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Some may find it excessive to take out a separate rental car insurance on top of a travel insurance while driving overseas. It is thus important to understand the coverage provided by each type of policy and weigh the pros and cons of paying for two separate insurance.  

Do you need both types of insurance?

If your vacations overseas consist mostly of travelling on public transport, then having subscribed a travel insurance will suffice in taking care of your needs. Most travel insurances provide coverage for accidents on public transport as well as the medical expenses incurred overseas for treatment.

If your holiday is pretty much a road-trip driving a rented vehicle, then it warrants paying some extra money to get yourself covered under a rental car insurance.

Rental car insurance 

Driving in foreign countries can be risky – you are not familiar with the roads and climate, and there can be some differences in driving rules. Having a good rental car insurance plan will protect you in case of accident or theft.

You could be hit with significant expenses if you meet with an unfortunate accident while driving a rental vehicle. Other than paying for the damage costs, you could be hit with penalty of as much as $50 per day for loss of income to the company. Rental car companies also regularly charge administrative fees related to accident events, and these can add up to hundreds of dollars.

Some rental car companies also require that renters cover the "loss of value" to their vehicle after the accident damage has been repaired. This can be thousands of dollars, depending on how badly damaged the car is. 

One important point to note is that you will still need your travel insurance for the personal accident coverage, as rental car insurance mostly protects the driver from having to incur huge costs on damage to the vehicle. In an accident, you will still need to cover any medical expenses for personal injury.

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