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

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


Key points

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

Every time a driver rents a car, he has to make a choice. The rental car company will offer to sell insurance on the rental vehicle and the driver will have to decide whether to purchase it.

Rental car insurance can cover costs if the driver of the rental vehicle causes an accident. It can also pay for personal belongings in the car if personal belongings cover is chosen and for medical bills if the driver chooses to buy personal accident insurance.

While getting these extra protections may seem smart, it’s important to carefully consider whether purchasing this specific type of auto insurance is worth it. Financial expert Dave Ramsey opined on the matter.

Ramsay’s advice on car rental insurance

As for whether you should buy rental car insurance, Ramsey believes it depends on what other types of insurance coverage you already have.

“The most important thing when it comes to rental car insurance is to make sure you’re not paying for something you don’t need.” Ramsay Solutions stated in the blog. “But it’s also not worth taking unnecessary risks to save a dollar.”

Ramsey points out that in many cases, drivers already have insurance that will provide the same protection that the rental car company is trying to get them to buy. “In general, your car insurance will cover your rental car in 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 full coverage, sufficient liability insurance, as well as health insurance to cover medical bills in the event of an accident.

Are there times when buying coverage is a good idea?

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

Those who do not own a car and are therefore uninsured should also purchase rental cover, as should business travelers, as their personal insurer may exclude cover due to the commercial nature of the trip.

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

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

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