Rental car insurance: do you need it?

It's a standard question at a rental car company counter: "Do you need rental car insurance?" The answer can be muddy, which is why preparation is key. Here's how to sort out the specifics.

Talk to your insurance agent

Most vehicle insurance policies already include some sort of rental car insurance coverage — so if you purchase a rental car policy, you're paying extra when you may not have to. Ask your State Farm® agent these key questions:

• Do liability, comprehensive, and collision coverage and any deductibles extend to rental car agreements? Coverage may not apply if a rental car is stolen or damaged; in that case, you may need supplemental insurance from the rental car company.
• Are administrative or towing fees for rental cars covered?
• Does homeowners or renters insurance extend to personal items in a rented car? This is sometimes referred to as off-premises coverage.
• Does your auto policy offer loss of income coverage? The rental car company may charge you for what they could have earned had a damaged car not needed repair.

Call your credit card company

If you pay for a rental car with a major credit card, there's a good chance that the card issuer offers secondary car rental insurance at no charge. This typically helps only with additional expenses and the deductible beyond your existing auto policy.

Review your rental coverage options

Never sign anything or agree to coverage without reading the policy thoroughly, and know that insurance requirements and rules vary from state to state.

• Unless you have full auto insurance coverage, including liability, comprehensive, and collision, you may need to get some kind of insurance coverage from the rental organization. In place of collision or comprehensive, you may be able to obtain a rental car company loss damage waiver, or LDW, which can help cover damage-repair costs, administrative fees, and towing. However, a rental car company generally limits how and when the LDW can be used — for example, if you were speeding, coverage may be negated.
• If you don't have health or medical payments coverage on an existing policy, you may be able to purchase personal accident coverage.
• If you're renting from a nontraditional car sharing company, review the agreement. While insurance is often included in the fee, there may be restrictions or extra costs, particularly if the car is stolen.

Renting for work or play?

Coverage extensions from your existing policy or your credit card may not apply if you're renting a car for business. In that case, review the coverage options through your employer.