Do you need rental car insurance? Here’s what Dave Ramsey thinks

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Don’t make a decision on rental car insurance without reading this.


Key points

  • Car rental insurance is an optional type of coverage that can be purchased when renting a vehicle.
  • Financial expert Dave Ramsey said it can be worth paying in some situations.
  • If a driver’s auto insurance has a high deductible or excludes rental cars, then purchasing rental car insurance may be worth it.

Every time a driver rents a car, they have a choice to make. The car rental company will offer to sell insurance on the rented vehicle, and the driver will have to decide whether to purchase it or not.

Rental car insurance can cover costs if the driver of the rental vehicle causes an accident. It can also pay for personal items in the car if personal effects coverage is chosen, and medical expenses if the driver chooses to purchase personal accident insurance.

While getting these additional protections may seem smart, it’s important to carefully consider whether buying this specific type of car insurance is worth it. Financial expert Dave Ramsey has weighed in on this question.

Ramsey’s advice on rental car insurance

As for whether you should have rental car insurance, Ramsey thinks it depends on what other types of insurance coverage are already in place.

“The main thing about rental car insurance is to make sure you’re not paying for something you don’t need,” said the Ramsey Solutions blog states. “But it’s also not worth taking unnecessary risks to save money.”

Ramsey says that in many cases drivers already have insurance in place that will provide the same protections the rental car company is trying to get them to buy. “Generally, your auto insurance will cover your rental car the same way it covers your own car, so you probably don’t need rental car insurance,” Ramsey said. This is especially true for drivers with comprehensive coverage, sufficient liability insurance and health insurance covering medical expenses in the event of an accident.

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Although Ramsey says many people can probably forgo rental car insurance because their own car policy already provides the same coverage, there are exceptions. In particular, it clarifies that drivers must purchase rental car coverage if their standard auto insurance excludes rentals or has a high deductible.

Those who do not have a car and are therefore uninsured should also purchase rental coverage, as should people traveling for business, as their personal insurer may exclude coverage due to the business nature of the trip.

However, for those who regularly rent cars but don’t own a car, Ramsey suggests looking for non-owner car insurance instead of regularly paying for rental car coverage. Non-owner’s insurance can be less expensive and offer more comprehensive protections than the policy offered by the car rental company.

Ramsey’s advice on this matter is worth heeding, as there are certainly times when extra protection may be needed – but it’s not worth paying for redundant coverage outside of those circumstances. Drivers should check the terms of their own car insurance policies before renting a vehicle to decide if it makes sense for them to purchase the insurance offered by the car rental company. In many cases, they will find that no additional coverage is needed.

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