When renting a car, you need some types of coverage. But you may already have the required coverage through your personal auto insurance policy or a credit card.
Here’s how to decide when it’s worth it to pay for coverage.
KEY TAKEAWAYS
- Rental car insurance can help protect you from out-of-pocket expenses in case of an accident, theft, or damage to the rental vehicle, but the daily fee will increase your rental cost.
- Your personal auto insurance policy may already provide adequate coverage when you rent a car, so you may not need additional rental car insurance.
- Some credit cards offer car insurance benefits if you pay the full rental cost with the card.
- The best way to decide if you need car rental insurance is to understand the coverage you already have and what is covered (and isn’t) if you add other protections.
What Does Rental Car Insurance Cover?
You’ll likely be offered optional rental car coverage at the counter when you rent a car. These coverage types may differ based on which state you’re renting in, but they typically include:
Collision Damage Waiver (or Loss Damage Waiver)
For an extra daily fee on your rental, a collision damage waiver/loss damage waiver (CDW/LDW) can cover any vehicle repair costs if you’re in an accident or if the car is vandalized or damaged during your rental period. It may also cover theft of the rental vehicle. A partial CDW only partially covers the cost and may require you to pay a deductible.
Personal Effects Coverage
This optional coverage will reimburse you and the people you’re traveling with for stolen or damaged personal items and luggage while in your rental car.1
Personal Accident Insurance
This insurance pays for medical expenses, including ambulance transport and hospital care, if you or your passengers are injured while in your rental car. It may also provide benefits for an accidental death.
Supplemental Liability Protection
Supplemental liability insurance (SLI) increases the liability coverage dollar amount if you injure someone else or damage their property in an accident. It may also cover damage from uninsured and underinsured drivers. For example, SLI could offer up to $1 million in coverage. And if you have your own auto insurance policy, it could cover the difference between your policy’s coverage and $1 million in damage that you cause to others.
Emergency Roadside Service
This service pays for lost or damaged keys and any towing or taxi charges resulting from broken or lost keys.
Emergency Sickness Protection
This coverage is intended only for international travelers and covers non-U.S. residents for medical and surgical treatments, ambulance, dental and medical office visits, and more. Significant exclusions may be listed.
Warning: Most rental car and credit card coverage policies have long lists of exclusions and prohibited behaviors that limit coverage. For example, your CDW may not offer coverage for injury or death while driving under the influence, from a preexisting condition, or if you’re renting the car to get medical treatment. Ensure that you understand your rental car insurance policy’s rules before driving away.
Does My Insurance Cover Rental Cars?
If you have insurance policies, the following coverages may extend to driving a rental car:
- Auto liability insurance: Covers damage you cause to others (liability) up to your limits
- Auto collision and comprehensive coverage: Covers damage to the rental car
- Homeowners insurance: Covers items you have in the car if stolen or damaged
- Medical insurance: Covers injuries you sustain in an accident
- Life insurance: Provides death benefits if you die in an accident
Depending on your home state or the state where you rent the car, your auto insurance may even cover rental car damage if you’re in an accident, even if you don’t have collision coverage.
However, you must pay your deductible out of pocket for damages and injuries, and you are only insured up to your coverage limits in some cases. Some personal auto insurance policies may limit how long you can rent cars for and be covered.
Your insurance may not cover costs that the rental car company could charge you for, like loss of use, which is lost income from being unable to rent the car while it’s repaired. Your insurance may also not pay administrative fees and other charges.
Rental Car Insurance vs. Your Own Insurance
If you’re unsure if you need to get car rental insurance when you rent a car, here’s a look at how you could be covered with and without it. Remember that you likely must pay out of pocket if you don’t have a personal policy for the following.
| Risk | Rental Insurance | Personal Policy |
|---|---|---|
| Rental car damage | CDW typically repairs vehicle damage and associated fees and costs such as loss of use. May not charge deductibles. | Typically only covers repairs or vehicle replacement up to the car’s actual value and only if you have collision and/or comprehensive coverage. Charges deductibles. |
| Damage you cause to other people or property | Supplemental liability coverage is available, but the car rental may include state-required minimum liability insurance. | Your auto policy likely includes adequate liability insurance since many states require it. |
| Personal injuries | Covers medical bills related to a car accident, even in an international location. | Emergency treatment should be covered by health insurance, personal injury protection (PIP), or medical payments as part of your auto insurance. |
| Accidental death | May be included in medical or accident coverage. | Life insurance policies offer death benefits and may even pay more for an accidental death. Or you may buy a travel insurance policy. |
| Stolen or damaged belongings | Personal effects coverage provides coverage, but with many limitations. | A homeowners policy may have fewer limits but charge you a deductible. |
Other Alternatives
Other ways to get rental car coverage include the following.
Credit Card Rental Car Insurance
Some credit cards provide rental car insurance as a benefit if you pay the entire rental cost with the card. This insurance only covers rental car damage, not liability. Your credit card benefits description will clearly state which coverage type you have.
