Figuring out if you need rental car insurance can be confusing. The type of coverage you carry on your personal auto policy, your contract terms and the reason you are renting a vehicle can all determine whether you should purchase extra rental car coverage.

In most cases, the coverage you carry on your auto policy will extend to a rental car as long as you rent a private passenger vehicle. In some scenarios, however, your personal auto policy can leave gaps in coverage that will cost you if you are in an accident in your rental car. Most insurance professionals advise exploring your options with your agent before driving off in a rental vehicle.
You do not have any type of insurance

You’ll want to purchase rental car insurance if you don’t have car insurance. That’s because most states have laws requiring you to carry a minimum amount of car insurance coverage while driving a vehicle. Consider purchasing a damage waiver and liability coverage from the rental company to protect your rental.

Some uninsured drivers rely solely on the rental car coverage that their credit card company provides. Although rental car coverage through your credit card can be helpful if you already have a primary insurance policy, it might not offer adequate protection as the only means of insuring your rental vehicle. Before declining additional damage protection, you may want to call your card issuer for more information on their rental car coverage policy.
You do not have collision or comprehensive coverage

Collision and comprehensive coverage are part of what’s known as full coverage car insurance, which covers damage to your vehicle after an at-fault accident or other incident, such as hail, theft or fire. These types of coverage typically extend to a rental vehicle. However, if you only have liability insurance coverage, your personal car insurance won’t cover damages to the rental.

To protect yourself in this situation, you can purchase a loss-and-damage waiver from a rental agency. This agreement waves your financial responsibility for damages or loss to the rental car.
You do not want to pay a deductible

If you rely on your personal car insurance to protect your rental car, and you get into an accident, you typically have to pay a deductible. However, if you buy rental car insurance and you get into a collision, there is no deductible required.

Types of rental car insurance

Rental car insurance is somewhat similar to regular auto insurance. You can select the type of coverage and the level of coverage you want based on your needs. However, the types of rental car insurance are much different than auto insurance.

Before getting rental car insurance, you should be aware of your options. The most common types of rental car insurance include:

Loss-and-damage waiver (LDW): Sometimes called the collision damage waiver (CDW), this is a waiver, rather than a true policy. It essentially says that the rental company will not come after you in the event that the rental car is damaged or stolen. However, if you have collision and comprehensive car insurance, this may be included in your policy.
Supplemental liability protection: This covers damage you do to other vehicles or property. However, your own liability insurance may cover these instances, even when you are driving a rental car.
Personal accident protection: Personal accident protection covers the medical costs for you and any passengers if you are involved in an accident. Again, if you have personal injury protection or medical payments coverage under your existing policy, you may already be covered.
Personal effects coverage: This coverage pays for any belongings that may be stolen from your rental car. In this case, your homeowner’s insurance or renter’s insurance policy may offer similar coverage.

While there are many different types of rental car insurance, it does not cover everything. For example, this type of insurance doesn’t reimburse you for the cost of renting a car. However, you may be reimbursed for rentals in some circumstances if you have rental reimbursement coverage — which is typically an endorsement you can add to your existing policy for an extra cost. Note that this coverage provides reimbursement only if you’re renting a car because your insured vehicle has suffered a covered loss.