What Is Rental Car Insurance Coverage?

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 coverage you do need and might already have if you rent a car.

We’ll cover the following:

  • What is rental car insurance coverage?
  • Rental car company insurance options
  • Whether you need it
  • How much rental car insurance costs
  • Who sells rental car coverage
  • Frequently asked questions

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What is Rental Car Insurance?

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

Rental Car Company Insurance Options

Your car rental company will usually offer coverage 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 rental 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 gives you coverage for 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 coverage 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 rental car during an accident or theft.
  • Supplemental liability insurance (SLI). SLI supplies bodily injury and property damage liability coverage while driving your rental car. The exact amount of coverage will vary by rental company. Rental companies must offer your state’s minimum liability insurance 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 for sure that you have coverage 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 car insurance 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 auto 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 for your rental car:

Your Personal Auto Insurance Policy

The coverage on your car insurance policy is likely to cover your rental car if the rental is 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 coverage limits that you have in place for your personal auto policy will carry over to your rental car.

The following will all cover your rental car if you have them on your policy:

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 auto insurance policy. You can also explore switching companies if you find an insurer with better rental car coverage. You can do that by comparing quotes from major insurance companies.

Coverage From Your Credit Card Company

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

Rental 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 Need Rental Car Insurance

  • Your auto insurance 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 passengers.
  • Your credit card provider offers a CDW or any other coverages.

When You Need Rental Car Insurance

  • You don’t have any car insurance.
  • You only have liability insurance 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 insurance to pay for injuries to yourself or 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 rental car agencies such as Avis, Enterprise, and Hertz. Rental companies will likely offer their coverage products to you at several points during the renting process. Remember, you don’t need to buy their coverage to rent a car.

You don’t always need to buy coverage options from your rental car company. 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 rental coverage from your personal auto insurance policy or with your credit card. We recommend checking your existing coverage with your insurance provider, as well as finding out if your credit card company will offer you coverage. 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 Insurance Cost?

The cost of rental car insurance can vary based on several factors. It could cost nothing if you can get coverage from your standard car insurance 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 rental coverage 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 price of each coverage 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 car if you have enough coverage on your policy. Check to ensure you have the proper coverage on your personal insurance policy.

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

Q: What does rental car insurance cover?

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

Your personal car insurance policy can also provide coverage while you drive a rental car. Your liability, collision, and comprehensive can cover you while 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 the rental 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 insurance policy’s limits may not be high enough to cover the damages to such an expensive car. Rental coverage from the company will help you stay covered.

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 car gets into an accident.

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