Rental Car Insurance: Do You Need It & What Does It Cover? (2025)


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Key Takeaways

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Rental car insurance is optional coverage that protects you from financial loss if your rental car is damaged or stolen.

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Personal auto insurance with comprehensive and collision coverage typically extends to rental vehicles for personal use, but excludes rental company fees like loss of use charges averaging $35-50 daily.

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Credit cards like Chase Sapphire Preferred offer primary rental coverage up to $75,000 with zero deductibles, while Capital One Venture X provides coverage without requiring insurance declination.

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What Is Rental Car Insurance?

Rental car insurance is temporary coverage that protects you financially when renting a vehicle from damage, theft and liability claims. It activates immediately upon signing the rental agreement and includes options like collision damage waiver, supplemental liability protection, personal accident insurance and personal effects coverage, though renters can decline coverage if they have adequate protection through personal auto insurance or credit card benefits.

Do You Need Rental Car Insurance?

Whether you need rental car insurance depends on your existing coverage through personal auto insurance, credit cards and risk tolerance. Analyzing coverage gaps and potential out-of-pocket expenses helps determine appropriate protection levels. Consider buying rental car insurance if:

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    You don't have comprehensive and collision coverage on your policy

    Comprehensive and collision insurance covers damage and theft, including for rental cars. Without this coverage, you’ll need rental car insurance to avoid repair and replacement costs.

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    You're renting an expensive or luxury car

    Rental companies usually charge higher insurance rates for high-value vehicles. Additional insurance can protect you from major financial loss if your personal policy doesn’t fully cover the rental car’s value.

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    You're traveling to a foreign country

    Your auto insurance and credit card coverage may not apply to international rentals. In such cases, consider buying rental car insurance from the rental company or a third-party provider.

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    You have a high deductible on your policy

    If your deductible is high, you might have to pay a large amount out of pocket after an accident. Rental car insurance can help cover these costs.

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    You want peace of mind and additional protection

    Even if you have some coverage through your personal policy or credit card, you might want the extra security of rental car insurance to avoid any potential hassles or coverage gaps.

Consider skipping rental car insurance if you have:

Existing Primary Credit Card Coverage

Existing Comprehensive Coverage

Short Rental Durations

Who Offers Rental Car Insurance Coverage?

You can get rental car insurance from three main sources: rental companies, your personal auto insurance, and credit cards. Coverage varies significantly between these options each with advantages and drawbacks:

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    Rental car company

    Buying insurance directly from the rental car company when you pick up your vehicle is most convenient but usually costs the most. You may not need it if your personal auto policy or credit card already provides coverage.

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    Personal insurer

    Car insurance may cover rental cars. Check your policy or contact your insurer to confirm. If coverage applies, review the limits and deductibles to ensure they meet your needs.

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    Credit card

    Some credit cards offer rental car insurance, but coverage may be limited. Before relying on your credit card, check whether it provides primary or secondary coverage and review the terms and conditions for exclusions and limitations.

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    Third-party providers

    Independent insurers offer standalone rental car insurance policies that can be cheaper than those from rental companies. These policies often provide comprehensive coverage and may have lower deductibles.

Rental Car Insurance Coverage

Rental car insurance includes six main coverage types that protect against different risks during your rental period. Each type covers specific situations while excluding others and typically activate immediately upon signing your rental agreement and remains in effect throughout your rental duration.

Coverage Type
What It Covers
What It Excludes

Collision Damage Waiver (CDW)

Vehicle collision damage

Personal belongings, other vehicles

Loss Damage Waiver

Theft, vandalism, weather damage

Items stolen from inside vehicle

Liability Protection

Damage to other vehicles/property

Your medical expenses

Personal Accident Insurance

Medical costs for you and passengers

Pre-existing medical conditions

Personal Effects Coverage

Stolen personal belongings

Electronics over $500, cash

Supplemental Liability

Additional liability beyond basic

Intentional damage, racing activities

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PERSONAL BELONGING LIMITS

Rental insurance excludes personal belongings over specified limits, damage from prohibited activities like off-road driving, pre-existing medical conditions and mechanical breakdowns.Rental company insurance provides more comprehensive protection but may not cover expensive electronics or jewelry beyond policy limits.

