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Do I Need The Insurance Offered By The Rental Car Company?

Rental Car Insurance protects you from financial liability due to loss, theft, or damage to your rental car. Often your existing car insurance policy “extends” to any vehicle you rent. This can save you from purchasing Rental Car Insurance from the rental car agency, ultimately saving you money.

The Best Way To Save On Insurance Is To Get A New Quote

See how you can cut rising costs with our car insurance comparison tool. In just a few minutes, you could be on the road to bigger savings!

TABLE OF CONTENTS

Have you debated adding insurance from the rental car company at checkout? Keep reading to learn what coverage options you may have built into your credit card perks and existing auto insurance policy.

Keep reading to save time, money, and headache at the checkout counter for your rental vehicle!

Do You Need Rental Car Insurance?

If you do not have an existing car insurance policy with full coverage, then you will need to purchase rental car insurance.

Rental car agencies like Hertz and Enterprise will require proof of insurance before renting their vehicles. Luckily, you can buy their stand-alone rental car insurance policies if you do not have an existing insurance policy.

Follow our step-by-step guide to understand your options when renting a car!

Group of happy young women laughing and enjoying in car during a road trip to vacation. Girls having fun on road trip.

Step 1: Understanding Rental Car Insurance

Rental Car Insurance covers the rental vehicle if lost, stolen, or damaged. This coverage is similar to regular car insurance but is offered directly by the rental car agency. 

There are four different types of policies offered by rental car companies.

  1. Rental Car Liability Insurance
  2. Rental Car Loss-Damage Waiver
  3. Personal Accident Insurance
  4. Rental Car Personal Effects Coverage

Pro Tip: Rental Car Insurance is not the same coverage as Rental Reimbursement Auto Insurance which pays for the daily cost of a rental vehicle after a claim.

Young happy women doing a road trip in tropical city - Travel people having fun driving in trendy convertible car discovering new places - Friendship and youth girlfriends vacation lifestyle concept

Step 2: Does Your Regular Car Insurance Cover a Rental Car?

Regular car insurance policies, including comprehensive and collision insurance, cover rental cars within the United States. 

Pro Tip: Contact your insurance company and ask, “What does my insurance policy cover if I rent a vehicle?” If it does, you can save money by waiving the rental companies’ offer of extra insurance. 

Here are some situations where your regular insurance policy will not “extend” coverage to the rental vehicle:

  • Cars rented abroad are not covered by a United States policy
  • If the vehicle on the policy is much cheaper than the rental car, you may experience difficulty getting your insurance company to pay for the expensive rental car
  • Unless the policy covers business use, personal insurance policies do not cover rental cars on business trips.
  • If your regular car insurance does not have full coverage, then you will have no coverage for damage to the rental vehicle 

Keep reading, and we’ll dive into how you can design your existing car insurance policy to give you automatic coverage for your rental!

Travel, smile and selfie with friends on road trip in car for adventure, summer and freedom on California holiday. Happy, support and mobile with group of people with phone for social media together.

Step 3: Rental Car Insurance vs. Your Own Auto Insurance

Regular Auto Insurance policies often cover rental cars if you have full coverage. Because of this, the insurance offered by the rental agency may be redundant, and if you don’t need to purchase the rental car agency’s insurance, you save money!

What Does Regular Car Insurance Cover When Renting a Vehicle?

An existing policy covers many expenses after an accident (so long as the existing policy has comprehensive and collision coverage).

Similarly, the liability portion of your car insurance policy extends to a rental vehicle. Liability lawsuits arising from an accident while driving your rental vehicle are covered up to the limit of your regular insurance policy.

Pro Tip: Without Comprehensive Coverage, insurance won’t pay for stolen, vandalized, or weather-damaged vehicles.

Why You Should Have High Liability Limits

Policyholders should have high liability limits to protect their finances in the event of an accident. 

When a driver is at fault for an accident, some of the large expenses they are responsible for include:

  • Damage to other vehicles or property
  • Death, Injuries, and medical expenses for other drivers and their passengers
  • Rental car needs of the other driver while their vehicle is being repaired

Pro Tip: Having low limits for liability insurance will leave the at-fault driver with the remaining balance the insurance doesn’t cover. Increasing liability limits is fairly affordable. Often, a few extra dollars a month can provide more than a hundred thousand dollars in liability protection.

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Step 4: Understanding Types of Rental Car Insurance Offered by Rental Agencies

There are four main types of rental car insurance offered by rental agencies. The following is a list of those coverages and quick explanations to help you decide what’s appropriate for your situation!

Rental Car Liability Insurance

Rental car liability insurance is a supplemental liability policy that covers the property damage and medical expenses of other parties in an accident when driving the rental car. A regular auto or umbrella liability insurance policy covers these expenses in the United States.

Rental Car Loss-damage Waiver Insurance

Rental Car Loss-damage Waiver Insurance covers any damage or a stolen rental car. Typically the waiver has a deductible.

Personal Accident Car Rental Insurance

Personal Accident Car Rental Insurance covers death, ambulance, and medical expenses for the rental car driver and their passengers. 

Pro Tip: When abroad, other travel insurance will provide a better umbrella insurance policy that will cover medical expenses in more scenarios than this policy offered through the rental car company.

Rental Car Personal Effects Coverage

Rental Car Personal Effects Coverage will help to reimburse the value of personal items stolen from a rental car (there is a dollar amount limit to the coverage).

Bonus: Credit Cards with Rental Car Insurance Coverage

The best rental car insurance credit cards are Chase Sapphire Reserve and Capital One Venture X Travel Rewards. These two cards offer complimentary primary coverage within the United States. That may save the hassle of filing a claim with auto insurance and prevent a premium increase.

