Rental car insurance is coverage from a personal insurance policy, a credit card, or the rental company itself that protects people when they drive a rental car. Depending on the policy, rental car insurance may cover damage to the vehicle, damage or injuries that you cause, your own injuries, theft, and loss of personal items.
There are several situations where it makes sense to purchase rental car insurance, including if you’re traveling internationally or renting long-term. Depending on your personal insurance policy and how you’re paying for the car, however, you might not need to purchase extra rental car insurance.
Key Things to Know About Rental Car Insurance:
- The most common types of rental car insurance are liability, collision damage waiver, personal accident, and personal effects.
- Rental car insurance costs $61 per day, on average, but it depends on how much coverage you purchase and where you’re renting the car.
- Your personal car insurance, health insurance, and credit card benefits will usually provide coverage when you rent a car.
- Other alternatives to rental car insurance are non-owner car insurance, temporary car insurance, and travel insurance.
- You should consider several factors before purchasing rental car insurance, including what coverage you already have and the potential cost of damage.
Do You Need Rental Car Insurance? The Quick Answer
If your personal vehicle is insured and you pay for your rental car with a credit card, you generally don’t need to buy extra insurance when renting a car in the United States or Canada. You may not have to purchase rental car insurance if you are traveling for business, either.
Why you might not have to buy extra rental car insurance:
- In most cases, your personal auto insurance will cover you as if you were driving your own car.
- Major credit cards generally include some level of collision insurance when you reserve and pay for the entire rental with that card.
- If you are traveling for business, you are likely covered by a company insurance policy. Check with your employer to be sure you know what coverage they provide.
That’s the quick answer, but read on to learn more about the rental insurance coverage you may already have and the extra coverage you can buy.
Rental Car Insurance You May Already Have
Before purchasing additional insurance, begin with an inventory of the coverage you already are paying for.
Personal Auto Insurance
Most personal auto insurance will cover you when you are driving a rental car. If you’re not sure about what your policy covers, check with your insurer or agent.
But be aware that getting the same coverage means you don’t get extra coverage when driving a rental. So, for example, if you don’t carry collision insurance on your personal policy, you won’t have any coverage for damage you cause to the rental car. If you do have collision and comprehensive coverage, don’t forget that you’re probably responsible for a deductible.
Also be aware that auto insurance typically only covers personal (non-business) use of cars. But, as noted above, while traveling for business, you may be covered by your employer’s insurance.
Personal Health Insurance
While making decisions at the rental counter, don’t overlook your health insurance policy, if you have one. Most health insurance plans will cover any health care you need while traveling in the U.S. – and sometimes in many other countries. Make sure you understand your policy's terms, especially for traveling outside the U.S.
As with your auto policy, remember that if you’re relying on your health insurance and you need medical treatment after an accident, you will be responsible for the health policy’s deductibles and copays.
Credit Card Benefits
By reserving and paying for your rental car with a major credit card, you generally will get coverage for theft or damage to that vehicle.
Here’s how this protection works:
- The collision protection from a credit card is usually secondary to other forms of insurance. That means it will only kick in after other forms of insurance are exhausted. This secondary coverage becomes primary if there is no other coverage from another source.
- Most credit card policies require you to decline the damage waiver offered by the car rental company. Make sure not to accidentally cancel your credit card’s solid coverage with a less comprehensive damage waiver.
- Credit card coverage only applies to short-term rentals, and sometimes the limit is as short as 15 days.
- Coverage applies when you travel outside of the U.S., but certain countries are excluded.
- Certain vehicles, such as trucks or vans, are often excluded from coverage.
- Some car rental companies seek compensation for rental fees they could have charged if the car were not in the shop. Many credit cards will pay these “loss of use” fees, but others will not. If this fee is not covered by your credit card (or your auto insurance), you will be responsible for this cost.
For details on each major car network’s rental car coverage, take a look at WalletHub’s picks for the best credit card rental car insurance.
Homeowner’s or Renter’s Insurance
Homeowner’s and renter’s policies usually cover personal possessions when they are outside of the home, including items stolen from a rental car. Though there are often limitations with high-end electronic equipment and cameras, this insurance is usually better than the daily rate coverage the rental company offers. Coverage may be denied if the rental or trip is for business purposes.