Rental Car Insurance Coverage Types by Provider

Three main sources offer rental car insurance with varying levels of protection: rental companies provide the most comprehensive coverage, personal auto insurance extends your existing policy, and credit cards offer limited secondary protection. Compare each one below:

Coverage Type
Rental Car Insurance
Personal Car Insurance
Credit Card Coverage

Liability coverage

Often, check your policy and limits

Varies by card

Collision coverage

Often, with full coverage car insurance

Varies by card

Comprehensive coverage

Often, with full coverage car insurance

Varies by card

Personal accident insurance

Sometimes, if you have medical payments or personal injury protection

Varies by card

Personal effects coverage

No

Varies by card

Loss of use coverage

Rarely

Varies by card

Rental reimbursement

N/A

Pays for rental car if your vehicle is being repaired after a covered accident

N/A

Deductibles

Typically none or low

Varies depending on your policy

Usually none, but varies by card

Rental Car Company Insurance Packages

Most rental companies offer three coverage packages: basic collision and theft protection, premium packages adding liability coverage, and comprehensive full protection including personal accident and effects coverage. Understanding each package helps determine appropriate coverage without paying for unnecessary protection.

Basic Coverage

Premium Coverage

Full Protection Package

Credit Card Rental Coverage

Credit cards provide rental car coverage as a cardholder benefit, often replacing rental company insurance, though coverage types and activation rules vary significantly. Primary coverage pays claims first without involving personal auto insurance, while secondary coverage activates only after your personal insurance processes claims first, potentially leaving you with deductibles and rate increases.

Credit Card
Coverage Type
Maximum Coverage
Key Requirements

Chase Sapphire Preferred

Primary

$75,000

Decline rental insurance

Chase Sapphire Reserve

Primary

$75,000

Use card for entire rental

Capital One Venture X

Primary

$50,000

No insurance declination required

American Express Platinum

Secondary

$50,000

Must pay with Amex card

Capital One Venture

Primary

$50,000

Use card for rental payment

Discover it

Secondary

$25,000

Limited to 31-day rentals

Most cards require using the card for entire rental payment and declining all rental company insurance to activate coverage, though Capital One Venture X uniquely provides coverage without requiring insurance declination. Understanding primary versus secondary coverage differences and specific activation requirements helps determine the best protection strategy.

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CREDIT CARD EXCLUSIONS

Most cards exclude vehicles over 10,000 pounds and coverage outside the United States and Canada.

What Personal Insurance Typical Covers

Your personal car insurance often extends to rental cars, but understanding exactly what transfers can save you from buying unnecessary coverage at the rental counter. Here's what your policy typically covers:

Liability protection:

Collision coverage:

Comprehensive coverage:

Personal insurance usually excludes:

  • Loss of use fees: Sometimes charged by rental companies for revenue lost while vehicles undergo repairs typically cost $35-75 daily. Personal auto insurance rarely covers these administrative charges.
  • Diminished value claims: In the event rental vehicles are worth less after an accident it remains your responsibility. Rental companies may seek compensation for decreased resale value even after proper repairs.
  • Administrative and processing fees: This Includes claim handling charges, storage fees and transportation costs often total $200-500 per incident without separate coverage.

Compare Credit Card and Rental Car Company Coverage Options

Credit card rental coverage provides collision damage protection up to $25,000-75,000 and theft coverage, but excludes crucial liability protection, personal accident insurance, and comprehensive benefits. This leaves you personally responsible for damage to other vehicles and medical expenses from accidents.

Rental company insurance offers complete protection including liability coverage up to $1 million and immediate on-site claim processing with replacement vehicles available within hours. Credit card claims require specific activation steps and third-party processing that can take weeks to resolve.

