When renting a car, you’re often asked if you want to purchase the rental company’s insurance coverage. But do you need it? Your auto insurance policy may already provide some protection for rental vehicles. Understanding what’s covered can help you avoid paying for unnecessary insurance and save money on your rental.
What is rental car insurance coverage?
Rental car companies typically offer several types of insurance coverages:
- Collision Damage Waiver (CDW) or Loss Damage Waiver (LDW): This relieves you of financial responsibility if the rental car is damaged, vandalized, or stolen.
- Liability Insurance: Covers injuries or property damage you cause to others while driving the rental car.
- Personal Accident Insurance (PAI): Provides medical coverage for you and your passengers if injured in an accident while driving the rental.
- Personal Effects Coverage (PEC): Covers theft of personal belongings from the rental car.
- Roadside Assistance: Pays for towing, jump-starts, flat tire changes, and lockout assistance.
Should I get insurance on a rental car?
Before purchasing rental car insurance, check what coverages your auto policy provides for rental vehicles. Your existing insurance may extend to rentals, making additional coverage unnecessary.
Here are some key questions to ask your insurance agent:
- What liability, comprehensive, and collision coverage limits do I have? These may apply to a rental car.
- If I have high deductibles, are rental cars adequately covered? Rental companies may not accept high deductible policies.
- Does my roadside assistance cover rental cars? Find out if towing and fees are included.
- Does my homeowners/renters insurance cover belongings stolen from a rental? Your off-premises coverage may apply.
- Does my policy include loss of use/income coverage? This reimburses rental companies if their car is in the shop.
If your policy falls short in any area, the rental company’s insurance may fill those gaps.
Does my credit card cover rental car insurance?
Many credit cards provide secondary rental car insurance when you use that card to pay for the rental. This coverage kicks in after your auto policy, helping to cover deductibles or exclusions.
However, credit card policies vary considerably in terms of:
- Coverage limits
- Eligible vehicle types (may exclude larger/luxury vehicles)
- Geographical restrictions
- How long you can rent (15-30 days is standard)
Check your card’s specific rental car coverage details before relying on it.
Review your rental coverage options.
Don’t simply accept the rental counter agent’s pitch – carefully review what’s included in each coverage option. Insurance requirements also differ by state, so understand your location’s rules.
Instead of collision/comprehensive coverage, you may want to purchase:
- Loss Damage Waiver (LDW) to cover repair costs if the car is damaged
- Liability insurance if your personal policy’s limits are low
- Personal accident insurance if you lack health/medical payment coverage
For convenience, emergency road service can spare you fees for lockouts, towing, etc.
What if I’m using a car-sharing or a peer-to-peer service?
Insurance for non-traditional car rental services like Turo can be complex. While some coverage may be included in your rental cost, restrictions often apply – especially if the car is stolen.
Review the company’s insurance policies and consider discussing options with your insurance agent.
What does rental car insurance cover?
Liability coverage
This helps pay for injuries and property damage if you cause an accident in the rental car. It covers:
- Medical bills for others injured
- Repair costs for another person’s damaged vehicle/property
- Legal fees if you are sued
Collision/loss damage waiver
The loss damage waiver or CDW/LDW relieves you of responsibility for repairs if the rental car is:
- Damaged in a collision
- Vandalized
- Stolen
It covers the entire repair cost or replacement value of the rental vehicle.
Personal effects coverage
This reimburses you if belongings are stolen from inside the rental car, such as:
- Luggage
- Electronics
- Valuables
Personal accident coverage
Also called personal accident insurance (PAI), this provides medical coverage if you or your passengers are injured in an accident while in the rental vehicle, paying for:
- Ambulance fees
- Emergency room visits
- Surgery/hospitalization costs
Renting for work or play?
Some personal auto policy coverages may not apply if you rent for business purposes. Your employer likely has its rental car insurance policies, so check with them about appropriate coverage when traveling for work.
For personal/leisure rentals, your existing auto insurance is more likely to extend protection.
Select the right size rental vehicle
When reserving, consider:
- Number of passengers: You’ll want enough seating for everyone comfortably.
- Luggage space: Larger groups or more extended trips require ample cargo room.
- Road conditions: AWD/4WD may be advisable for inclement weather.
- Parking logistics: Compact cars can be easier to maneuver and park.
Double-check that your rental has desired features like:
- Bluetooth
- Backup camera
- Navigation system
- USB ports
Inspect the rental car
Before driving off the lot, do a thorough walkaround inspection, noting any:
- Existing dents, scratches, or damage
- Windshield chips or cracks
- Low tire tread or improper inflation
- Inoperative lights
- Fluid leaks
Take photos to document the vehicle’s condition when you pick it up. This safeguards against being charged for pre-existing issues.
Other ways to get car rental coverage
Rather than relying on personal insurance or the rental company, some credit cards offer robust primary rental car coverage, including:
Chase Sapphire Preferred® Card
- Primary rental coverage: Provides reimbursement for damage or theft to the rental car
- Rewards: 2X points on travel and dining
- Welcome bonus: 60,000 bonus points
- Annual fee: $95
- Intro APR: N/A
- Regular APR: 20.24% – 27.24% Variable
- Balance transfer fee: Either $5 or 5% of the amount of each transfer, whichever is greater
- Foreign transaction fee: $0
- Credit needed: Excellent/Good
Using a card like this can provide robust insurance benefits while earning rewards on your rental.
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FAQs
Do you need extra insurance when renting a car in the USA?
It depends on your existing auto insurance policy. Many personal auto policies extend coverages like liability, collision, and comprehensive to rental cars. However, you may need supplemental coverage from the rental company if your policy has high deductibles, low limits, or exclusions.
Does my car insurance cover rental cars internationally?
Usually, non-personal auto policies do not provide rental vehicle coverage outside the United States. You’ll likely need to purchase a rental liability/collision damage waiver from the rental company when traveling abroad.
What does progressive consider a total loss?
Progressive considers a vehicle a total loss when the cost to repair the damages exceeds the vehicle’s actual cash value. Typical total loss thresholds are around 70-80% of the pre-accident value.
What is a crucial thing you should do before lending your car to a friend or family member?
Notify your insurance company that you are temporarily loaning out your vehicle. Many policies restrict coverage or have limitations when an unlisted driver operates the car. Getting proper permission is essential in case of an accident.
Conclusion
Rather than automatically purchasing the rental company’s insurance, first understand what coverages your auto policy provides for rental vehicles. Many policies extend protection like liability, collision, and even theft coverage.
However, high deductibles, coverage exclusions, or policy limitations may leave gaps when renting. The rental company’s CDW/LDW or supplemental liability could be wise investments in those cases.
Additional rental car insurance is frequently advisable if traveling internationally or for work, as personal policies may only apply partially.
Before your next rental, take the time to understand your existing coverage and policy details. This allows you to make an informed decision about purchasing rental insurance, potentially saving you money while being fully protected.
