Rental Car Insurance: How It Works, What It Covers, and When You Might Need It

Whether you drive your own car or you’re renting, you’ll want to make sure you have auto insurance coverage. If you rent a vehicle and don’t have your own car insurance policy, you’ll probably need to get coverage as part of the rental agreement if you don’t want to get stuck with a potentially costly repair bill.

Car rental insurance can cover your personal property and rental car damage or supplement your existing policy. You can purchase it at the rental counter, as part of a travel protection plan, or through a third-party company.

Here’s what you should know about rental insurance and how it can protect your finances.

Key Takeaways:

• You might already have coverage for a rental vehicle through your credit card or personal car insurance policy.
• There are several types of rental car insurance options to choose from, and they may be optional if you have other coverage available.
• Having rental insurance can prevent the rates on your personal insurance policies from increasing if you file a claim.

Do You Need Insurance to Rent a Car?

You don’t need insurance to rent a car, but many rental car companies only include minimal coverage on the vehicles they rent.

Without personal auto insurance coverage, the rental agency may require you to buy liability coverage and offer optional coverages, such as collision insurance. If you get in an accident while driving a rental vehicle and don’t have the right type of coverage, you could end up with a hefty out-of-pocket repair bill.

How Does Rental Car Insurance Work?

Rental car insurance protects you financially if you get in an accident or someone steals your rental car. If your vehicle is damaged or stolen, you’ll file a claim through the insurance policy.

That said, there are several types of rental insurance available, and each covers different types of damage or loss. That can make things a bit confusing when you’re at the rental counter, so we’ll discuss your options in more detail below.

What Does Rental Car Insurance Cover?

Rental car insurance can cover multiple types of losses, including:

• Theft of the vehicle while you’re on vacation, traveling for work, or using a rental while your car is in the repair shop.
• The cost to replace personal items stolen from the rental car, such as cameras, laptops, luggage, and clothes.
• Bodily injury or property damage you cause to others while driving a rental.
• Your medical treatment costs if you’re injured in an accident.
• The cost of repairs or replacement of the rental vehicle if it’s totaled after an accident.

Does Your Car Insurance Cover Rental Cars?

Your personal auto insurance policy can cover rental cars, but it depends on the type of coverage you have. A liability-only policy would cover bodily injury and property damage you cause to others, but it wouldn’t cover the rental car itself.

If you have a full-coverage policy, it would also cover comprehensive and collision insurance claims. Comprehensive insurance can cover damage from events like natural disasters or if the vehicle is stolen. Collision coverage may pay if you cause an accident that damages your rental.

Medical payments and personal injury protection (PIP) can cover your medical expenses if you get injured in an accident. There’s also an optional add-on you can include in your policy called rental reimbursement coverage. This coverage will pay some or all of the cost to rent a car if yours is in the repair shop after a covered accident, up to the limit outlined in your policy.

How to Insure Your Rental Car

You have a few different options to insure your rental car. Let’s take a look at each.

Using your auto insurance policy

Your personal car insurance policy can extend coverage to a rental vehicle as a substitute for your car. But if you get into an accident or the vehicle gets stolen, you’d still have to pay your comprehensive or collision deductible. And if you’re at fault in the accident, your insurance company might raise your rates.

Through your credit card company

Some credit cards — especially travel cards — offer benefits like rental car coverage, but you’ll have to check the fine print to know if it’s primary or secondary coverage. With primary coverage, you’d file the claim through the credit card company. But with secondary coverage, you’d have to go through another pre-existing policy first, like your car insurance.

If you owe a deductible under your personal policy, the secondary coverage might reimburse you. But secondary coverage may not be enough for everyone, especially if you don’t have an existing car insurance policy. Talk to your insurance agent or your credit card’s customer service department if you’re unsure.

Purchasing insurance from the rental car company

Even if you have auto insurance, you can still purchase several different types of coverage from the rental company (we’ll discuss each of them in detail later on). Purchasing rental car insurance from the company can help prevent you from paying a deductible and protect your insurance premiums. It’s up to you to decide if that extra cost is worth it.

Buying rental car insurance through a third party

Several third-party companies offer their own rental insurance you can purchase if you don’t want to go through the rental company or your own insurance policy. For example, Allianz Global Assistance offers OneTrip Rental Car Protector for $11 per day, offering up to $50,000 in primary coverage for collisions, baggage loss or damage, and trip interruption.

RentalCover.com provides primary collision damage waiver coverage and liability insurance for domestic rentals. It’ll also cover theft, collisions, flat tires, cracked windshields or headlights, towing costs, and lost keys.

Bonzah and Sure also provide rental car insurance, allowing you to choose the coverage you want at various price points.

