Rental Car Insurance: Key Things to Know in 2024 (2024)

What is Rental Car Insurance?

Rental car insurance is coverage that protects people when they drive a rental car. You can get rental car insurance through your personal insurance policy, from your credit card benefits, or from the rental car company itself. Depending on the policy, rental car insurance may cover damage to the vehicle, damage or injuries that you cause, your own injuries, theft, and loss of personal items.

Key Things to Know About Rental Car Insurance

• The most common types of rental car insurance are liability, collision damage waiver, personal accident, and personal effects.
• Rental car insurance costs $61 per day, on average, but it depends on how much coverage you purchase and where you’re renting the car.
• Your personal car insurance, health insurance, and credit card benefits will usually provide coverage when you rent a car.
• Other alternatives to rental car insurance are non-owner car insurance, temporary car insurance, and travel insurance.

Is Rental Car Insurance Worth It?

Rental car insurance is rarely worth it if your personal vehicle is insured and you pay for your rental car with a credit card. You may not have to purchase rental car insurance if you are traveling for business, either.

Why you might not have to buy extra rental car insurance:

• In most cases, your personal auto insurance will cover you as if you were driving your own car.

• Major credit cards generally include some level of collision insurance when you reserve and pay for the entire rental with that card.

• If you are traveling for business, you are likely covered by a company insurance policy. Check with your employer to be sure you know what coverage they provide.

Learn more about whether you need rental car insurance.

How Does Rental Car Insurance Work?

The types of insurance available for purchase from rental car companies are meant to supplement the liability insurance that rental car companies automatically include in almost every state. Insurance from the rental car company can also supplement your personal auto policy since most personal car insurance policies extend coverage to rental cars.

For instance, if you carry state-minimum liability coverage on your personal car insurance policy, it will usually apply when you are driving a rental car, but you can purchase supplemental rental car liability insurance to get higher coverage limits or purchase a collision damage waiver, which will cover damage to the rental car itself.

How rental car insurance works after an accident:

• If the accident was your fault (even partially), your liability insurance will cover medical expenses and vehicle damage for the other drivers involved, up to your preset policy limits. If you carry liability insurance on your personal policy, this will likely be primary to any liability insurance through the rental car company.

• If there is damage to your rental car or you and your passengers are injured in a car accident during your rental period, you will need to complete a vehicle incident/accident report for your rental car company.

• If the rental car is damaged during your rental period but you purchased a CDW or LDW, you will not be responsible for compensating your rental car company for whatever portion of the damage the CDW or the LDW covers.

• If you purchased a CDW or an LDW but the amount you purchased is not enough to cover all accident-related expenses, you may be responsible for the remainder of the costs, depending on your rental car company. You can use your personal collision or comprehensive insurance to cover the remaining damage to the rental car. If you do not have these types of coverage, the rental car company will typically add the excess amount to the total cost of your rental car.

• If you get into an accident and you have rental car insurance through your credit card company, you will need to report the incident to your credit card company’s benefit administrator and file a claim with them. They will likely ask you for documents such as a copy of the accident report, the rental agreement, and the repair estimate. Keep in mind that if you were renting for personal reasons, your personal auto policy will need to be exhausted before the rental coverage from your credit card kicks in.

It’s important to note that under most rental car contracts, your rental car insurance will be voided if an accident occurs while the driver is under the influence of alcohol or drugs, while a non-authorized driver is operating the vehicle, or while you are using the car to transport property or people for a fee. Coverage would also be voided if you used false information when reserving the rental car.

Learn more about how rental car insurance works.

Types of Rental Car Insurance

The most common types of insurance offered by rental car companies along with the type of personal auto insurance serve the same purpose are as follows:

Collision Damage Waiver

A collision damage waiver, often referred to as a loss damage waiver, will cover repairs if you cause any damage to your rental car. Coverage may exclude certain parts of the car, such as tires or the windshield, as well as certain causes of damage such as weather or damage while on private property.

• Average cost: $10-30 per day
• Comparable to: Collision and comprehensive insurance

Learn more about collision damage waivers.

Rental Car Liability Insurance

Liability insurance covers damage to other vehicles, property and people as a result of accidents you cause when driving your rental car. Note that this does not cover you, your passengers or the rental vehicle itself.

The state minimum levels of liability insurance are included as part of the basic rental fee in almost every state. In these cases, any additional insurance you purchase will at most give you higher coverage limits. There are some exceptions, most notably in California, where rental companies are not required by law to include liability insurance.

• Average cost: $10-16 per day
• Comparable to: Bodily injury liability and property damage liability insurance

Personal Accident Insurance

Personal accident insurance covers the medical costs for injuries to anyone in your rental vehicle during an accident. Many rental companies in the U.S. include “personal effects” coverage within personal accident insurance.

• Average cost: $3-9 per day
• Comparable to: Personal injury protection and medical payments insurance

Personal Effects Coverage

Personal items – such as clothing and luggage – stolen from the rental vehicle, or lost when a rental vehicle is stolen, are covered by this option. Expensive electronics (especially cameras) may be subject to limits and exclusions.

• Average cost: $1-6 per day
• Comparable to: Homeowners and renters insurance

How to Get Rental Car Insurance

Purchase rental car insurance directly from the rental car company. This is usually the easiest and most convenient option, but it is more expensive than purchasing coverage from a third-party company or using the rental coverage that may be provided by your personal auto policy or your credit card company. You can add rental car insurance to your reservation when you book your rental car, or you can add it at the counter when you pick up your rental.

Purchase a full coverage policy from your personal car insurance provider. Full coverage car insurance policies include collision and comprehensive coverage, which generally extends to cover damage to a rental vehicle. There are some exceptions, however, like if you are traveling outside the U.S. or if you are renting for business reasons.