- Primary rental car insurance: This means that your credit card company will act as your main insurance coverage for rental car damage so that you don’t have to file a claim with your car insurance carrier. Remember: You will still need to file a claim if you damaged someone else’s vehicle or hurt them in an accident.
- Secondary rental car insurance: This insurance can piggyback off of your personal auto insurance policy, covering your deductible and other costs beyond your insurance limits for rental car damage. In some cases, such as international car rental or if you don’t have a primary form of auto insurance, secondary insurance becomes primary insurance.
Some credit cards also offer accidental injury and death insurance and coverage for your luggage and other belongings. Read the card policy carefully for coverage rules and exclusions.
Important: Credit card rental coverage may not extend to some types of car rentals or rentals in certain countries. If you’re relying on your card for protection, take the time to confirm that your rental circumstances aren’t excluded from coverage.
Car Rental Travel Insurance (Third Parties)
Depending on your itinerary and destination, you could buy insurance from a third party that includes car rental insurance, medical expenses, and protection for personal items. For example, this may be helpful when traveling abroad if auto policies and credit card insurance benefits don’t provide the specific coverages necessary.
Special Considerations: Driving Abroad
It’s a good idea to speak to your agent to find out if you need to purchase special rental car insurance that will protect you in other countries. For example, if you travel to another country, your personal insurance will probably not cover rental cars. You may also decide to seek out a third-party policy for other potential accidents or injuries that happen abroad.
Price of Rental Car Insurance
You can expect to pay around $30 to $50 per day extra, on average, if you decide to add on CDW/LDW and other coverages.
We collected quotes from three rental car providers across three locations (Orlando, Florida; Las Vegas; and Boston) for an economy-sized car in June 2023. Crunching the numbers, we discovered the average car rental insurance costs. Here are the results, rounded to the nearest dollar.
Coverage cost factors depend primarily on the location or state where you’re renting and the car’s value. You may pay far more for luxury vehicles. You may pay less when choosing more than two qualifying coverage products.
Should I Get Rental Car Insurance?
Rental car insurance can be a good idea in certain circumstances and a waste of money in others.
Consider car rental insurance if you:
- Don’t have liability or rental vehicle damage coverage from a personal car insurance policy or a credit card.
- Don’t want to deal with the hassle of claims, reimbursement, or other administrative expenses that your insurance company won’t pay.
- Want to avoid filing a claim and paying a deductible for a minor fender-bender.
- Want additional coverage because the car you’re renting is worth well beyond credit card or personal policy limits.
- Plan to share driving duties with someone not insured by your policy to ease future claims.
Skip the rental car insurance if you:
- Have full auto insurance coverage with ample liability limits and a deductible you can handle, and you can pay loss of use or other expenses out of pocket without worry.
- Have health insurance for medical expenses and homeowners coverage for stolen or damaged personal belongings.
- Have a credit card with robust primary or secondary rental car coverage, and you can charge the entire amount to the card as required.
- Are traveling to a destination covered by your car and/or credit card insurance.
- Find a similar third-party travel insurance policy at a lower price.
What Is the Difference Between Rental Car Insurance and Rental Car Reimbursement Coverage?
Rental car insurance covers costs associated with car damage resulting from an accident, theft, or vandalism. In contrast, rental car reimbursement coverage is optional personal auto coverage for your car. It covers up to a set amount per day if you have to rent a car while your vehicle is being repaired.
Do I Need Rental Car Insurance If I Rent a Car Abroad?
When traveling abroad, figure out if and how you’re covered for an accident while driving, including any injuries, damage, and injuries to others. Check with your personal auto insurance company, your health insurance carrier, and your credit cards to get the specifics. If you don’t have adequate coverage (or none at all), you can decide if rental car company coverage or third-party travel insurance will best suit your needs.
Does My Credit Card Cover Rental Car Insurance?
Many credit cards offer secondary rental car insurance for physical damage, which may become primary in limited situations. Call your card to find out how your coverage works. The list of credit cards that offer primary rental car insurance isn’t very long, but if you have travel rewards cards, look to see if it’s a featured benefit.
our American Express card may provide secondary rental car physical damage coverage. American Express. “Car Rental Loss and Damage Insurance Plan Documents,” Page 11. But you can add primary rental car coverage (called American Express Premium Car Rental Protection) that piggybacks on your card for a per-rental fee and features expanded benefits beyond traditional primary coverage. However, you must sign up before renting the car.
Does Temporary Car Insurance Cover Rental Cars?
Temporary car insurance policies are not really available in the United States for less than six months at a time. These policies may be more available in other countries, such as the United Kingdom—where you can purchase a policy term for as short as one hour and as long as 30 days, for instance. You can also purchase short-term travel insurance policies that provide some damage coverage in the U.S.
The Bottom Line
Don’t walk up to the rental counter blindsided and confused about whether the rental company’s coverage is worth it. Whether or not you need rental car insurance depends on the coverages that you already carry.
Compare your coverage through your insurance or credit card to your particular car rental situation. Your best bet is to call your auto insurance agent and/or credit card company and ask if and how you’re covered before picking up your rental car.
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