Basics

• According to Car Rental Express, daily rates for rental car insurance (collision damage waiver, personal accident insurance, and personal effects coverage) can range from $15 to more than $30. However, insurance from the rental company is optional and can be declined. By accepting coverage directly from the rental company, you pay to not be liable for any damage created while the vehicle is in your possession.
  
  Realize the difference between driving uninsured (with absolutely no coverage) versus underinsured (with insufficient coverage to pay for your damages). If you are uninsured and rent a car, then the rental car company will hold you personally liable for all damage along with loss in expected profits (as the car cannot be rented while it is being repaired). You can be sued and forced to pay a judgment.
  
  If you are underinsured, then your insurance will not pay for all of the rental car damages. For instance, if you rent an expensive vehicle that is totaled, then you will be responsible for the difference between the car cost (e.g., $45,000) minus your car insurance coverage maximum (e.g., $20,000).
  
  

Features

• Many insurance companies will extend protection to rental cars. Thus, when your drive a rental car, you are not driving without insurance. Like with your personal vehicle, if you get involved in an accident with a rental, you have to file a claim and pay your deductible. One advantage of purchasing insurance from the rental car company is that if you are involved in an accident with a rental, you will not have to worry about calling your insurance company.
  
  There are various ways for your personal insurance company to deny coverage on a rental--even if included within your personal policy. For instance, you can get denied if you get into an accident out of state when the rental agreement explicitly restricts out of state driving. Your insurance company also can avoid paying for an accident if an unauthorized driver was driving the rental or if the police report cites that you drove under the influence of alcohol.
  
  

Considerations

• Consider using a credit card for rental insurance coverage as many credit card companies extend coverage when you use your card to rent a car. Before relying on your credit card, contact a representative and confirm coverage. For example, some credit card companies require that you completely reject coverage offered by the rental company. According to creditcards.com, your credit card company may refuse to provide primary coverage, so you will have to file a claim with your personal insurance before the card company will pay.
  
  You should inspect your rental car with the sales person before leaving the rental car premises to highlight any and all existing damage. Understand reporting requirements for your credit card and car insurance company. For example, you might have to file a claim within 30 or 45 days. Insurance from your personal vehicle or credit card typically will not extend to rental cars when you travel internationally. Another common exception arises if you rent exotic or expensive cars, which often will not be covered.