Key Benefits of Car Rental Insurance Coverage

Rental car insurance eliminates potentially devastating financial losses that can reach $50,000 or more from a single incident. Without coverage, you remain personally liable for all damage costs, theft, replacement and third-party claims. Below are the key benefits of rental car insurance coverage:

  • Collision Coverage Savings: If you cause $3,200 in bumper damage backing into a concrete barrier, collision damage waiver covers the full repair cost. Without coverage, you pay the entire amount or file a claim with your personal insurance.
  • Theft Protection Savings: When your rental vehicle is stolen from a hotel parking lot, loss damage waiver covers the vehicle's $38,000 replacement value. Personal effects coverage separately protects belongings up to policy limits.
  • Liability Coverage Savings: After causing an accident resulting in $15,000 damage to another vehicle, liability protection pays the claim. Without this coverage, your personal auto insurance or personal assets cover the costs.

How Much Is Rental Car Insurance?

Rental car insurance costs $13-41 daily depending on coverage level and company - basic coverage starts at $16 per day, Premium options at $29 and full protection is $36 daily.  However, redit card benefits often provide equivalent protection at zero additional cost.

Here’s a quick overview of rental car companies, their offerings and average costs:

Company
Total Insurance Cost
Supplemental Liability Cost
Collision Damage Waiver Cost
Personal Accident Insurance Cost

Enterprise

$50

$13

$31

$6

Avis

$54

$16

$30

$9

Hertz

$56

$17

$32

$7

How Does Rental Duration and Coverage Affect Rental Car Insurance Costs?

 

Most companies offer 10-20% discounts for weekly rentals, reducing full coverage from $280 daily pricing to approximately $210-240 weekly. Extended rentals exceeding 30 days qualify for additional discounts of 25-35%, bringing monthly full coverage costs to $650-800 versus $900-1,200 at daily rates. Below is a breakdown of how much rental car insurance costs based on how long you rent a vehicle and the type of coverage you choose:

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BASIC COVERAGE:

  • Daily (7 days): $112
  • Weekly Rate: $98-101
  • Monthly (30 days): $480
  • With a Monthly Discount: $360-384
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PREMIUM COVERAGE:

  • Daily (7 days): $203
  • Weekly Rate: $182-203
  • Monthly (30 days): $870
  • With a Monthly Discount: $652-696
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FULL PROTECTION:

  • Daily (7 days): $252
  • Weekly Rate: $231-252
  • Monthly (30 days): $1,080
  • With a Monthly Discount: $810-864

Is Credit Card Coverage Cheaper Than Using a Rental Company?

Credit card coverage eliminates daily rental insurance costs for cardholders with qualifying benefits. However, rental company insurance provides superior value in specific situations where credit card coverage falls short or becomes unavailable. Geographic restrictions, vehicle limitations and rental duration affect which protection strategy offers better financial protection and convenience.

When Credit Cards are Cheaper

When Personal Insurance is Cheaper

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MONEYGEEK EXPERT TIP

Using a credit card doesn't always mean you'll incur interest charges; paying the balance in full each month can avoid this while maximizing savings and coverage quality. Your rental frequency determines which credit card strategy delivers maximum savings compared to daily rental company rates.

How Does Rental Car Insurance Work?

Rental car insurance activates immediately upon signing your rental agreement and provides coverage only for the specific rental duration, though credit card benefits and personal auto insurance may also provide protection with different activation requirements, claim procedures and coverage limitations. Understanding which protection source you're using determines the activation steps, documentation requirements and claim processes you'll follow during your rental period.

Rental Car Company Insurance Process

Coverage begins when you sign the rental agreement and pay for selected insurance options, remaining active throughout your entire rental period and automatically expiring when you return the vehicle to the rental location. Extended rentals may qualify for weekly or monthly discounts of 10-35% depending on duration and coverage level, while most rental company insurance provides coverage within the United States and Canada with international coverage varying by company.

