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Do I Really Need Rental Car Insurance?

Do I really need Rental Car Insurance?  That’s the most common question that people ask when renting a car. Do I need to buy the insurance offered by the rental company, or am I covered elsewhere?

If you already have an auto insurance policy, you are covered, but only for liability. Liability covers the driver and not the car. If you have liability insurance (which is required by law) then you are covered in whatever car you drive, as long as it is a rare occurrence, and not part of a routine. A rental car is no different, your insurance company will cover any damages you cause to anyone else (property and injury), up to your limit.

However, your other coverage options will probably not transfer (collision, comprehensive) so any damage you cause to the rental car is your responsibility. Even if you have collision and comprehensive insurance on your policy, these coverages are specific to the car, so they will not transfer to your rental car, and it will not be covered.

Most rental companies offer collision coverage on vehicles at a small per day price ($10-$30), the benefit to this is that any claims made will not affect your own insurance premiums.

Most Insurance companies also offer a special endorsement policy that provides coverage for non-owned cars. This costs much less than the coverage offered by the rental car agency, and is included in your regular insurance payment plan. But under this plan, if you cause damage to your rental vehicle, it may cause your regular car insurance premium to increase. Be sure to check with your broker to see if you have this rental car endorsement.

Some major credit cards also offer rental insurance if you use their card to pay for the rental. Check with your credit card company to see if this applies. They usually have strict guidelines, such as use must rent from certain rental companies. If you are travelling outside of the Canada or US, you will also find that most international rental companies won't deal directly with credit card firms, which means that any you may have to pay for any damage to the car up front, then appeal for reimbursement when you return home.

Rental car coverage is a must, and there are a number of places that offer varying levels of coverage. The key to adequate coverage is in knowing what your requirements are, and determining whether or not the protection you currently have in place, is sufficient to your needs.  If in doubt, contact your insurance broker to see if you already have the rental car coverage in place, or to discuss your options.