Purchase rental car insurance through a third-party provider. If your existing coverage for your personal vehicle does not extend to a rental car, you can consider purchasing stand-alone rental car insurance from another insurer. There are many third-party insurance companies that offer rental car insurance, like Allianz and Bonzah, so you can compare different policies to find the one that best meets your needs.

Use a credit card that provides rental car insurance. Some credit cards offer rental car insurance as a benefit if you book the reservation with your card. Check first with your current credit card issuer to see if you already have this benefit. If not, check out WalletHub’s picks for the best credit cards with rental car insurance.

Daily Cost of Rental Car Insurance Coverage by Company

Note: Rates are based on a mid-sized sedan. Actual rates will vary. In addition, the coverage offered under personal accident and effects varies by company. You may not receive coverage for both medical expenses and the loss of personal belongings for the same price listed in the table.

*Sure’s family plan includes coverage for rental car damage and loss of personal property.

Learn more about rental car insurance costs.

Car Rental Insurance You May Already Have

Before purchasing additional insurance, begin with an inventory of the coverage you might already be paying for.

Personal Auto Insurance

Most personal auto insurance policies will cover you when you are driving a rental car. If you’re not sure about what your policy covers, check with your insurer or agent.

Keep in mind that getting the same coverage doesn’t mean you’ll get extra coverage when driving a rental. For example, if you don’t carry collision insurance on your personal policy, you won’t have any coverage for damage you cause to the rental car. If you have both collision and comprehensive coverage on your insurance policy, don’t forget that you’re probably also responsible for a deductible.

Also be aware that auto insurance typically only covers personal (non-business) use of cars. While traveling for business however, you may be covered by your employer’s insurance.

Personal Health Insurance

While making decisions at the rental counter, don’t overlook your health insurance policy, if you have one. Most health insurance plans will cover any health care you need while traveling in the U.S. – and sometimes in many other countries. Make sure you understand your policy's terms, especially for traveling outside the U.S.

As with your auto policy, remember that if you’re relying on your health insurance and you need medical treatment after an accident, you will be responsible for the health policy’s deductibles and copays.

Credit Card Benefits

By reserving and paying for your rental car with a major credit card, you generally will get coverage for theft or damage to that vehicle, among other benefits.

Here’s how this protection works:

• The collision protection from a credit card is usually secondary to other forms of insurance. That means it will only kick in after other forms of insurance are exhausted. This secondary coverage becomes primary if there is no other coverage from another source.

• Most credit card policies require you to decline the damage waiver offered by the car rental company. Make sure to not accidentally cancel your credit card’s solid coverage with a less comprehensive damage waiver.

• Credit card coverage only applies to short-term rentals, and sometimes the limit is as short as 15 days.

• Coverage applies when you travel outside of the U.S., but certain countries are excluded.

• Certain vehicles, such as trucks or vans, are often excluded from coverage.

• Some car rental companies seek compensation for rental fees they could have charged if the car had to be sent in for repairs at a shop. Many credit cards will pay these “loss of use” fees, but others will not. If this fee is not covered by your credit card (or your auto insurance), you will be responsible for this cost.

For details on each major card network’s rental car coverage, take a look at WalletHub’s picks for the best credit card rental car insurance.

Homeowners or Renters Insurance

Homeowner’s and renters policies usually cover personal possessions when they are outside of the home, including items stolen from a rental car. Though there are often limitations with high-end electronic equipment and cameras, this insurance is usually better than the daily rate coverage the rental company offers. Coverage may be denied if the rental or trip is for business purposes.

Travel Insurance

If you are already purchasing travel insurance, this may provide you sufficient medical and personal effects coverage. Make sure not to get duplicate rental car insurance.

Non-Owner Car Insurance

People who don’t own a car can still get car insurance of their own, by purchasing anon-owner policy. For people who frequently rent cars, this can be far more affordable than buying the rental company’s policy for each rental.

When You Should Buy Extra Rental Car Insurance

With all of the alternatives available, is there any reason to purchase insurance from the rental agency? There are a few worth considering:

• No car insurance of your own. For people who don’t already have car insurance, it may be most convenient to purchase insurance from the rental company.

• Paying with a debit card or with cash. Debit cards usually don’t include the collision protection that credit cards do.

• Want to avoid paying a high deductible. Your own car and health insurance policies may carry high deductibles that you do not want to pay out of pocket in the event of an accident.

• Potential costs not covered by alternatives. Certain charges, such as administrative and towing fees, or “loss of use” costs when the rental car is being repaired, may not be covered by other forms of insurance.

• Traveling internationally. Your insurance and credit card benefits may not provide the same coverage abroad as they do in the United States.

• Don’t want to tie up available credit. When you turn in a damaged car at the rental counter, some rental car companies will put a hold on your credit card for all or part of the anticipated costs of repair unless you have purchased a damage waiver from them.

• Business trips. If you are traveling on business your personal coverage may not apply. If your employer doesn’t provide insurance, you may need additional coverage.

• Long-term rentals. If you're depending on your credit card to provide collision protection, remember that your coverage is limited to up to 15 days. Using, or scheduling, the rental for a longer period of time may void insurance for the full rental period, not just for the excess days.

Video: Rental Car Insurance Basics

Ask the Experts

To gain more insight about Rental Car Insurance, WalletHub posed the following questions to a panel of experts. Click on the experts below to view their bios and answers.

1. When does it make sense to buy insurance from a rental car company?
2. What are the biggest mistakes that people make with rental car insurance?
3. What is the most cost-effective way to get reliable rental car insurance coverage?