Why You Should Always Buy the Insurance When Renting a Car (Even If You Think You're Covered)

It’s a familiar moment at the rental car counter. You're tired from traveling, just want the keys, and the agent asks:

“Would you like to add our insurance coverage for an additional $15 to $25 per day?”

If you’re like most people, your knee-jerk reaction is:

“No thanks, I have full coverage on my personal auto policy.”

Unfortunately, that answer could cost you hundreds, or even thousands, of dollars if something goes wrong. And most people don’t realize this until it’s too late.

A True Story: The $2,100 “Loss of Use” Fee

Let’s say you’re on a weekend getaway and rent a mid-size SUV from a national rental agency. You decline their damage waiver, feeling confident because your personal auto policy includes “rental car coverage.”

On the second day of your trip, you get into a minor accident. No one’s hurt, but the vehicle needs to be towed. You file a claim through your auto insurance, which covers the physical damage, so you think you’re in the clear.

Then comes the surprise bill from the rental company:

$2,100 for “loss of use.”

What is that? It’s the daily revenue the rental company estimates to have lost while the vehicle was in the shop, often charged at full retail daily rate, regardless of actual demand.

And here’s the kicker: Most personal auto policies do NOT cover loss of use, administrative fees, or diminished value of the vehicle.

Let’s Break Down the Gaps

Even if your personal auto policy includes rental vehicle coverage, here are the common gaps that can leave you exposed:

• Loss of Use: The rental agency can charge you for every day the vehicle is unavailable, even if they have a full lot of unused cars.
• Administrative Fees: Rental companies may charge additional processing fees, towing coordination fees, or storage-related expenses.
• Diminished Value: After an accident, the car may be worth less on resale, and some agencies charge you the difference. Personal policies typically don’t cover this.
• Out-of-Pocket Deductible: Your own policy deductible will still apply. So if you have a $1,000 deductible, that’s coming out of your pocket.

The Safer (and Smarter) Move

When you purchase the collision damage waiver (CDW) or loss damage waiver (LDW) from the rental car agency, they typically waive all financial responsibility for damage, loss of use, and diminished value. This means no deductible, no claim on your personal policy, and no surprise bills later.

Yes, it’s an extra daily charge. But it’s often the cheapest form of peace of mind you can buy, especially when traveling in unfamiliar areas or parking in busy city lots.

Final Thoughts

Your personal auto insurance might cover some aspects of a rental car, but it doesn’t cover everything. The gaps can be financially painful.

Before you automatically decline coverage at the counter, take a moment to think:

What would it cost me if something goes wrong?

In many cases, that $15–$25 a day is a small price to pay to avoid a multi-thousand-dollar surprise. Don’t let a false sense of security become an expensive lesson.