What Is Rental Car Insurance?

Rental companies typically offer you coverage options when you rent a car. But you may already have enough insurance. Learn more here.
Rental car

Renting a car is common if you’re on a business trip, vacation, or if you just need a car for a little while. But what’s the best way to get rental car insurance? Rental car companies will often suggest auto coverage options that you may not need. This article will explain the protection you do need and might already have if you rent a car.

We’ll cover the following about rental auto insurance:

  • What it is
  • Rental car company coverage options
  • Whether you need it
  • How much it costs
  • Which companies sell it
  • Frequently asked questions

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Rental Car Insurance Definition

In general, rental car insurance refers to any coverage you can get for a car you rent. You can get it from your personal auto policy or through your rental company.

Rental Car Company Coverage Options

Your car rental company will usually offer options such as a collision damage waiver (CDW). This may be called a loss damage waiver (LDW). Though you’ll often see both waivers written differently, they’re the same thing. Keep in mind that a DW isn’t car insurance. It’s a special type of coverage option you can buy from a rental car company.

What Does a DW Cover?

A damage waiver takes care of damages to your car due to a collision with a car or other object, theft, or vandalism. Rental companies don’t require a DW to rent a car.

It’s important to note that your CDW won’t work if you got into an accident by driving unsafely or violating the terms of the waiver. Per the Insurance Information Institute (III), your DW could become void for any of the following reasons:

  • Speeding
  • Getting a DUI/DWI
  • Letting unauthorized or underage drivers (under 25) behind the wheel
  • Letting someone with no license or a suspended one drive the car
  • Driving the car on unpaved roads

More Rental Car Insurance Coverages

A CDW is just one of the common optional coverages you can get from a rental company. Other available options could include:

  • Extra roadside assistance coverage (RAC). RAC helps you with mechanical car troubles. Some companies will offer extra roadside assistance coverage for other issues such as running out of gas, losing your key or fob, and getting a flat tire.
  • Personal accident insurance (PAI). This gives you and your passengers protection for medical and ambulance expenses after an accident.
  • Personal effects coverage (PEC). This covers your belongings or effects that you, your passengers, and/or any additional drivers have in your car during an accident or theft.
  • Supplemental liability insurance (SLI). SLI supplies bodily injury and property damage liability coverage. The exact amount will vary by company. Rental providers must offer your state’s minimum liability requirements by law.

Getting coverage from a rental company isn’t always necessary. And the price can also vary. But the biggest benefit is the peace of mind you can get by knowing you’re covered while driving a car you don’t own.

Do You Need Rental Car Insurance?

Most of the time, you might already have enough coverage for your rental in your existing auto policy or from your credit card company. If this is the case, you might be able to avoid buying protection from a rental company. Double-check your policy or contact your insurer to see what kind of coverage you have and if it’ll extend to your rental.

Below are ways you might already have coverage:

Your Personal Auto Insurance Policy

Your policy is likely to cover your rental if it’s around the same value as your car. But chances are your insurance won’t cover an accident if you usually drive a sedan, but you rented an expensive luxury or exotic car. This is because both the deductible and limits that you have in place for your personal auto policy will carry over to your rental car.

The following coverages will all cover your rental if you have them:

Again, it’s a good idea to contact your insurer or agent so you have a good handle on all the coverages you have on your policy. You can also explore switching companies if you find an insurer with better rental coverage. You can do that by comparing quotes from major insurers.

Coverage From Your Credit Card Company

You might also be able to get credit card rental insurance. Many well-known credit card companies, such as Visa, American Express, and Mastercard, offer rental vehicle coverage for cardholders. Some companies like Discover don’t offer it. Be sure to check with your credit card company to see if they have it.

Coverage from credit card networks can vary. But you can expect credit card companies to offer a CDW, which will cover you after a collision or theft. Be aware that you often won’t get liability insurance or MedPay with your credit card. Consider getting it from your rental company if you don’t already have these on your policy.

When You Don’t Additional Rental Coverage

  • Your policy extends to your rental
  • The value of your rental and personal car is similar (likely not an exotic or luxury vehicle)
  • Your renters or homeowners insurance pays for stolen items
  • You have enough auto or health coverage to pay for injuries to yourself or your passengers
  • Your credit card provider offers a CDW or any other protection

When You Do Need It

  • You don’t have any auto insurance
  • You only have liability on your policy or need more coverage
  • You don’t have renters or homeowners coverage that’ll pay for stolen items
  • You don’t have enough auto or health coverage to pay for injuries to yourself or your passengers
  • You’re renting a car outside the US or Canada
  • You want peace of mind and don’t mind paying extra for complete protection

Who Offers Rental Car Insurance?

You can get rental auto coverage from many of the major car agencies such as Avis, Enterprise, and Hertz. These companies will likely offer their products to you at several points during the renting process. Remember, you don’t need to buy their add-ons to rent a car.

You don’t always need to buy options from your rental provider. Another way to get rental car insurance is to find a company that offers third-party auto coverage. Companies such as Allianz and Bonzah offer standalone rental policies.

You can also get enough insurance from your personal policy or with your credit card. We recommend checking your existing coverage with your insurer, as well as finding out if your credit card company will offer you anything. You likely won’t need to buy extra coverage if you can get it with your own car insurance or your credit card.

How Much Does Rental Car Coverage Cost?

The cost of rental protection can vary based on several factors. It could cost nothing if you can get it from your standard policy. But you could end up paying a good chunk of money if you buy it from the rental company.

The following is a quick list of common options that three major rental companies offer:

  • Collision damage waiver: about $14.99 a day
  • Supplemental liability insurance: about $13.03 a day
  • Personal accident and personal effects coverage: about $7.19 a day

We calculated the above by averaging the three companies’ listed prices for renting a sedan for four days at Los Angeles International Airport. Note that prices can be different depending on the car you rent and how long and where you drive it.

Frequently Asked Questions

Q: When traveling, does your car insurance cover a rental car?

A: Your auto insurance can cover a rental vehicle if you have enough on your policy. Check to ensure you have the proper coverage on your personal policy.

Keep in mind that your auto coverage won’t cover a rental if you travel away from the US and Canada. You’ll probably need to buy extra insurance in that case.

Q: What does rental car insurance cover?

A: It can cover a range of things, depending on the coverage you get or might already have. Rental companies will often try to offer you a CDW, some form of liability, and more.

Your personal policy can also cover you while you drive. If you have full coverage, your liability, collision, and comprehensive offer complete protection when you rent in most cases.

Q: Who’s responsible for rental car insurance after an accident?

A: You’re responsible for making sure you have enough coverage when you rent a car, whether it’s from your policy or another company. You’ll pay out of pocket for the repairs if you get into an accident and don’t have enough auto coverage.

Q: Should I buy extra rental coverage if I rent a supercar?

A: Imagine you’re on a fun vacation in Las Vegas and want to rent a supercar. You may want to buy extra coverage from your rental company. This is because your personal policy’s limits may not be high enough to cover the damages to such an expensive car.

Q: Is rental car insurance a rip-off?

A: Auto coverage from rental companies isn’t necessarily a rip-off, but just something that you may not always need. Sometimes, your personal auto insurance might give you what you need. But not always. If you need to buy the extra protection, you could save even more money if your rental vehicle gets into an accident.

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