What Is Rental Car Insurance & Do You Need It?

There are several scenarios where you may need to purchase rental car insurance. If you're renting a more expensive car or one your credit card's insurance benefit can't cover, it's smart to take out insurance. It's also a good option if your standard auto insurance policy doesn't extend to rental cars. You can usually sign up for a policy at car rental stores if you need it.

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Last Updated: 8/20/2022
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It's wise to carry insurance if you drive, regardless of whether you own a car or rent one.

If you're renting a car, the rental company may offer you insurance on the spot. Rental car insurance is optional, but it's a good idea, particularly if your auto insurance policy doesn't extend to rented cars.

Don't mistake rental insurance for rental reimbursement. That's an add-on coverage that reimburses the cost of a rental if yours is totaled. If you find that your car insurance plan doesn't extend to rentals, it's worth purchasing rental car insurance.

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Key Takeaways

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Before purchasing rental car insurance, check with your insurer to determine if your personal auto insurance policy covers rentals. If it does, a separate policy is unnecessary.

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Rental car insurance may come with various coverage options. These include supplemental liability insurance, personal accident coverage, collision damage/loss damage and personal effects coverage.

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You don’t have to purchase your policy from the car rental company. You can also get it from your insurer or another company.

What Is Rental Car Insurance?

Rental car insurance covers your rental car for medical and property damage if you are in a crash. Car rental companies offer optional coverage when you transact with them. You can also check with your auto insurer to see if they will cover your car rental or if you can purchase a temporary rental policy. Doing this can help you avoid purchasing unnecessary coverage.

It’s good to understand that rental reimbursement is not the same thing. Rental reimbursement is an auto insurance add-on that reimburses the cost of renting a vehicle if you need one after your car is totaled.

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Rental Reimbursement refers to additional coverage you purchase to append to your regular auto insurance policy. It pays for transportation expenses you incur while your car is being repaired after an accident. It is not synonymous with rental car insurance.

What Is Covered by Rental Car Insurance?

Standard rental car insurance includes several coverages. These can comprise liability insurance, collision damages and personal effects loss. You must understand each of these to make an informed decision about which ones you need.

Rental Car Insurance Coverage
  • Insurance
    Description
  • Supplemental Liability Insurance

    Supplemental Liability Insurance is also known as additional liability insurance. It can help pay for medical treatments and damages to others’ property.

    Once you’ve exhausted your personal auto insurance’s liability limits, it can cover any outstanding expenses you have left.

  • Personal Accidents Coverage

    Personal Accidents Coverage ensures that you and your passengers are protected if you get into a crash. It’ll cover the costs of medical treatment and emergency care (for example, using an ambulance). In worst-case scenarios, it may help pay for expenses related to accidental death.

  • Collision Damage or Loss Damage

    Having this included in your rental car insurance policy assures you that you will have coverage for repairs if the vehicle is damaged. It also saves you from the cost of a replacement if someone steals it.

  • Personal Effects

    Personal Effects Coverage protects you against costs if your belongings are lost or stolen from inside your rental unit. It extends to the personal possessions of any additional drivers and members of the principal driver’s family.

Waivers You May Get With Your Rental Car Insurance

When a car rental company offers insurance on the spot, you may run into terms that sound like they’re offering you coverage. However, these are waivers that you may want to get. If you decide to go with any of these, you’ll have to pay extra.

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A Collision Damage Waiver (CDW) removes financial responsibility from your end if the rental vehicle is damaged in a collision, regardless of whether or not you were at fault.

A Loss Damage Waiver (LDW) covers other unforeseeable events such as theft, vandalism, fire and acts of nature. You must ensure that you do not violate any terms in your rental agreement with the rental car company. Doing so could void the waivers.

Do You Need Rental Car Insurance?

The answer to the question, “Do you need rental car insurance?” depends on your specific situation. There are scenarios where it’s an excellent option, such as when you’re renting an expensive vehicle. If you’re not covered, you’ll have to pay for any damages, which may be costly. You may not need rental car insurance if you can find protection elsewhere, like your personal auto insurance policy or credit card.

Do You Need Rental Car Insurance?

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Yes, if:
  • You don't have a car or insurance, and you’re renting a car.
  • Your personal car insurance doesn’t cover rental cars.
  • You want extra temporary protection.
  • You do not have a credit card benefit that covers rental car insurance.
  • You‘re renting an expensive car.
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No, if:
  • Your personal car has the same value as your rental car.
  • Your credit card offers secondary protection.

Examining your situation can help you decide whether you should get rental car insurance. Before deciding to get a rental policy, it’s smart to evaluate any coverage you already have. If your car insurance policy or credit card provides coverage for rentals, then purchasing it may be redundant. If you don’t have a car and regularly rent one, purchasing non-owner car insurance may be a more affordable alternative.

Rental car insurance is a smart idea when renting a more expensive vehicle or if you want additional coverage. You need to carry insurance to drive (except in New Hampshire and Virginia). So if you need to rent a car but aren’t insured, it’s an excellent option to get temporary coverage.

Does My Insurance Cover Rental Cars?

Some standard car insurance policies extend coverage to rented vehicles. If you’re not sure whether or not this is the case for you, the best thing to do is to get in touch with your provider. If it offers rental coverage, you don’t have to purchase a separate rental policy, which helps reduce costs.

What Companies Offer Rental Car Insurance?

You can purchase rental car insurance from various providers. Most car insurance companies consider this a separate product, so you can check with your insurer to find out if getting it through them is an option. If it isn’t, there are stand-alone companies that specialize in this, such as Avis, Hertz and Enterprise.

Average Cost of Rental Car Insurance
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 to Buy Insurance for a Rental Car

You have several options when it comes to rental car insurance providers. You can get a policy directly from a rental car company. You can also check with your insurer to determine if your current policy covers rentals. Your credit card may also offer rental car coverage if you pay for your rental using the card. If not, you can purchase a separate policy.

Frequently Asked Questions About Rental Car Insurance

If you’re not familiar with car rental insurance, it may seem confusing. Our guide addresses the most commonly asked questions about this rental insurance to help you decide if it’s something you need.

About the Author


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Mark Fitzpatrick is a senior content manager with MoneyGeek specializing in insurance. Mark has years of experience analyzing the insurance market and creating original research and content. He graduated from Boston College with a Bachelor of Arts and Johns Hopkins University with a Master of Arts.