Credit Card Rental Process

Credit card rental coverage requires using the card for the entire rental payment and often declining rental company insurance to activate protection, though Capital One Venture X uniquely provides coverage without requiring insurance declination. Primary credit card coverage pays claims first without involving personal auto insurance, while secondary coverage activates only after your personal insurance processes claims first, potentially leaving you with deductibles and rate increases.

Personal Car Insurance Extension

Personal auto insurance with comprehensive and collision coverage typically extends to rental vehicles with identical limits and deductibles as your personal policy, covering liability, collision and comprehensive damage for personal use within the United States and Canada. However, personal insurance excludes loss of use fees charged by rental companies averaging $35-75 daily, administrative and processing fees totaling $200-500 per incident, and diminished value claims for rental vehicles worth less after accidents.

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INTERNATIONAL RENTAL CAR COVERAGE TIP

Purchase rental company insurance for international travel even if you have domestic credit card coverage, as most cards exclude foreign countries and local claim procedures vary significantly from United States standards.

How to Buy Car Rental Insurance

Getting rental car insurance requires evaluating your existing coverage, understanding available options and making informed decisions at booking or pickup. Following these steps ensures adequate protection while avoiding unnecessary costs and coverage gaps.

  1. 1

    Assess Your Existing Coverage

    Review your personal auto insurance policy by contacting your insurance agent or checking your policy documents to determine if liability, comprehensive and collision coverage extend to rental vehicles. Most full coverage policies protect rental cars for personal use within the United States and Canada with identical limits and deductibles.

    Check your credit card benefits by calling the number on your card or reviewing cardholder agreements to verify rental car coverage details. Note whether coverage is primary or secondary, maximum coverage limits, activation requirements and geographic restrictions that may affect protection.

    Identify coverage gaps by comparing your personal insurance and credit card benefits against potential rental costs including liability for damage to other vehicles, medical expenses, administrative fees and loss of use charges that may not be covered.

  2. 2

    Choose Your Coverage

    For renters with comprehensive personal auto insurance and primary credit card coverage: Decline rental company insurance and rely on existing protection to avoid duplicate coverage costs. Ensure your credit card provides primary coverage with limits exceeding $50,000 for adequate vehicle protection.

    For renters with secondary credit card coverage only, consider rental company liability insurance to avoid personal auto insurance involvement and potential deductible obligations. Personal insurance claims can affect your rates and driving record even for rental incidents.

    For renters without personal auto insurance: Purchase comprehensive rental company insurance including collision damage waiver, liability protection and personal accident insurance. This provides complete protection without relying on non-existent personal coverage.

  3. 3

    Purchase Coverage at the Right Time

    During online booking typically offers 10-15% discounts compared to counter pricing, with the ability to review coverage details and make informed decisions without time pressure. Most rental companies allow coverage modifications up to 24 hours before pickup.

    At the rental counter provides opportunity to ask questions and clarify coverage details, though agents may use high-pressure sales tactics and pricing is typically higher than online rates. Review coverage options carefully and don't feel pressured to purchase unnecessary protection.

    Avoid post-pickup purchases as most rental companies prohibit adding coverage after leaving the rental location. Coverage decisions must be made at booking or pickup to ensure immediate protection activation

  4. 4

    Activate Credit Card Coverage Properly (If using a card)

    Eensure coverage activation. Partial payments with other methods may void credit card protection even if the initial reservation used the qualifying card.

    Decline rental company insurance when required by most credit cards to activate coverage, though Capital One Venture X uniquely provides coverage without requiring insurance declination. Verify your specific card requirements before declining rental company protection.

    Keep documentation including rental agreement, credit card receipts and cardholder agreement details accessible throughout your rental period. This documentation proves coverage activation if claims arise during your rental.

  5. 5

    Understand Deductibles

    Your deductible is the amount you'll pay out of pocket before your insurance coverage begins. Choosing a higher deductible typically results in a lower premium. However, select an amount you can afford should you need to file a claim.

