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All states except New Hampshire and Virginia require that drivers have at least a minimum level of auto insurance coverage. 

States that require insurance can impose five fundamental forms of coverage: All states requiring some form of coverage except Florida require the inclusion of bodily injury insurance, while all states requiring insurance and Washington D.C. require property damage liability coverage. In addition, nearly half of these states mandate some form of uninsured or underinsured motorist coverage. Only a few states require personal injury protection. These are standard offerings, and companies generally price them accordingly.

Insurance coverage by rental companies is more elaborate. Opting for their plans can provide drivers with Basic Liability Coverage, Collision Damage/Loss Damage Waivers, Supplemental Liability Coverage, Personal Accident Insurance, and Personal Effects Coverage.

In addition to the bare minimum required by the state, rental car insurance offers more protection. Generally, prices range from about $31-$60 per day for rental insurance from popular providers like Budget and Enterprise Rent-A-Car. At Enterprise Rent-A-Car, Loss Damage Waiver costs around $30; liability coverage costs about $15; and personal accident insurance costs roughly $13, bringing the total daily rental car insurance cost to $60.

On the more cost-efficient side, Budget Rent-A-Car charges $9 for loss damage waiver, $15 for liability coverage, and $7 for personal accident insurance, making daily rental car insurance $31. The covers the cost of repairs for vehicular damages caused by accidents, fire, vandalism, theft, and other similar cases, according to NAIC, the U.S. regulator for insurance commissioners.

Liability insurance covers medical bills and damages to another person's property. Similarly, personal accident insurance covers the renter's and passenger's medical bills, while personal effects coverage covers theft of personal belongings stolen from the rental.

Car rental insurance can be pretty pricey depending on how much coverage you buy and where you rent the automobile. While the pricing might be out of your control, there are ways you can save a penny or two. Before buying rental car insurance, check your car insurance policy. In some cases, the insurance might extend to rental cars if they are for travel use only.

Credit card companies also offer insurance for customers who reserve and pay for their rental cars with their cards. Typically, credit card insurance only covers short-term leases; in some instances, the maximum period is 15 days. Another alternative to rental car insurance is nonowned auto coverage, which provides coverage for vehicles you don't own. It's beneficial because it saves you the stress of buying a new policy every time you rent a car.

That said, if you have a more comprehensive personal auto insurance plan than the basic one—especially if you have collision insurance already—you may not need additional coverage. Insurance plans vary widely, so do your research before making this decision.

Car rental insurance can often be worth the additional cost. Research shows that than nonrented vehicles. The higher accident rate puts the high premiums associated with rental car insurance into perspective.

Several factors contribute to the elevated accident rate. For instance, many car renters engage in riskier driving than they would in their own vehicles. People renting cars are also usually doing so away from home—where traffic patterns and rules may differ from what they're accustomed to—leading to reduced adherence to traffic regulations. And many rental car drivers are young and inexperienced behind the wheel.

Apart from the behavioral causes of accidents by rental car drivers, the increasing popularity of rental vehicles on the highways will likely push the number of traffic accidents involving them upward. All in all, make sure you have coverage—either through your own provider or a rental car company's provider—to protect yourself from the potentially steep costs associated with repairing damaged vehicles.