Baltimore, Maryland


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Maureen May
Maureen May
Attorney • (410) 321-6000

Do I Need to Buy Insurance on a Rental Car?

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Since most personal auto insurance plans cover loss or damage to a rental car, many people decide to waive the optional insurance coverage add-ons offered by the rental company.

But is this really a smart thing to do?

Personal Auto Insurance Covers Rentals

While most people’s personal auto insurance covers losses and damage to a rental vehicle, if their deductible is higher than the Collision Damage Waiver (CDW) or Loss Damage Waiver (LDW) coverage that the rental company is offering, the add-on policy can be worth the money, particularly if you are driving in dangerous locations, narrow streets, or high-traffic areas that are not familiar to you. Plus, most personal auto insurance policies state that the policy will pay for only direct and accidental losses, not indirect ones.

Most Major Credit Cards Offer Rental Car Coverage

If you are resistant to paying the daily fee for the rental car company’s coverage, another option is to pay for the rental with your credit card. Many credit card companies offer rental coverage that is usually very similar to a CDW or LDW and can be used in addition to your personal insurance coverage. Because every credit card company handles rentals differently, you will need to check with your credit card company about its specific policy, which likely will not cover indirect losses. And plan to fully pay for the rental with your card and deny the CDW or LDW at the rental counter.

Do Your Homework

You should always check to make sure that your personal insurance – auto, renters, homeowners, and credit card – does or does not already have rental car coverage built into your policies before you rent the vehicle. And remember: your personal insurance is not going to cover you if you violate the terms of the rental contract, no matter what kind of insurance you have.