Does car insurance cover rental cars?

Does your personal car insurance cover rental cars?

Personal car insurance covers rental cars, but “the amount of coverage it provides will depend on the type of insurance you have,” explains Josh Damico, vice president of insurance operations at Jerry, an insurance comparison app.

Your policy extends the same types of coverage you have for a personal vehicle:

• Liability coverage pays for injuries or damage you cause to other people or their property but not your own medical bills or car repairs.
• Collision coverage pays for damage to your rental car from accidents with other vehicles or objects, minus your deductible.
• Comprehensive coverage handles non-accident damage such as theft, vandalism, weather damage and broken windshields.

However, some exclusions may apply. For example, your policy likely excludes rentals in Mexico and other foreign countries. So, you’ll need to buy a separate policy if you’re driving out of the United States or Canada.

Pro tip

Before renting, call your insurance provider to verify your coverage and understand any limitations. This will help you avoid buying unnecessary coverage or discovering gaps in protection when it’s too late.

Do credit cards cover rental car insurance?

Yes, “credit cards [with a collision damage waiver (CDW)] offer a form of rental car insurance, but [unlike personal auto insurance] it only covers the car,” said Rob Bhatt, an insurance expert at LendingTree.

Credit card coverage comes in two forms: primary and secondary.

Primary coverage kicks in immediately, while secondary coverage only applies after your personal insurance pays. With secondary rental car insurance, Damico explains that you’ll need personal insurance and must file a claim with your insurance company before your credit card will cover anything.

Like other insurance forms, there are some limitations:

• Coverage timeframe may be limited
• Doesn’t cover liability for injuries or property damage
• Often excludes exotic vehicles, RVs, motorcycles and certain trucks
• Price caps on eligible cars may apply

Every card issuer has unique exclusions. So, follow these steps to properly activate and verify your credit card’s coverage before relying on it:

1. Call your card issuer to confirm rental insurance benefits.
2. Pay for the entire rental with that specific credit card.
3. Decline the rental company’s collision damage waiver.
4. Save all documentation if you need to file a claim.

What insurance options do rental car companies offer?

Rental car companies offer three main types of insurance coverage to protect you, your passengers and the vehicle.

Here’s what each type covers and how much it costs on average:

• Loss damage waiver (LDW) covers vehicle damage and loss of use, costing about $25 per day.
• Supplemental liability insurance (SLI) covers up to $1,000,000 of property damage or medical claims people make against you after an accident, adding around $15 per day.
• Personal accident and effects coverage (PAE) covers injuries to you and passengers, as well as damage to certain personal belongings for approximately $10 per day.

The value of these coverages varies based on your existing protection. If your credit card offers a CDW, Bhatt advises you won't need the rental car company's LDW. However, SLI is essential if you lack personal auto insurance.

Rental car costs

When comparing costs, the difference is significant:

• Credit card rental car coverage comes free, but not all credit cards offer it.
• Your car insurance likely already covers rental cars — included in the annual rate you pay (e.g., around $2,400 per year or $7 per day for full coverage car insurance).
• Rental company coverage costs an average of $10 to $25 per day.

Before committing at the rental counter, weigh these pros and cons of rental company insurance:

How to ensure you're fully covered when renting a car

“The best way to ensure you’re adequately covered is to identify any gaps in your existing coverage,” Damico said. He suggests asking yourself three questions before booking:

• Do you have a suitable personal insurance policy?
• Does your credit card provide rental car coverage?
• Are you renting within the U.S. or Canada?

If you answer “yes” to these, you can likely skip the rental company’s insurance. But if you answered “no” to any question, you may want to consider additional protection. Just remember to carefully review the rental agreement and insurance policies, as these outline coverages, exclusions and your responsibilities.

Rental car coverage checklist

Follow these steps to verify your coverage before renting:

1. Check your credit card’s collision damage waiver terms
2. Contact your car insurance company to confirm rental coverage details
3. Request written confirmation of coverage if possible
4. Review your policy’s liability, collision and comprehensive limits
5. Understand your deductible responsibilities
6. Verify any coverage restrictions or exclusions

Pro tip

See if your health insurance plan has limits on emergency room visits. “If you don’t have Personal Injury Protection (PIP) or MedPay and your health plan excludes injuries that occur out of state or in foreign countries, springing for PAE or [another] form of medical coverage may be worthwhile,” advised Bhatt.