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Should I buy the Insurance from Rental Car Company?

By April 15, 2021No Comments

Rental car insurance

When it comes time to rent a car, here are two common questions that customers often ask us:

  • Do I need to buy the insurance from rental car companies?

  • If I am in a car accident and need to rent a car, am I covered?

Let’s find out the answers.


You’re standing at the rental car counter and the person helping you asks if you want to buy insurance through them. Do you need it?

This is a great question to ask your Knoxville, TN ERIE agent at Applegate Insurance Agency before your next vacation. Ultimately, the decision is up to you. There are some advantages to saying yes. Often, getting a rental means you’re driving an unfamiliar vehicle in an unfamiliar area, so the supplemental coverage from the rental car company can give you extra peace of mind.

Before you accept or decline, it’s important to understand how the rental car company’s coverage can (and can’t) kick in. Every rental company handles things differently. Your ERIE agent can also explain some important details, like how the rental company might calculate loss of use. You should know what you’d be on the hook to pay after a claim, including the deductible as well as any administrative fees that may apply.

With that in mind, here are a few questions to ask your ERIE agent in Knoxville, TN with Applegate Insurance Agency before you plan on renting a car:

  • If I buy the rental company’s coverage, then have a claim – will that prevent me from having to pay a surcharge on my personal auto policy?
  • If I’m in an accident, will the coverage help me pay for a replacement rental car while this one’s in the shop?
  • If I decline the extra coverage, then have a total loss… would the rental company max out my credit card until my personal auto policy pays for it?

Again, the decision is up to you. If you choose to decline at the rental counter, know that your personal auto insurance can kick in to cover you in certain situations while you’re driving your rental. Your ERIE policy will cover you for liability claims but you must have opted in to have collision and comprehensive coverage, on one of your cars on the policy to be covered for damage to the rental car. The ERIE policy has built in coverage in Tennessee is designed to suitably protect you and your family for incidental use of a car that’s not your own, such as a short-term rental of less than 45 days. The coverage extends to cars in the U.S. or Canada.

Here are a few questions to ask your Tennessee ERIE agent at Applegate Insurance Agency about insurance and rental car coverage:

Q:When I rent a car for a combined business trip and a personal vacation, am I covered? A: Your personal auto policy may not cover you, but your employer’s insurance might.

Q:If more than one person is driving the rental car, am I covered?A: Your auto insurance likely only covers individuals that are on your policy, such as spouse or kids. So, in this scenario, coverage from the rental company could be a good idea.

Q: If my luggage, purse or personal possessions are stolen out of my rental car, am I covered?A: Maybe. This depends on the details of your individual auto policy. In many cases, personal property may be covered by a homeowners or rental insurance policy, but not by your auto insurance. It may be worth asking an associate from the rental company what their policy is regarding personal property stolen from their vehicles.

Another option to consider: Many credit card companies offer rental car insurance if you pay the rental fee using their card. Just know that this coverage typically only covers physical damage to the rental car, so you’ll still need separate liability coverage. Get in touch with your credit card company to ask for details.

With liability coverage, there are a few things you should consider. Most states have a required minimum amount of liability coverage, which rental car companies are required by law to offer, but that still may not give you enough protection. If you have personal auto insurance and have opted for higher liability limits, you’ll be better protected.


If your car needs to be in the shop for a while after an accident, you may need to rent a car. Most auto insurance policies offer rental reimbursement coverage for a nominal extra charge, but sometimes auto insurance shoppers skip adding it to their policies.

With ERIE, basic rental car coverage is automatically included in most states if you’ve purchased comprehensive coverage. That means if your car is disabled because of a fire, theft, glass damage or another comprehensive type claim that may be covered under your policy, you’re covered for a compact sedan rental car. If you need a bigger rental vehicle, you could buy additional coverage (details below).

Related: When is a car considered “totaled”… and what happens when it is?

To have rental car coverage while your vehicle is being repaired from collision losses, such as hitting another car or a fence, building or pole, you would need to purchase collision coverage and add the rental car coverage to your policy.

At ERIE, this add-on coverage is called Transportation Expenses. It allows you to select a class of vehicle you want. It’s a nice benefit, because if you are a family of six… a compact sedan is probably not going to work. There are six classes* from which to choose:

  • Class 1: Compact sedan
  • Class 2: Traditional sedan
  • Class 3: Small SUV or pickup truck
  • Class 4: Minivan or midsize SUV
  • Class 5: Luxury sedan or large SUV
  • Class 6: Specially equipped vehicle that can be operated and accessed by an individual with a disability.

With that in mind, it’s easy to add rental car expense coverage to your ERIE auto insurance policy. Just ask your agent to do so. And, while you’re at it, consider adding Emergency Roadside Service Coverage.  Contact your local ERIE agent in Tennessee at Applegate Insurance Agency, 865-240-2348 to help you determine what best meets your needs.

It was updated with new information on April 29, 2019.