Should you spring for insurance on a rental car? See what the experts say.

Illustration of woman at rental car counter

You’re standing at the rental counter, excited for your trip. But first you must deal with the confusing and sometimes intimidating hard sell for insurance coming at you from the customer service agent. Not sure whether you should sign on the dotted line? Some key facts:

How It Works

Rental companies generally offer four types of coverage. A collision and damage waiver (CDW) prevents the rental company from billing you if the vehicle is stolen or damaged. Liability insurance covers the costs if you injure someone else while you’re driving. Personal-accident insurance takes care of any medical treatment you might need after an accident. And personal-effects coverage protects items stolen from the car. These options are usually offered à la carte or combined in a comprehensive package, says Gerri Detweiler, a personal-finance expert for the consumer advice website

What It Costs

Per day, CDW costs $9 to $19; liability insurance runs $7 to $15; personal-accident coverage is $1 to $7; and personal-effects insurance is $1 to $4. When these are bundled, the overall cost tends to be somewhat lower than à la carte pricing.

Who Needs It

For years, consumer advocates said that few people needed any of this coverage, since they could find it by other means. And it’s true that personal auto insurance often provides rental collision and theft coverage, health insurers may cover medical bills, and homeowner’s or renter’s insurance can reimburse you for items stolen from a car, says Galia Gichon, the founder of Down-to-Earth Finance. Your credit card may also offer coverage. But these days the fine print on many policies has gotten trickier. Some credit-card companies, for instance, won’t pay all fees associated with an accident, potentially leaving you on the hook for hundreds or even thousands of dollars.

The Bottom Line

“Generally, if you have auto insurance, homeowner’s or renter’s insurance, health insurance, and a credit card, you’ll probably be OK opting out,” says Gichon. “But if you don’t have one or more of these safety nets, buy coverage from the rental-car company.”