  6. 6

    Review Exclusions

    Read the fine print to understand what your policy doesn’t cover. Common exclusions include driving under the influence, commercial use and off-road use.

  7. 7

    Consider Extra Factors

    Consider the insurer's reputation, claims process, customer reviews and perks like 24/7 roadside assistance. These factors can make a big difference in an emergency.

  8. 8

    Understand Claims Procedures

    For rental company insurance claims, report incidents immediately to the rental company's 24/7 claims hotline and follow their specific procedures for damage assessment and documentation. Rental companies typically provide replacement vehicles and handle all claim processing directly.

    For credit card coverage claims, contact your card issuer's benefits administrator immediately after any incident and before returning the vehicle when possible. Provide complete documentation including police reports, photos, rental agreement and receipts for prompt claim processing.

    Document everything thoroughly including photos of damage, police report numbers, witness contact information and detailed incident descriptions. Complete documentation expedites claim processing and reduces potential disputes about coverage or liability.

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WHEN NOT TO BUY RENTAL CAR INSURANCE

If you frequently rent cars but don't own one, consider non-owner insurance. It's a liability-only policy, meaning it won't cover damage to the rental car itself. However, it can offer better financial protection than the rental company's insurance if you're liable for injuries or damages to another person or their property. You can also increase your policy limits for greater coverage.

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Rental Car Insurance Coverage and Cost: Bottom Line

Rental car insurance covers vehicle damage or theft, but your auto policy or credit card benefits might already provide enough coverage. This guide explains rental car coverage options, costs and when buying additional insurance makes sense. Comparing quotes can help you find the best protection without overspending.

Rental Car Liability Insurance: FAQ

We address the most common questions about rental car insurance to help you decide if you need it.

What is rental car insurance?

When is rental car insurance unnecessary?

How does a collision damage waiver (CDW) work?

Is rental car insurance worth it?

How much does rental car insurance cost per day?

Is rental car insurance worth the cost?

Does my credit card automatically cover rental cars?

What happens if I decline rental car insurance and have an accident?

Can I buy rental car insurance after picking up the vehicle?

Does rental car insurance cover other drivers?

Renting a Car Insurance Coverage: Our Review Methodology

Study Overview

MoneyGeek gathered and evaluated rates using a sample driver profile to determine the average auto insurance cost for specific age groups, which factors affect price changes and how premiums vary by insurance provider.

Data Sources and Depth

We used data from state insurance departments and Quadrant Information Services. We reviewed 22,848 quotes from six providers across 100 ZIP codes.

Driver Profile

We used an average driver profile to determine annual auto insurance costs:

  • 40-year-old male
  • Toyota Camry LE
  • Clean driving record
  • 12,000 miles driven annually

We adjusted this profile by region and coverage type to calculate average costs for drivers with various coverage requirements.

Coverage Levels and Deductibles

A deductible is the amount you must pay before insurance begins to pay. Comprehensive and collision coverage (often called full coverage) offers the best financial protection.

100/300/100 means:

  • $100,000 in bodily injury liability per person
  • $300,000 in bodily injury liability per accident
  • $100,000 in property damage liability

We used 100/300/100 comprehensive and collision coverage for national averages with a $1,000 deductible.

50/100/50 means:

  • $50,000 in bodily injury liability per person
  • $100,000 in bodily injury liability per accident
  • $50,000 in property damage liability

We used 50/100/50 comprehensive and collision coverage for state-specific data with a $1,000 deductible.

Auto Rental Insurance: Related Articles

About Mark Fitzpatrick


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Mark Fitzpatrick, a Licensed Property and Casualty Insurance Producer, is MoneyGeek's resident Personal Finance Expert. With over five years of experience analyzing the insurance market, he conducts original research and creates tailored content for all types of buyers. His insights have been featured in publications like CNBC, NBC News and Mashable.

Fitzpatrick holds a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He's also a five-time Jeopardy champion!

Passionate about economics and insurance, he aims to promote transparency in financial topics and empower others to make confident money decisions.


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