Rental Car Insurance -- Yes or No?

Emily Ferreira, Managing Editor

Anyone alive in the 1990s undoubtedly remembers the comedy series “The Fresh Prince of Bel-Air” with Will Smith. There is a classic episode where Will goes skiing with his Aunt, Uncle, and cousins. Will’s cousin Carlton rents a car while they are on vacation and refuses to get insurance because he believes it is a scam. Of course, through a series of unfortunate events, the rental car ends up at the bottom of a snow bank.

This example is meant to be humorous, but listening to Carlton cry when he realizes he is going to have to pay to replace the rental car provides a life lesson we can all learn from. When renting a car, it is very important to make sure you take the proper steps to protect it.

Importance of Rental Car Insurance

Many people believe that rental car insurance is a scam--something car rental companies came up with in order to make more money. Others just do not think about the importance of insuring a vehicle that they are driving but do not own. Some people may mistakenly believe that their personal vehicle insurance will cover any damages done to any car they are driving. This is not necessarily true.

For most of us, the idea of driving our own cars around without auto insurance is an absurd notion. However, people do not hesitate to drive borrowed cars around without insuring them. This idea is confusing to many people in the insurance business.

Insurance provides us with the security of knowing we will be financially “ok” in the event of an accident. Having to pay to repair or replace an entire car because it was wrecked could be as devastating as the accident itself.

Finding Rental Car Insurance

One place for a person to look for a rental car insurance policy is through the company that insures their personal vehicle. Sometimes these companies offer discounted rental car insurance rates to their current customers.

Most of the time, people really do not know if their insurance company covers these extra vehicles. Checking with their auto insurance company before getting to the rental car counter could save a lot of confusion and uncertainty on the day the rental car is needed.

Another place to find rental car insurance is online. Hundreds of agencies have websites that outline their policies and car insurance quotes. A few minutes would be all it takes to find the best car insurance rate for your next car rental.

Finally, each rental car company will offer its customers a car insurance policy before turning over the car. This is probably the easiest and most convenient way to get insurance on a rental car.

Available Options

Loss Damage Waivers (LDW) and Collision Damage Waivers (CDW) are very similar plans. These are designed to cover any loss or damage to a rented vehicle. These policies are not actually insurance policies and are not regulated, so read the waiver carefully before deciding on this option.

These waivers can be voided if the person is caught driving recklessly. This would include such things as driving drunk or causing an accident. These restrictions are designed to protect the rental agencies from people who are not as careful in rental cars as they would be in their own vehicles.

Supplemental Liability insurance is another option available to car renters. This is a good choice if the person has an insurance policy that covers rental cars but does not offer as much coverage as he or she would like. A supplemental policy from most rental agencies could make up the difference.

Some insurance companies also offer Personal Accident Insurance. This generally covers expenses related to injury or death. Many people choose not to purchase this because they have health insurance that will cover these expenses.

Rental car insurance is usually pretty inexpensive. Prices vary based on what rental agency is used and what kind of policy their insurance broker chooses. Most policies cost between $10-$15 a day. When compared to the $15,000-$20,000 it would cost to replace a car, $15 is really not a significant amount of money.


Rental car insurance is not a scam. It is a relatively inexpensive way to protect car rental drivers from paying for damages that are done to a car they do not own. The chance of having an accident in a rental car is probably not great. But then, who really plans on having an accident? Why take the chance? Say “yes” to rental car insurance, because it is always better to be safe than sorry.

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