Do You Need Rental Car Insurance?

Most people like to skip out on rental car insurance to save a buck or two. Before you turn it down, make sure you have a backup - otherwise an accident can cost you thousands of dollars.

Start with your car insurance policy. If you have comprehensive or collision coverage, your policy may extend to rental cars as well. Most insurance companies will also provide liability insurance if you injure somebody in an accident. If you're covered, you don't need to pay the extra money.

However, keep in mind that your comprehensive insurance may be limited by the amount established for your personal car. This means that if your car is insured for $5,000 and you rent a $20,000 SUV, your policy may only cover $5,000. If this is the case you should consider buying additional rental insurance. Check the fine print in your insurance policy contract and, if in doubt, call your agent.

If your insurance doesn't cover rentals, check your credit cards. Most of them will pay for damages in case of an accident, but this benefit may be limited to certain rental companies, locations and time periods. You'll also have to charge the full rental amount on your credit card, but it's definitely worth the savings. Plan ahead and make sure your credit card will become responsible in case of accident, as some credit card companies often change their policies without notifying their clients. The best way to find out if you're eligible is to call the 800 number on the back of your credit card. This simple toll-free phone call could save you hundreds of dollars.

If you don't have any of the options mentioned above we strongly suggest you pay for the rental car company's insurance. It is not worth gambling with the risk of having an accident and then having to pay for the damages straight out of your own pocket.

When you buy rental car insurance you must consider several options: collision, liability, contents and life insurance, with price ranging between $10 and $40 per day. Collision and liability coverage is essential, but the other two are optional. If you're worried about your personal belongings being stolen out of the rental car, check your homeowner's insurance as well. Vehicle contents may be included in your policy.

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