Rental Car Insurance Explained

Fact-checked with HomeInsurance.com

4 min read
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If you take a vacation or have your car serviced, chances are you will need to rent a car. But many people don’t know that their auto insurance policy doesn’t automatically cover rentals. To get the protection you need, you have to have rental car insurance.

Rental car insurance temporarily covers drivers from financial responsibility for potential liabilities while driving a rental car. While this coverage will be offered to you by your rental car company, you may already be covered, either under your existing insurance policies or by your credit card. You can also buy similar coverage from standalone insurers.

Like regular auto insurance, not all rental car insurance policies are created equal. If you’ve never purchased rental car insurance before, you might not know what you’re looking for. In this article, we’ll break down the different types of rental car insurance available and help you determine which policy is right 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 specific 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 won’t 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 you against damage that you do to other vehicles or property. However, your own liability insurance may cover you, even when you’re driving a rental car.
  • Personal accident protection: Personal accident protection covers the medical costs for you and any passengers if you’re 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 doesn’t cover everything. For example, you wouldn’t 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’s 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 isn’t always clear. If you only need a rental car for a few days at most, you may be tempted to skip it. It’s important to determine when rental car insurance is worth the extra protection and money.

Ultimately, you should have rental car insurance anytime you need to rent a car—regardless of how long you’re using it. However, the decision of whether to opt in to rental insurance from your rental car company depends on whether you are already covered by another source.

You might already have rental car coverage built into your auto insurance policy or even through your credit card. If that’s the case, you can rely on that coverage to protect you whenever you rent a car. You’ll also want to look at the coverage amounts to see if you feel that they are sufficient. If you don’t have insurance through your auto insurance or credit card company, look into getting it through the rental car company.

While no one likes to think about it, accidents do happen. If you don’t have coverage or the cost of the accident exceeds your policy limits, you could get stuck paying a huge bill out-of-pocket.

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’s the case, your deductible will apply to the claim.

There are some credit card companies that offer primary rental car insurance, although it’s less common. Primary insurance doesn’t go through your personal auto insurance, so you don’t 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’re covered, it comes at no additional cost beyond what you’re 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’re wondering if you’re covered, the best thing that you can do is to read over your auto insurance policy or to ask your insurance agent directly. If you do need to purchase supplemental coverage, most companies allow you to buy rental car insurance online.

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 aren’t covered or if the cost of the accident exceeds your coverage limits, you could be left with the bill.

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 affect your insurance premium, whether it’s 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.