Do I Need Rental Car Insurance for a Car I Rent on Vacation?

April 30, 2025

It’s almost summertime in Tennessee, which means that for many, it’s almost vacation season. For some vacations, you may find yourself in need of a rental car, whether you’re renting a larger vehicle to transport your family more comfortably or picking up the keys after you fly to your destination.

While you’re in the middle of planning the perfect trip, here’s one more question to consider: Do you need to purchase rental car insurance for the car you rent for vacation?

The short answer: Maybe!

The longer answer: Your existing auto insurance policy may already cover rental cars, so it's important to check your coverage before purchasing additional insurance from a rental company. Liability, collision, and comprehensive coverage often extend to rental vehicles; but exceptions apply, such as when traveling internationally or renting non-standard vehicles like RVs or motorcycles.

The full answer: The complete answer to whether you should purchase insurance for your rental car is detailed below, alongside information about how to work with Farm Bureau Insurance of Tennessee to make sure you are fully covered on vacation.

Rental Cars and Insurance

While car rental companies (and even certain credit cards) can provide coverage, that may be redundant depending on your policy. Before you elect to purchase additional coverage, you should check what benefits you’re already paying for with your current auto policy, such as:

• Liability coverage, which can help cover claims and defense costs if you’re found legally liable for bodily injury to someone or for property damage.

• Collision coverage for accidents involving other vehicles or objects like trees or median strips.

• Comprehensive coverage for damage other than collisions, like fire, flood, hail, theft, and glass breakage.

In Tennessee, drivers are required to provide proof of financial responsibility in case of an accident, which most people do by purchasing liability insurance. In most cases, this coverage will extend to any car you rent. Your policy may even include rental car reimbursement, if you need to rent a vehicle while your car is being repaired or replaced after a covered accident, like a collision or theft.

You may want to consider purchasing additional rental car insurance if any of the following are true for you:

• Your current auto policy doesn’t include comprehensive or collision coverage

• You don’t have an auto policy or are only insured under a commercial auto policy

• You’re traveling to a foreign country

It’s also worth noting your personal auto insurance policy may not cover all expenses if you have an accident in the rental car. Two such issues could be loss of use or diminished value on the rental car.

Loss of use refers to the income a rental car company loses out on when the car you damaged is being repaired and cannot be rented out. Diminished value refers to the reduction in a rental car's resale worth after an accident, even if it's perfectly repaired, simply because it now has an accident history.

If you are concerned about the potential costs that would arise from one of those situations, purchasing additional car insurance coverage may be a viable option for you. Before your next long trip, talk to your local agent to see what coverage your policy has when renting a vehicle and to make sure you are adequately protected.

How To Know If Your Auto Insurance Policy Covers Rental Cars

Rental car insurance isn’t required by law, but having some sort of liability coverage is in most states. As we’ve mentioned, if you have a current auto policy, it likely covers any standard vehicles you rent. It may not cover things like RVs, motorcycles, or even luxury vehicles, though.

Your best source of information on whether your policy covers rental cars will always be your insurance provider. At Farm Bureau Insurance of Tennessee, our local agents are always happy to discuss your coverage and check that you have the protection you need before you hit the open road this summer. Reach out to schedule a call with one today.