How does rental car insurance work?

Rental car insurance works by providing liability coverage for the driver, as well as optional coverage for damage to the rental car, the driver’s medical bills, and theft. You can get rental car insurance from a rental car company, your credit card, or your personal car insurance policy. Most personal car insurance policies automatically cover rental cars, as long as the rental isn’t being used for business purposes.

If you don’t already have car insurance, you might need to purchase rental car coverage. In most states, rental companies are required to automatically include the state minimum level of liability coverage in rental car contracts. However, if you want higher liability limits or you want to protect against damage to the rental car, you will need to purchase coverage from the rental car company.

How Different Types of Rental Car Insurance Work

Most rental companies offer four types of rental car insurance: collision damage waivers, supplementary liability coverage, personal accident coverage, and personal effects coverage. You can generally choose which types, if any, you want to purchase.

• Collision Damage Waiver: This waiver covers the cost of repairs for the rental car if you damage it. It may not cover damage to certain parts of the car like the windshield or tires and may not cover certain causes of damage like inclement weather.

• Liability Coverage: This coverage pays for liability claims if you injure someone else or cause damage to someone else’s property while driving the rental car. In every state except California, the minimum amount of liability coverage required by the state is automatically included in rental car contracts. Any additional coverage you purchase will go toward raising your liability limits.

• Personal Accident Coverage: This type of rental car insurance covers medical costs for you and your passengers in the event of a rental car accident.

• Personal Effects Coverage: This insurance option covers personal items like clothing and luggage if they are stolen from the rental car. Expensive electronics like cameras and laptops may be subject to limits and exclusions.

To learn more, check out WalletHub’s guide to rental car insurance.