance that the rental company offers. But if you already have insurance for your regular car, do you need to purchase an insurance policy for your rental car as well?
“The short answer is probably not,” says Michael Barry, vice president of media relations for the Insurance Information Institute. “If you’ve already found out how much coverage you have on your car, whatever coverage and deductibles you already have on your own car [are] probably covered.”
Don’t over insure yourself
You don’t want to spend money where you don’t have to. If your own insurance will cover your rental car, it may not be necessary to purchase additional insurance. To find out if you’re already covered, do the following:
Talk with your insurance company. Find out exactly how much coverage you have, Barry suggests. “If you have auto insurance, you are in all likelihood covered from many of the things that could potentially happen when you rent a car.”
That includes any damage to the vehicle that occurs while you’re driving, damage that you cause to other vehicles, and bodily injury.
Talk with your credit card company. If they cover anything, credit card companies usually cover only damage to or loss of your vehicle, not issues with other cars or costs related to injuries, Barry says.
Still, it’s worth checking with your credit card company to see if it can save you money by covering at least part of the insurance you are considering for the rental car.
Find out if an umbrella policy covers you. If you own significant assets, you may have an umbrella liability plan that kicks in when all other insurance plans don’t. According to Barry, this umbrella policy may negate the need for rental car insurance because it provides you with protection above and beyond your regular policy.
Don’t underinsure yourself
The National Association of Insurance Commissioners warns that while purchasing unnecessary insurance is a waste of money, not purchasing enough can be costly as well
The provided amount of liability insurance likely won’t cover you. Rental companies must provide the state-mandated minimum amount of liability coverage when you rent a car, Barry says. But that amount likely won’t cover you completely in case of an accident.
“The problem with [state minimum coverage] is that most people driving around carry much more than the mandatory minimums. If you’re in an accident and medical bills start coming in, then $25,00 or $50,000 doesn’t look like much coverage,” he explains.
If the rental car is being used for business, you may need coverage. In general, your car insurance will only cover rental cars being used for leisure. Again, Barry suggests you consult with your insurer if you don’t know what your policy covers.
Educate yourself before arriving at the rental counter. According to information from Ned Maniscalco, a spokesman for Enterprise Holdings, which owns the Enterprise, National, and Alamo car rental companies, an educated consumer is the best consumer.
“It is always helpful when a consumer knows before renting a car what his or her credit cards or auto insurance policy might cover, and if it transfers to the rental vehicle,” Maniscalco says. By being proactive and contacting your insurance provider ahead of time, you can save money while also making sure you have the right coverage for your situation.
Ilyce Glink is the author of ten books, including the bestselling 100 Questions Every First-Time Home Buyer Should Ask. Her nationally syndicated column, “Real Estate Matters,” appears in more than 125 newspapers and Websites, and her online “Ask Ilyce” columns are read by hundreds of thousands of people every month. She is a top-rated radio host on WSB Radio in Atlanta, the Home Equity blogger at CBS MoneyWatch.com, host of the Internet program “Expert Real Estate Tips,” managing editor of the Equifax Personal Finance Blog, and publisher of ThinkGlink.com.