Car Rentals – Do I Need the Extra Auto Insurance?

Every time I rent a car, the guy at the counter talks me into buying extra insurance coverage, which is always expensive. Some people have told me that I don’t need to buy the extra insurance if I have full coverage on my own car. Is that right?

Assuming that a person has a standard personal automobile policy issued in Texas, the policy generally covers all vehicles that a person operates, including rental cars. Under these circumstances, it is not essential that the person buy the additional coverage. It is always a good idea to call your insurance company beforehand and verify that your policy does cover you in rented vehicles.

For people whose policy does not cover them in other vehicles, they may want to think about adding this coverage to their personal policy if they find themselves renting cars often. Because the extra coverage offered by rental car companies is so expensive, it can often be cheaper for someone to add this coverage to their personal policy rather than buy coverage each time they rent a car.

Keep in mind that there could be legitimate reasons why someone would want to buy the extra insurance coverage even if they are covered to drive other vehicles on their personal policy. Buying the rental company’s insurance coverage usually means that the driver’s individual policy becomes secondary. If an accident were to occur, the driver would be covered under the rental company’s policy and may not have to submit a claim to his or her own insurance company. This can be important for drivers who have submitted several prior claims on their policy and are worried about significantly increased premiums or having their policy cancelled.

Some credit card companies offer extra coverage on rental cars, although it is a good idea to verify the extent of the coverage. In addition, most standard policies do not cover renting a car outside of the United States, so it’s generally advisable to pay for the extra coverage when renting a car in a foreign country.

This article appears in April 14 • 2006.

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