Types of Rental Car Insurance
The most common types of insurance offered by rental car companies are as follows:
Collision Damage Waiver
- Average cost: $10-30 per day
- Comparable to: Collision and comprehensive insurance
Often called a collision damage waiver or a loss damage waiver, this will cover repairs if you cause any damage to your rental car. Coverage may exclude certain parts of the car, such as tires or the windshield, as well as certain causes of damage such as weather or damage while on private property.
Damage waivers for rentals in the United States don’t have deductibles, but in some other countries, these policies will have a deductible.
Rental Car Liability Insurance
- Average cost: $10–16 per day
- Comparable to: Bodily injury liability and property damage liability insurance
Liability insurance covers damage to other vehicles, property and people as a result of accidents you cause when driving your rental car. Note that this does not cover you, your passengers or the rental vehicle itself.
The state minimum levels of liability insurance are included as part of the basic rental fee in almost every state. In these cases, any additional insurance you purchase will at most give you higher coverage limits. There are some exceptions, most notably in California, where rental companies are not required by law to include liability insurance.
Personal Accident Insurance
- Average cost: $3–9 per day
- Comparable to: Personal injury protection and medical payments insurance
Personal accident insurance covers the medical costs for injuries to anyone in your rental vehicle during an accident.
Note that for many rental companies located in the U.S., personal accident insurance includes the “personal effects” insurance described below.
Personal Effects Coverage
- Average cost: $1–6 per day
- Comparable to: Homeowner’s and renter’s insurance
Personal items – such as clothing and luggage – stolen from the rental vehicle, or lost when a rental vehicle is stolen, are covered by this option. Expensive electronics (especially cameras) may be subject to limits and exclusions.
Read the car rental insurance agreement as well as your own insurance policies carefully. Speeding, drunk driving, non-approved drivers or using the vehicle for certain business purposes will void most rental car insurance.
Also be aware that some rental car companies have installed GPS trackers in their vehicles. If they find you have violated the rental agreement at any time, coverage may be voided. This includes speeding and taking the car beyond specified borders. Note that insurance may be voided even if an accident occurred separately from the violation.
More Alternatives to Rental Car Insurance
Non-Owner Car Insurance
People who don’t own a car can still get car insurance of their own, by purchasing a non-owner policy. For people who frequently rent cars, this can be far more affordable than buying the rental company’s policy for each rental.
Temporary Car Insurance
Some car insurance companies offer temporary policies that provide coverage for as little as a day or as long as a month. If you don’t already have coverage, you may find this is a better value than the insurance offered by the car rental company.
If you are already purchasing travel insurance, this may provide you sufficient medical and personal effects coverage. Make sure not to get duplicate rental car insurance.
Cost of Rental Car Insurance Coverage
The cost of rental car insurance depends on the rental company, type of car, location and various other factors. The following table provides some examples of how various forms of car rental insurance will impact your total bill.
Cost of Rental Car Insurance Coverage by Company
|Location/Company||Rental||Damage Waiver||Personal Accident and Effects||Liability||Total/Day|
|Las Vegas, NV|
|New York, NY|
|Los Angeles, CA|
Note: Quotes were obtained for a day in November 2014 for an economy-sized vehicle.
When Rental Car Insurance Might Make Sense
With all of the alternatives available, is there any reason to purchase insurance from the rental agency? There are a few worth considering:
No car insurance of your own
For people who don’t already have car insurance, it may be most convenient to purchase insurance from the rental company.
Paying with a debit card or with cash
Debit cards usually don’t include the collision protection that credit cards do.
Want to avoid paying a high deductible
Your own car and health insurance policies may carry high deductibles that you do not want to pay out of pocket in the event of an accident.
Potential costs not covered by alternatives
Certain charges, such as administrative and towing fees, or “loss of use” costs when the rental car is being repaired, may not be covered by other forms of insurance.
Your insurance and credit card benefits may not provide the same coverage abroad as they do in the United States.
Don’t want to tie up available credit
When you turn in a damaged car at the rental counter, some rental car companies will put a hold on your credit card for all or part of the anticipated costs of repair unless you have purchased a damage waiver from them.
If you are traveling on business your personal coverage may not apply. If your employer doesn’t provide insurance, you may need additional coverage.
If you are depending on your credit card to provide collision protection, remember that your coverage is limited to rentals of as few as 15 days. Using, or scheduling, the rental for a longer period of time may void insurance for the full rental period, not just for the excess days.
Make the most of your existing personal auto insurance and credit card benefits before purchasing additional coverage. While there are valid reasons to opt into what the rental company offers, make sure you know what you are buying and why.