Rental car companies offer customers the option to purchase additional coverage such as collision damage coverage, personal accident and supplemental liability protection. Spending the few extra dollars for additional indemnity coverage can be a prudent decision that can save you many thousands of dollars if you were ever involved in a serious car accident while renting the vehicle. Purchasing additional car rental insurance can even be a good idea if your rental car is covered under your own personal policy.

Before you rent a car, you should check with your insurance provider to find out what coverage you have while driving a rental car. Many insurance companies only provide partial coverage for rental vehicles. If this is the case with your company, you should definitely purchase additional coverage from the rental car company.

As part of your investigation, verify that your policy will pay for an accident resulting to a vehicle you rent out of state. Some policies are very specific to the state they are written for and coverage for collision damage (damage to the vehicles being driven by either party), bodily injury (money that your policy would pay for another person injured in a car accident that you caused) may be reduced or eliminated. Additionally, important personal coverage (coverage to you if you become seriously injured in a car accident) within your policy such as uninsured and underinsured motorist coverage, may not transfer to an out of state rented vehicle.

There are other notable gaps in coverage that may work to the detriment of the insured. For example, if you drive an older car, you may not be carrying collision coverage. Therefore, when you rent, you coverage may be quite inadequate. Also, if you have entered into a long term lease or rental agreement, some states assume that you have temporary ownership, legally. If you are involved in an accident while operating a rental, you could be liable for the entirety of the damages.

The credit card you use to pay for your vehicle rental will often provide automatic accident protection. This insurance is, however, only secondary collision coverage. The credit card company will only pay after any other insurance reimbursement is made. Keep in mind that your credit card will not provide liability coverage.

Even if rentals are covered in your policy, it is sensible to buy additional coverage, as stated above. In standard rental company clauses, there are no caps on liabilities resulting from the use of their vehicles. Regardless of fault, you are responsible for physical damages, loss of use, depreciation, and the administrative fees associated with the damages. Your insurance may not cover the entire cost, depending on the upper limit of the policy.

You are in a "catch 22" situation in the raging legal battle between rental agencies and primary insurers, with both holding on to their ground. In a number of states, as per the local law, it is mandatory for a vehicle owner's private transport to merit primary coverage in all aspects. But, the argument on the part of the primary insurer's solicitor is that this law does not hold good in the case of rental vehicles as the fall under a different set of rules applicable to rental cars only. Therefore, the insurer is obligated to compensate only for the physical damages of the vehicle, and the onus of clearing other payments on the claim falls on you. Neither side has been adjudged as a loser in the courts. The lesson learned here is to ensure that your vehicle insurance covers all aspects explicitly before you buy the policy.

Having an accident in a car you have rented can lead to a major financial hit to your bank account. You can purchase additional coverage when you rent a car that adds extra fees, but that relatively small amount will provide extra coverage you will be glad you have if something unexpected happens to the rental car.