How Much Is Rental Car Insurance?

Rental car insurance costs can vary depending on the vehicle you rent, the type of coverage you want, and where you purchase insurance from. The rates outlined below are in addition to the cost of renting a car and are subject to change.

A collision damage waiver (CDW) can cost anywhere from $10 to $20 per day. Personal effects coverage can cost between $5 and $16 daily, and supplemental liability insurance (SLI) can range from $7 to $17. If you add personal accident insurance, it’ll also cost around $5 per day.

Rentalcover.com’s website states its rental car insurance is 50% cheaper than what it costs through rental car companies. Bonzah’s basic CDW coverage is $22 daily, and SLI costs $12 daily.

Is rental car insurance worth it?

Rental car insurance is often worth it, but in the end, it’s up to you. You don’t want to be stuck paying huge expenses you didn’t account for, especially if you’re traveling out of the country.

If you’re worried about the cost of rental car insurance, check to see if you have primary coverage elsewhere and then supplement what you don’t have.

Types of Rental Car Insurance

If you don’t have personal accident insurance, you have several other options. You might have coverage on a credit card, get a stand-alone policy through a third-party company, or buy insurance from the rental company itself.

Here are the common types of insurance you’ll usually see at the rental car counter.

Collision damage waiver (CDW) or loss damage waiver (LDW)

A collision damage waiver (CDW) is the same as a loss damage waiver (LDW). The waiver negates your financial responsibility for damages you’ve incurred to the rental car, as long as the cause of damage isn’t prohibited in the rental agreement.

You might have this coverage already if you have car insurance or a credit card with CDW benefits. Although your personal auto insurance won’t cover you outside the U.S. or Canada (and sometimes Mexico), credit card coverage may be international. Check with your credit card company first.

Personal effects coverage (PEC)

Personal effects coverage (PEC) covers your personal belongings if they’re stolen from your rental car. Each policy has coverage maximums and may have exclusions and limitations, so be sure to read the fine print of the rental agreement.

Your renters or homeowners insurance may cover your personal items but may limit how far away from your home you’re covered. You’d also pay a deductible and could see a rate increase for filing a claim.

Personal accident insurance (PAI)

If you or your passengers get injured in an accident, personal accident insurance (PAI) can help pay your medical bills. Check your auto or health insurance first to see if you have coverage where you’re traveling and if PAI is worth purchasing.

Supplemental liability insurance (SLI)

If you cause an accident that injures others or damages their property, supplemental liability insurance (SLI) could prevent you from paying out of pocket for repairs. Your auto liability insurance may cover you, but only up to your liability limits, and it usually won’t cover you outside the U.S. or Canada. Getting SLI may be worth it if you have low liability limits on your auto policy.

Rental Car Insurance FAQs

Rental car insurance can be a cost-effective way to protect yourself financially when renting a vehicle. We’ve answered some of the most common questions about rental insurance below.

Do you need extra insurance when renting a car in the USA?

It depends. Whether you need extra insurance when renting a car in the United States varies on your personal car insurance coverage.

For example, a collision damage waiver is a good idea if you only have liability coverage on your policy. Supplemental liability can increase your coverage limits for additional protection.

Is rental car insurance a rip-off?

No. Rental insurance isn’t a rip-off. It can provide peace of mind when traveling, knowing you’re covered if something happens to your car rental or your stuff gets stolen out of the vehicle.

That said, not all drivers need to buy rental insurance at the rental counter. Checking your auto insurance and credit cards before you buy can ensure you only purchase the coverage you need.

Which credit cards offer primary rental car insurance?

Many Chase credit cards — including the Sapphire Preferred and Reserve and Ink Business cards — offer primary rental car insurance. The Bilt Mastercard, United Explorer card, American Express Platinum card, and Capital One Venture X Rewards credit card also offer primary rental car insurance coverage.

Does rental car insurance include roadside assistance?

It depends. Some companies offer it, but not all.

Enterprise offers Roadside Assistance Protection (RAP) as an optional add-on to cover refueling, lockouts, and lost keys. Avis extended roadside assistance covers jump-starts, fuel delivery, lockouts, and flat tires. And while Hertz includes basic roadside assistance, it only covers mechanical defects — though you can upgrade for more coverage.

Does travel insurance cover rental car accidents?

It’s possible, but you’ll usually have to pay extra.

It also typically only covers physical damage to the rental vehicle and may offer roadside assistance. However, travel insurance might not cover you if you cause an accident and injure others or damage their property.

Sources

1. District of Columbia Department of Insurance, Securities & Banking. “Things to Know About Car Insurance and Rental Cars Before Starting Your Road Trip.” Accessed November 3, 2023.