Does Car Insurance Cover a Car Rental?

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Some rental car rates are surprisingly cheap. This is especially true now that rental car companies are competing with ride-sharing. When you book a car online, you may see rates of $10 a day or less. However, when you arrive at the rental counter, you’ll have to read and sign a lengthy contract, along with making quick decisions about a number of upcharges, the most costly of which is insurance that can set you back another $20 to $50 per day.

It’s the job of the rental car salesperson to convince you that this auto insurance is absolutely necessary. Let’s face it, it would definitely ruin your vacation and your financial situation if an incident occurred and you didn’t have the appropriate coverage. However, wouldn’t it be nice to keep the extra money in your pocket, especially if your personal auto insurance already has you covered? There’s no sense in doubling up on car insurance, right?

These are surely questions that you should address ahead of time. There’s nothing fun about standing at a car rental counter poring over these details. Sadly, there’s no definitive answer that applies to every person or situation. It really just depends. It depends on your insurance company, what your policy states, what types of coverage and limits you have, the nature of the incident, and a myriad of other factors.

In most cases, your personal car insurance should cover you, but let’s take a closer look.

Types of Insurance Needed for Rental Cars

In order for your primary automotive insurance to cover your rental car, you’ll need three types of coverage: liability, collision, and comprehensive.

Liability insurance will cover damages to other vehicles and property, as well as injuries to other people, up to your personal policy limits. Collision insurance will pay for damages to the rental car that occur during the accident. Comprehensive insurance takes care of other damages to the vehicle that aren’t the result of an accident, like vandalism or theft.

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Most U.S. states have mandatory minimum requirements for liability insurance, which cover at least property damage and bodily injury. Comprehensive and collision coverage are not always required. It’s your job to make sure you have enough insurance coverage and know your policy limits.

Keep in mind that if you have homeowners or renters insurance, your personal items may be covered if they’re stolen from a rental car.

Limits of Coverage for Rental Cars

Aside from the limits determined by your primary policy, there are other considerations. For example, if you drive a Nissan Versa and you rent and wreck a Chevrolet Corvette, your car insurance company may not be willing to foot the entire bill.

Also, if damage to the rental vehicle is seen as negligence, you may be out of luck. If you leave the car unlocked and someone steals it, it will likely be considered your fault and not covered. Likewise, if you’re driving recklessly and cause an accident, the same could be true.

Alternatives to Conventional Insurance for Rental Cars

As an added perk, many credit card companies offer rental car insurance as long as you book and pay for the car with the credit card. Some companies offer at least a basic amount of secondary coverage for free, while others assess a small fee for more extensive insurance coverage or full responsibility.

Another option is to secure coverage through a third party. If you use one of the major travel websites to book your rental car, there’s usually an option to add collision coverage for about $10 a day. You can also buy third-party auto insurance online separately through various companies.

The Benefits of Opting for Rental Car Insurance

Purchasing a rental car company’s Collision Damage Waiver (CDW) is the most comprehensive and convenient way to assure that you will not be held financially responsible. It’s not actually insurance by definition, but instead, a waiver of responsibility. When you purchase it, the rental company surrenders its rights to charge you for damage to the car, except in extreme circumstances.

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If you don’t purchase the CDW, the company could go to great lengths to make sure you pay for even the smallest dents or scratches. Fixing a simple scratch could result in additional charges for revenue the rental company loses during the repair and administrative costs related to filing the claim. Larger repairs could leave you responsible for towing costs, as well as fees associated with the vehicle’s diminished resale value.

If you rely on your personal insurance policy, a credit card, or a third party for coverage, you will usually be responsible for all damage up front. Then, it’s your job to file a claim and attempt to get reimbursed at a later date.

Final Thoughts About Rental Car Insurance

Be proactive. Speak with your auto insurance agent ahead of time. Ask if your personal policy coverage will cover the vehicle you plan to rent. If the coverage isn’t enough, inquire about what changes you can make to your policy to assure that you’re covered. If you have homeowners or renters insurance, check to see if your personal items will be covered.

Make sure that you have your auto insurance policy paperwork with you when you arrive at the rental counter. This way, if there are questions you can’t answer, you can refer to your insurance policy. Additionally, carry your auto insurance agent’s phone number with you in case you need to make a call for clarification.

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