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.
Rental Car Insurance: Do You Need It & What Does It Cover? (2025)
Updated: June 9, 2025
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Key Takeaways
Rental car insurance is optional coverage that protects you from financial loss if your rental car is damaged or stolen.
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.
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.
What Is Rental Car Insurance?
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:
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.
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.
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.
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.
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
If you have a card providing primary coverage up to $50,000-75,000 with zero deductibles often exceed rental company protection while eliminating daily insurance cost
Existing Comprehensive Coverage
Full coverage auto insurance with low deductibles provides adequate protection for domestic personal rental use without additional insurance needs.
Short Rental Durations
Brief rentals under three days with comprehensive existing coverage may justify accepting limited risk to avoid $45-120 insurance costs.
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:
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.
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.
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.
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 |
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
Includes Collision damage waiver or loss damage waiver only. Covers vehicle damage from accidents, theft, vandalism and weather-related incidents up to the vehicle's full value. Excludes liability protection, medical expenses and personal belongings coverage. This coverage is best for renters with comprehensive personal auto insurance and credit card liability coverage who need only vehicle protection.
Premium Coverage
Includes basic coverage plus supplemental liability insurance. Provides vehicle protection and additional liability coverage beyond state minimums, typically $300,000-500,000 per accident. Excludes personal accident insurance and personal effects coverage. This package is good for renters wanting enhanced liability protection beyond personal auto insurance limits without medical or personal property coverage.
Full Protection Package
Rental company full protection includes all available coverage types including collision damage waiver, supplemental liability insurance, personal accident insurance and personal effects coverage. This comprehensive protection covers vehicle damage, liability for third-party property damage and injuries, medical expenses up to $175,000, personal belongings up to $3,500 and administrative fees, providing maximum protection for renters without personal auto insurance, credit card coverage or those seeking complete protection regardless of existing coverage
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.
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:
Covers bodily injury and property damage you cause to others while driving rental vehicles. Coverage limits match your personal policy, typically ranging from $25,000-500,000 per acciden
Collision coverage:
Pays for rental vehicle damage from accidents when you maintain this coverage on your personal vehicle. Your standard deductible applies, usually $250-2,500 depending on your policy selection.
Comprehensive coverage:
Protects against theft, vandalism, weather damage and animal collisions. Coverage includes rental vehicles when you maintain comprehensive protection on your owned vehicle.
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:
BASIC COVERAGE:
- Daily (7 days): $112
- Weekly Rate: $98-101
- Monthly (30 days): $480
- With a Monthly Discount: $360-384
PREMIUM COVERAGE:
- Daily (7 days): $203
- Weekly Rate: $182-203
- Monthly (30 days): $870
- With a Monthly Discount: $652-696
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
- Occasional renters: Drivers who use vehicles one to three days annually benefit from credit cards with annual fees under $100.
- Frequent renters: Drivers who use vehicles seven or more days annually find higher annual fee cards. Daily rates of $35-41 for seven days totaling $245-
- Business travelers: Drivers who rent 15 or more days annually achieve substantial savings with premium credit cards, while receiving additional travel benefits.
- Credit Card Rental Bonuses: Travel credit cards can offer bonus points or miles for car rentals, potentially offsetting the cost of the rental.
When Personal Insurance is Cheaper
- High-value vehicle rentals: Luxury cars, exotic vehicles, or trucks exceeding $75,000 often exceed credit card coverage limits of $25,000-75,000.
- Secondary credit card coverage with high personal deductibles: When your personal insurance has a high deductible, rental coverage with zero deductible may cost less.
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.
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
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
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
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
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
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
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
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
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.
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.
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?
Rental car insurance protects you from financial responsibility if your rental car is damaged or stolen. It typically includes collision damage waiver, liability coverage, personal accident insurance and personal effects coverage.
When is rental car insurance unnecessary?
You might not need rental car insurance if your auto policy covers rentals or your credit card provides primary rental car insurance. Review your policy to confirm coverage details.
How does a collision damage waiver (CDW) work?
A CDW covers damage to a rental car from collisions, theft or vandalism. It’s not insurance but a waiver that limits your financial responsibility. Some CDWs include a deductible, requiring you to pay a portion before coverage applies.
Is rental car insurance worth it?
If your auto insurance doesn’t cover rentals, getting rental car insurance is wise. It protects you from out-of-pocket costs for damage caused by theft, vandalism, fire or collisions.
How much does rental car insurance cost per day?
Rental car insurance costs $13-41 daily depending on coverage level and rental company. Basic collision damage waiver averages $15-20 daily, while comprehensive protection including liability and personal accident coverage ranges from $30-41 daily.
Is rental car insurance worth the cost?
Rental car insurance value depends on your existing coverage. Drivers with credit card benefits or comprehensive personal auto insurance may find rental company insurance unnecessary. However, drivers without adequate coverage benefit from the protection against potential $10,000-50,000 claims.
Does my credit card automatically cover rental cars?
Credit cards do not provide automatic rental car coverage. You must use the card to pay for the entire rental and often decline rental company insurance to activate coverage. Contact your card issuer to verify specific requirements and coverage limits
What happens if I decline rental car insurance and have an accident?
Without rental car insurance, you're responsible for vehicle damage costs that can range from $2,000-50,000 depending on accident severity. Your personal auto insurance may cover damages minus your deductible, but you remain liable for rental company administrative fees.
Can I buy rental car insurance after picking up the vehicle?
Most rental companies require insurance purchase at booking or vehicle pickup. You cannot add coverage after leaving the rental location. Some companies allow coverage additions during the rental period by returning to a rental counter.
Does rental car insurance cover other drivers?
Rental car insurance covers only authorized drivers listed on the rental agreement. Additional drivers must be added to the contract and meet age requirements, typically 21-25 years minimum depending on the rental company policy.
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.
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About Mark Fitzpatrick
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.