Rental car insurance: The facts behind the offer

Can you save money by skipping optional damage waivers?

A few years ago, my wife and I took a vacation to northern California—a week of play and relaxation.

(It was the kind of thing we did before we had kids.)

We flew into San Francisco International, planning to rent a car to drive to Sonoma County. When we arrived at the rental counter, we were exhausted from the six-hour flight and long hike from the baggage claim. We just wanted to get the car and get going.

And, that’s when they got me—when my wife and I were tired and at our weakest.

I recall the rental agent not even positioning it as a question, but as an assumption.
“Check here to accept the optional damage waiver,” she said in a friendly voice.


That little pen mark cost us hundreds over the course of a seven-day rental. And, it was probably
totally unnecessary.

Your personal coverage extends to a rental car

If I knew then what I know now, I would have skipped the check mark and spent that money at the wineries.

It burns me to this day.

Truth is, your personal insurance coverage extends to a rental in most situations.

So, if you have liability, comprehensive and collision coverages on your personal car insurance policy, you probably have it with a rental too. We had a full coverage policy; so, in essence, we paid for and drove around California for a week with duplicate insurance.

You can probably just say no to the rental agent

To borrow a line from Nancy Reagan (and to date me to the ‘80s), you can probably “just say no” to the rental agent’s offer of additional coverage if you already have a
full coverage car insurance policy.

Here’s a breakdown of what the rental company is really offering.

Damage waivers

What it does

Provides coverage if the rental car is damaged or stolen. May not apply if the car is misused (speeding, driving on unpaved roads, or driving while intoxicated).

You might not need it if

You have comprehensive and collision coverage on your personal auto policy.

Supplemental liability

What it does

Provides additional liability protection if you’re at fault for an accident and the other party files a claim against you for injuries and damage that exceed your regular policy limits.

You might not need it if

You already have liability coverage that adequately protects your assets. Supplemental liability is essentially a form of umbrella insurance. It provides protection above and beyond what your auto policy provides—useful if you’re sued. If you feel like you need supplemental liability for a rental, you may actually need a personal umbrella policy.

Personal effects coverage

What it does

Provides coverage for items and property you own that’s damaged while in the car.

You might not need it if

You have homeowners or renters insurance (you may have to pay a deductible).

Personal accident insurance

What it does

Covers your injuries while you’re driving a rental.

You might not need it if

You already have health insurance, or you have adequate medical coverage under your auto policy.

A few helpful rental car tips

The advice here is just meant as a general guide. I know that’s a bit of a cop-out, but the truth is that different insurance companies’ policies vary slightly, and there are some situations—such as renting a moving truck, or renting a car outside the United States—where different rules apply.

Some tips that always apply:

  • Talk to your insurance agent or company—It’s the logical first step. Ask if the coverage you have on your personal vehicle will provide protection for you in a rental car. Your agent or company can let you know if you have what you need, and what your options are if you don’t.
  • Check with your credit card company—Some credit card companies provide at least limited coverage at no charge if you use their card to pay for the rental.
  • Take your policy paperwork to the rental counter—You may be asked a question that these papers can answer. If you’re in doubt, have your insurance company or agent’s name and phone number readily available.
  • Ask your agent or company about “named non-owner” coverage—It’s horrible jargon even by insurance standards, but “named non-owner” coverage is designed to provide coverage to people who don’t own a car, but do drive. So, say you live in the city and don’t own a car, but do rent every few weeks to travel to your parents’ house in the country. Named non-owner coverage might be what you need … never mind the name.

The bottom line

Do your homework before you head to the airport—a 10-minute chat with your agent or company can save you hundreds. At the rental counter, be sure to ask questions before you check that box accepting rental car insurance. Only you can decide what’s best for your finances and peace of mind.