We compared ten popular credit cards with a complimentary Collision Damage Waiver (similar to Rental Car Coverage). Keep in mind, you must pay for the rental vehicle with the card you’d like to use the coverage on for the benefits to apply.

Pro Tip: The primary policies available through American Express offer better coverage than most of the complementary policies.

Credit CardIs the Coverage Primary or Secondary in the United States?
American Express Gold CardPrimary Available for Purchase
American Express Platinum CardPrimary Available for Purchase
Bank of America Travel RewardsSecondary Coverage
Capital One Venture X Travel Rewards Credit CardPrimary Coverage
Chase Freedom UnlimitedSecondary Coverage
Chase Sapphire ReservePrimary Coverage
Costco Anywhere Visa Card by CitiSecondary Coverage
Ink Business Preferred by ChasePrimary When Rental Car is Used for Business
Ink Business Cash by ChasePrimary When Rental Car is Used for Business
Southwest Rapid Rewards PremierSecondary Coverage

Using Your Credit Card for Rental Car Insurance

Select credit card companies offer Collision Damage Waiver when you pay for the rental vehicle with their card.

What’s Covered In a Credit Card’s Collision Damage Waiver?

The primary insurance coverage CDW offers is cash value replacement of the rental vehicle. 

Some cards may also cover loss of use charges from the rental car company, while others even provide extended travel protection if you call in advance.

What’s NOT Covered With a Credit Card’s Collision Damage Waiver?

Collision Damage Waiver has a few deficiencies in coverage that need to be listed. For one, CDW does not cover any liability insurance. This means that if there’s a lawsuit for injury, property damage, and most general lawsuits, CDW will not help. 

Here are some other things CDW does not cover:

  • Antique, luxury, or expensive vehicles are often excluded
  • Within the United States, renters typically must also file with their auto insurance company because the CDW only covers what the policy does not
  • Many policies do not cover rental vehicles worldwide
  • Open-bed trucks, and large passenger vehicles are often not covered

The Bottom Line: Should I Get Rental Car Insurance?

When renting a vehicle, it is recommended to have either a regular car insurance policy with full coverage, an in-house insurance policy provided by the rental agency, or both. 

Car insurance is required to rent a vehicle, and car rental businesses have full discretion to require the purchase of their in-house insurance coverages if you do not have a regular car insurance policy with full coverage.

Call your insurance agent and ask about your car insurance policy and whether it extends coverage to a rental car before purchasing anything!

Frequently Asked Questions

Will my Collision Damage Waiver cover me in an accident?

The collision Damage Waiver covers the rental car but does not cover liability or medical expenses in an accident. This coverage is offered through a rental car company or as an additional credit cardholder benefit.

Can I add rental car insurance after an accident?

Any insurance coverage added after an accident will not provide coverage for the accident.

Can I add rental car insurance later?

Additional coverage can be purchased later, but the rental company will inspect the car for damage before issuing any coverage.

How long does an accident increase insurance rates?

Insurance rates are affected by an accident for three to five years, depending on the insurance company.

References

(2022). The Four Types of Rental Car Insurance. Allianz Travel. Retrieved December 2, 2022, from https://www.allianztravelinsurance.com/travel/rental-cars/rental-car-insurance-explained.htm?accam=F202942&gclid=Cj0KCQiA4aacBhCUARIsAI55maG2jX5g4E5Xytz-d3wIp_Pk58exusMY91vZwL5DdCYH56yS9r6l-qMaAg51EALw_wcB

(2022, September 7). Primary Vs. Secondary Car Rental Insurance Coverage. Forbes Advisor. Retrieved December 2, 2022, from https://www.forbes.com/advisor/credit-cards/primary-vs-secondary-car-rental-insurance-coverage/

(2014, June 30). Why You Don’t Need to Buy Extra Car Rental Insurance. CNN Money. Retrieved December 2, 2022, from https://money.cnn.com/2014/06/30/pf/insurance/rental-car-insurance/index.html

Jesse Cunningham profile picture

Jesse Cunningham V is a professional writer and licensed insurance agent. He has worked in the insurance industry in different capacities, starting as a customer service representative and working his way up to an independent agency owner. He is licensed in the states of Maryland and Pennsylvania for Property, Casualty, Life, and Health products. Jesse has worked with many national carriers, including Nationwide, State Farm, Travelers, and Liberty Mutual, and specializes in car and home insurance and health, life, accidental death, and disability insurance. He writes for multiple publications including FIXD and Bauple.com. All articles by Jesse are opinion-based. Speak with your licensed insurance agent about the particulars of your insurance before making any decisions.

We’re here to help you simplify car care and save, so this post may contain affiliate links to help you do just that. If you click on a link and take action, we may earn a commission. However, the analysis and opinions expressed are our own.

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About the Author

Jesse Cunningham

Jesse Cunningham

Jesse Cunningham V is a professional writer and licensed insurance agent. He has worked in the insurance industry in different capacities, starting as a customer service representative and working his way up to an independent agency owner. He is licensed in the states of Maryland and Pennsylvania for Property, Casualty, Life, and Health products. Jesse has worked with many national carriers, including Nationwide, State Farm, Travelers, and Liberty Mutual, and specializes in car and home insurance and health, life, accidental death, and disability insurance. He writes for multiple publications including FIXD and Bauple.com. All articles by Jesse are opinion-based. Speak with your licensed insurance agent about the particulars of your insurance before making any decisions.

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