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Do You Really Need Rental Car Insurance?

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States require car rental companies to carry insurance on their vehicles. But there’s no corresponding law that says you have to purchase insurance, which technically isn’t insurance, but an expensive and highly profitable collision-damage waiver (CDW) or loss-damage waiver (LDW) product sold by your car rental company. With the help of a few half-truths, a clever car rental agent can push you into buying pricey coverage.

Optional collision-damage waivers represent a “significant” source of income for car rental companies, although no one except the car rental companies knows how significant, according to car rental consultant Neil Abrams. Optional damage waivers are strongly encouraged by car rental companies, even though customers may already be covered by auto insurance, a credit card or travel insurance. The policies can routinely double the cost of your rental.

While an overwhelming majority of rentals are free of misunderstandings, a “tiny percent” may end with a car rental company turning away a customer because of a paperwork problem.

“Yes, they can refuse to rent a car,” Abrams says. “There is extreme liability and cost associated with vehicle damage, loss or worse. The rental of a vehicle is a privilege, not a right, but the operators do have the right to protect their assets, passengers and the general public.”

Lauren Luster, a spokeswoman for Hertz, which owns Thrifty, says they do not require their customers to have car insurance. “We offer optional car rental protection which is available for purchase by customers, many of whom are often navigating unfamiliar places in an unfamiliar vehicle while on a business trip or vacation.”

The optional coverage policy for other car rental companies is an industry standard in the United States.

Insurance is a good idea and no one should drive a car without coverage — but it doesn’t have to be the car rental company’s coverage. A driver can buy insurance through an online agency or a site like Insuremyrentalcar.com for about half the price of auto rental protection.

What insurance do you really need?

  • Domestic rentals: Any car rental insurance requirements are in the state’s laws, which are readily available online.
  • International rentals: If you’re renting overseas, check the car rental company’s website or call for information. Or you can check out Autoeurope.com, which lists detailed insurance requirements by country.

 

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