Do I really need to buy rental car insurance?

This week, we’re tackling a question from By The Way editor Amanda Finnegan, who’s fresh off driving around Italy on a family trip: I’m always questioning whether I really need to buy extra insurance for a rental car. Between credit card protections and my own car insurance, what’s left uncovered when I rent a car?

When you’re booking a rental, the menagerie of insurance plans - often thrown in with add-ons like car seats and fuel packages - look similar but different and can add up quickly. Deciding can feel as high-stakes as a bomb deactivation scene in an action movie. One wrong click and boom: the rate on your economy compact just doubled.

Unless you have a bottomless checking account, you definitely want some kind of insurance in case something bad happens while the rental car is on your watch. But whether you need to buy it with the rental car company is a different story. I went to industry experts to demystify the situation.

Turns out there’s not a one-size-fits-all coverage option. Elie Michaels, vice president of operations at Advantage Rent A Car says what you need and the cost will depend on a few elements of your personal life, the insurance coverage level you want and the type of car you’re after, and where you rent - from the company to the actual location.

Let’s run through those variables.

Variable 1: Do you own a car? Check your existing coverage.

People who own cars should (keyword, should) have their rentals covered by their own insurance, at least for damage, theft or injuries caused to others when traveling domestically.

“The coverage and deductibles you have on your auto insurance policy apply in most cases when you rent a car, as long as it’s for personal use,” AAA spokesperson Brittany Moye said in an email.

If you have a policy with comprehensive coverage, that’ll protect your rental for damage caused by events out of your control, like vandalism or fire, says Ted Olsen, vice president at Goosehead Insurance. And if you also have collision coverage, that should protect the rental car costs if you hit another vehicle or object.

Don’t guess. Call your car insurance company and ask how much coverage you have and if it extends to rental cars. And “get it in writing,” says Melanie McGovern, spokesperson for the Better Business Bureau.

One little caveat: Olsen says for your personal insurance to cover your car, it needs to be a similar class to what you drive at home. The insurance on your sedan won’t likely cover a U-Haul, motorcycle, ATV, scooter or boat.

One big caveat: If misfortune strikes (i.e. damage, theft or injuries), you’ll have to place a claim against your personal auto insurance policy, which could impact your premium. Depending on your coverage, “it could be a high deductible that would be out of pocket,” says Alaina Hixson, the director of sales and operations at the Churchill Agency, an independent insurance company.

For that reason, some car owners still buy the rental company’s insurance, like a collision damage waiver policy, says Denise Bialek, head of travel insurance at Priceline. Like your own collision coverage, that’ll cover damages to the rental car in case of accident or theft. To cover damage caused to other vehicles or people, Bialek says you may want to add supplemental liability insurance.

Variable 2: Do you have a credit card with travel perks?

More than a dozen credit cards (Capital One Venture X, Chase Sapphire Preferred and Chase Sapphire Reserve, to name a few) offer primary car rental insurance as a benefit. They tend to cover reimbursement for collision or theft damage, up to the actual cash value of most cars. They don’t often cover damage you cause to others.

Call the number on the back of your card to get an explainer of your benefits, and ask whether your card offers primary coverage or secondary coverage.

“Primary coverage will cover the entire claim first; this is the best-case scenario,” Olsen said in an email. “Secondary coverage is more common and requires you to file a claim with your own insurance first before credit card coverage kicks in, which negates a lot of the benefit.”

Hixson agrees credit card insurance is “usually pretty comprehensive.” “But you have to make sure you use that card to make the rental purchase,” she added.

Variable 3: Are you traveling abroad?

All of that advice changes if you’re renting internationally. Olsen says because of the different laws in different countries, it’s unlikely that your personal insurance coverage will extend abroad.

There’s an exception. “When you’re in Canada, for the most part, you’re fine,” Hixson said. “Your insurance is likely going to transfer over.”

Bialek says that many countries and jurisdictions require renters to have a collision damage waiver policy. “If you’re renting a car in Europe, for example, it is required to show proof of third-party insurance,” she said in an email. A policy through your credit card could suffice if you have enough coverage through their policy, but check with your company to see which (if any) foreign countries they may exclude.

A few important final notes

Hixson reminds travelers that none of these policies - your personal auto or credit card insurance - is going to protect you physically. “So if you get injured in that accident, and you’re at fault, then you would have to come out of pocket or go with your health insurance.”

You can beef up your medical protection with travel insurance, Hixson says, particularly when traveling abroad.

Lastly, should you find yourself panicked at the rental car counter, ask for help.

“Don’t feel pressure to buy what you don’t need,” McGovern said. “Reputable car rental companies will answer all of your questions and walk you through the whole process.”

Chris Dong contributed to this report.