Rental car insurance explained

1
Martin Dimitrov/Getty Images
Bankrate Logo

Why you can trust Bankrate

While we adhere to strict , this post may contain references to products from our partners. Here's an explanation for . This content is powered by HomeInsurance.com (NPN: 8781838). For more information, please see our

We rely on our vehicles to transport us to a number of necessary destinations: school, work, the grocery store, doctor’s appointments and countless other stops throughout our daily life. However, daily life can easily grind to a halt when you do not have the use of your vehicle – and in this case a rental car may be the way you have to go. That is where rental car insurance can help.

Whether you have had an accident, are taking a vacation, or are simply having your car serviced, rental car insurance is the added protection you need for rental car benefits, and Bankrate has some tips to help you find the right coverage for you.

Types of rental car insurance

Rental car insurance is somewhat similar to regular auto insurance. You can select the type of coverage and the level of coverage you want based on your needs. However, the types of rental car insurance are much different than auto insurance.

Before getting rental car insurance, you should be aware of your options. The most common types of rental car insurance include:

  • Loss-and-damage waiver (LDW): Sometimes called the collision damage waiver (CDW), this is a waiver, rather than a true policy. It essentially says that the rental company will not come after you in the event that the rental car is damaged or stolen. However, if you have collision and comprehensive car insurance, this may be included in your policy.
  • Supplemental liability protection: This covers damage you do to other vehicles or property. However, your own liability insurance may cover these instances, even when you are driving a rental car.
  • Personal accident protection: Personal accident protection covers the medical costs for you and any passengers if you are involved in an accident. Again, if you have personal injury protection or medical payments coverage under your existing policy, you may already be covered.
  • Personal effects coverage: This coverage pays for any belongings that may be stolen from your rental car. In this case, your homeowner’s insurance or renter’s insurance policy may offer similar coverage.

While there are many different types of rental car insurance, it does not cover everything. For example, you would not use this type of policy to be reimbursed for the cost of renting a car while your normal vehicle is being repaired as part of a claim. In that instance, you would use what is known as rental car reimbursement coverage, another option which is included under most typical auto insurance policies.

When do you need rental car insurance?

Knowing when you need car rental insurance is not always clear. If you only need a rental car for a few days at most, you may be tempted to skip it. For some people, their personal car insurance policy automatically covers rental cars. So, in what situations is a standalone rental car insurance policy required?

You do not have any type of insurance

According to financial expert Laura Adams, “If you do not have auto insurance, you should purchase liability and a damage waiver for a rental car, at a minimum. If you have a non-owner auto insurance policy, it only covers liability, so you should purchase damage protection.”

Driving without any type of car insurance is illegal in most states, and it could land you in serious legal and financial trouble. It is also advised to not rely on rental car insurance from your credit card company because it is usually not enough coverage if you get into an accident.

You do not have collision or comprehensive coverage

If you do not have collision and comprehensive coverage on your personal auto insurance policy, you should consider purchasing an LDW. Otherwise, your personal policy will not cover the repairs if you get into an accident or if something else happens to the car that causes damage.

“If you also have collision and comprehensive auto insurance, they cover physical damage and may extend to a rental car. However, state laws vary, so be sure to check with your insurance carrier,” says Adams.

Keep in mind that all auto insurance policies include liability coverage, which protects you in a legal situation if you cause an accident and get sued.

Adams states, “Knowing whether you should purchase rental car insurance depends on the type of coverage you already have or do not have. For instance, if you have liability coverage, it follows you when you rent a car. Liability protects you from a lawsuit if you cause injury to someone or their property.”

You are going on a business trip

If you are going on a business trip in your personal vehicle, your car insurance policy might have some limitations. For instance, if you got into an accident while driving to a conference or a big meeting, it might not be covered.

Laura Adams says, “Another consideration is whether you are renting a car for work or your own business travel. If so, your existing personal auto insurance may not cover you. When in doubt, it is best to purchase rental car insurance. You will be glad you did, as even minor damage could be expensive to repair.”

You do not want to pay a deductible

If you rely on your personal car insurance to protect your rental car, and you get into an accident, you will pay a deductible. However, if you buy rental car insurance and you get into a collision, there is no deductible required.

How much is rental car insurance?

The cost of rental car insurance depends on a few factors. For one, it depends on the company you buy coverage from. It also depends on the state, what type of car you are renting, and how many miles you are driving. Purchasing add-on coverages will also increase the amount you pay.

