Many consumers are confused about insurance coverage for their own vehicles; it only stands to reason that there would be confusion about rental cars and whether or not you need liability insurance when renting a vehicle. Whether or not you need to purchase liability insurance from the rental car company will depend on a variety of factors.
In an article for Smartmoney Magazine, Noah Rothbaum writes that most of the time, if you have insurance on your personal vehicle the coverage extends to cover rental cars. This would give you both collision and liability coverage. You should always check with your agent concerning your policy and the extent of your coverage. Don’t just take for granted that the policy will cover a rental car; find out for yourself. Another question to ask your agent is if the coverage amounts of your policy are sufficient for the rental car you are considering. Liability limits won’t differ, but if you are relying on your policy for collision coverage you will want to make sure the limits cover the car you are renting, which may or may not be more expensive than your own vehicle.
Some insurance policies only cover rental cars when necessary as a replacement for your own vehicle. Again, this a question to ask your agent. Ideally you should have some idea of what your policy covers before the need for a rental car arises.
When you rent a vehicle, most companies require you to do so with a credit card. The credit card you use may provide insurance for a rental car. You should check with the credit card company to find out what they cover and any requirements they have for that coverage to apply. For example, the entire rental may have to paid for using that card. Credit card rental car insurance coverage is not going to provide you with liability though. You will only get damage coverage.
Additional points to consider when deciding whether or not to purchase liability insurance at the rental company would include finding out how your insurance company handles claims on a rental car. If you are concerned about a raise in rates should you have a claim on your own insurance, then you should look into the liability the car insurance companies provide. If you are required by law to report any accident or claim regardless of the vehicle you are driving, then you may just want to let your own insurance coverage prevail. If you risk an increase anyway, there is no need to go to additional expense.