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Rental Car Insurance Explained

Aug. 1, 2019
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If you’ve ever rented a car, you’ve probably been warned by salespeople at the counter about the possible consequences of walking away without buying their company’s rental car insurance. Put on the spot, you might not feel confident about exactly what your current auto insurance covers. And that’s what rental companies are counting on — along with their commissions for selling you the coverage.

Note that rental car insurance is not the same as rental car reimbursement coverage, an auto policy option that covers the cost of a car rental if your vehicle is being repaired as part of a claim. Most insurers offer that coverage, and you can learn more from our auto insurer reviews.


Want to be prepared next time you’re renting? We can help you understand whether you need rental car insurance and how to get it before you get to the rental counter.

Rental car insurance or your own auto insurance?

Here are the typical insurance options from rental car companies, along with how to determine if you already have coverage within your own auto insurance policy. Coverage from your own policy applies when you are using a rental car for personal, nonbusiness purposes. The rules may be different for business use of a rental car. Check with your insurer or employer for details about coverage when using a rental car for business.

Crashes and car theft

At the counter: A loss-damage waiver (LDW), also called a collision damage waiver (CDW), gets you off the hook for any damage to the rental vehicle or theft of the car. It’s technically not insurance but rather a waiver that says the rental car company won’t come after you.

Your policy: If you have collision and comprehensive coverage on your own policy, it generally will extend to a rental car. However, you will still be on the hook for your deductible. If you don’t have comprehensive and collision on your regular policy, and don’t have the LDW, you’d have to pay for the damage.

Damage you do to others

At the counter: Supplemental liability protection will pay for damage you do to others’ vehicles or property. A typical limit is $1 million. If you have no auto insurance (for example, if you don’t own a car), you should buy this.

Your own policy: Your own liability insurance will cover you when you’re driving rental cars. If you have really minimal liability coverage on your auto policy, you could buy the supplemental protection to boost your coverage.

Injuries to you

At the counter: Personal accident insurance covers medical costs for you and your passengers if you’re involved in an accident. This includes ambulance, medical care and death benefits.

Your own policy: If you have personal injury protection or MedPay through your auto policy, you won’t need personal accident insurance. If you are interested in death benefits, consider getting a life insurance policy.

Your stolen stuff

At the counter: Personal effects coverage pays for your belongings if they’re stolen from the rental car, up to a set dollar amount.

Your own policy: A homeowners or renters insurance policy will cover your possessions if they are stolen, even away from home. To make a theft claim, you’ll need to file a police report, and your deductible amount will apply.

» MORE: Compare car insurance

Using your credit card for rental car coverage

Credit cards often provide coverage for rental cars, assuming you have used the card to pay for the rental and the rental is in your name. You’ll automatically have this coverage if it’s included with your credit card — no need to call or sign forms. But it is secondary coverage, meaning your own auto insurance policy will pay out first. NerdWallet assessed credit cards that offer good rental car insurance.

If you don’t have auto insurance and are going to count on credit card coverage, call your credit card issuer to confirm the details.

Buying rental car insurance on your own

There are companies that sell standalone policies for rental cars if you don’t want to buy insurance at the counter. You generally need to decline the rental company’s coverage to use these.

Allianz Global Assistance

Allianz Global Assistance sells a Rental Car Damage Protector for $9 a day that pays out up to $40,000 for damage and loss. It’s primary coverage, so it pays out before your own auto insurance, and includes 24-hour emergency assistance.

Bonzah

Bonzah sells insurance starting at $7.99 per day that pays out for up to $35,000 in repairs or replacement of the vehicle. It’s primary insurance, so it pays out before your own insurer. Policies generally cover travel abroad, but check the fine print.

Insure My Rental Car

Insure My Rental Car offers loss damage waivers covering up to $100,000 in damage to your rental vehicle. You can purchase coverage for anywhere from a day (starting at $6) to a year. The policy provides primary coverage so you don’t need to use your own auto insurance first. Policies also extend to rentals outside the United States.

Rental Cover

Rental Cover offers no-deductible policies that count as primary coverage so you wouldn’t need to make a claim to your auto insurer first. It doesn’t list policy limits or prices on its website, but claims it will beat any competitor’s daily rate.

Sure

Sure offers rental car insurance that covers up to $100,000 worth of damage to a vehicle, plus any of your belongings inside of it. The coverage also includes flat tires and lost keys, and you can get an online quote from its website.