Does my credit card offer rental car insurance?

Many credit card companies offer rental car insurance as one of the benefits for cardholders. However, rental car insurance provided by your credit card company is usually secondary insurance. That means if you get into an accident or the car gets stolen, your auto insurance company will get billed first. If that is the case, your deductible will apply to the claim.

There are some credit card companies that offer primary rental car insurance, although it is less common. Primary insurance does not go through your personal auto insurance, so you do not have to pay a deductible. You can call your credit card company to determine if your card offers rental car insurance and what type of insurance they offer.

Most major credit card companies, like Visa, MasterCard and American Express all offer some form of rental car insurance for their cardholders. To take advantage of the coverage, you usually have to pay for the rental car using the card and rent the car in your name.

Which insurance providers offer rental car insurance?

Getting rental car insurance coverage is pretty easy because most major car insurance providers offer it. State Farm, Allstate, Geico and Farmers all offer the option to have some type of rental car insurance coverage included in their regular car insurance policies. If you are covered, it comes at no additional cost beyond what you are already paying for your monthly premium.

As stated above, your car insurance policy may offer similar coverage to the loss-and-damage waiver, the supplemental liability protection or the personal accident protection. However, not all car insurance policies are created equal and, as such, not all policies include rental car insurance. It usually comes along with comprehensive and collision policies or supplemental protections with higher coverage limits.

If you are wondering if you are covered, the best thing that you can do is to read your auto insurance policy or to ask your insurance agent directly. “Before your next trip, do your homework by reviewing your auto insurance policy or speaking with your insurer about how much rental car insurance you may need,” suggests Adams.

If you do need to purchase standalone coverage, here are some companies that offer it:

  • Allianz Global: Allianz Global’s Rental Car Damage Protector includes $75,000 in coverage, for just $11 per day, and offers coverage anywhere in the world. Every policy comes with up to $400 in coverage for lost baggage and personal items, and $250 in trip interruption coverage.
  • Bonzah: With a RoamRight Auto Rental Insurance Plus policy from Bonzah, you can get up to $35,000 in coverage, plus up to $500 in coverage for lost luggage and personal items, no deductible and a 10-day free look period.
  • RentalCover.com: Rental car insurance from RentalCover.com is meant to supplement insurance from your credit card provider. The company claims that drivers can get supplemental insurance for $134 less than an LDW waiver from the rental counter. One of the biggest draws is that drivers can cancel their rental insurance for a full refund up until their car pick-up time.
  • Sure: Sure is a mobile-based rental car insurance company that is entirely digital. When you download the app, you can select your trip dates, the type of coverage you want, the deductible and more. That means you can update and make changes to your choices on-the-go. Every policy comes with great perks, like flat tire protection and lost key reimbursement.
  • InsureMyRentalCar.com: InsureMyRentalCar.com offers an LDW with up to $100,000 in protection without a deductible. It covers your rental car anywhere in the world, and if you break down, you can get 24/7 emergency roadside assistance. Policies start at just $9.75 per day.

Frequently asked questions

Do you need insurance on a rental car?

The truth is that you should have some type of insurance on your rental car, whether it comes from the rental car company, your car insurance, your credit card or an independent insurer. Accidents do happen and if you are not covered or if the cost of the accident exceeds your coverage limits, you could be left with the bill.

Do rental car companies offer rental car insurance?

Rental car companies do offer rental car insurance that you can purchase. There are four types of insurance coverage to choose from, including liability coverage, personal accident insurance, personal effects coverage and a loss damage waiver. After receiving a quote from your rental car company, be sure to compare pricing and coverage against other options.

Is a rental car covered by my insurance?

Possibly. It depends on which services are included in your individual policy. Your best bet is to read over your policy before you rent a car or to call your insurance agent directly so you can get your questions answered.

How will an accident in a rental car affect my insurance?

Getting into any accident will most likely affect your insurance premium, whether it is in your car or a rental car. This is especially true if you have rental car insurance through your auto insurance provider or a credit card company. Anytime you file a claim that is attached to your auto insurance policy, the company will know you had an accident and will likely increase your rate accordingly.

Written by
Lena Borrelli
Insurance Contributor
Lena Muhtadi Borrelli has several years of experience in writing for insurance domains such as allconnect, Healthline and Reviews.com. She previously worked for Morgan Stanley.
Edited by
Insurance Editor