Does Personal Car Insurance Cover a Rental Car?
Your personal car insurance will most likely cover a rental car, but be sure to confirm with your insurer in case you need additional coverage.
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The liability portion of your personal car insurance typically covers any damage you cause to other vehicles while driving a rental car. And if you have full-coverage car insurance, your personal policy will likely cover any damage you cause to the rental car.
But if you want additional coverage, you can buy rental car insurance from the rental car company or a separate company, or check if you have that benefit through your credit card company. Buying rental car coverage might seem like a waste of money, but it could pay off in the long run.
For example, buying a collision damage waiver from the rental car company could save you from having to file a claim with your personal insurance for damage to your rental vehicle. A claim on your personal insurance policy could increase your rates.
It’s a good idea to know what coverage you have before you walk into the rental agency. Here’s what to know while you’re considering rental car coverage.
When your car insurance covers rental cars
If you have a standard or non-owner car insurance policy, coverage will typically extend to any rental cars you drive for non-business purposes within the U.S.
You can usually rent a car without purchasing additional coverage if you have liability-only insurance, which would cover any harm you cause to someone else or their property while driving the rental. If you don’t have collision or comprehensive coverage, though, you’d have to pay out of pocket for any damage to the vehicle that happens while you’re renting it.
You also have the option of purchasing coverage from the rental car company when you pick up the vehicle.1
Though the rental company’s coverage provides financial protection in the event of vehicle damage or loss, it isn’t necessarily insurance in the traditional sense. Instead, this optional protection is a collision or loss damage waiver that waives your financial obligations for damage to the rental car.
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How to check if you have rental car insurance
Before purchasing insurance from the rental car company, call your agent or review your policy to check if you have the necessary coverage. Take note of each of your coverages — like bodily injury liability, property damage liability, comprehensive, and collision — and ask your insurance agent to point to the verbiage in the contract explaining whether it extends to a rental car.
Insurify agents usually point to Part D of an auto policy contract, which outlines coverage for damage to your vehicle. That section references a “non-owned auto” and defines coverage for a rental or “furnished” vehicle, typically including a rental car.
Generally, if you have a liability-only personal policy — meaning you don’t have comprehensive or collision coverage — you’d be responsible for covering any damages to the rental car unless you purchase a waiver from the rental agency.
It’s a good idea to familiarize yourself with your coverage before confirming your rental. You need some kind of auto insurance to rent a car, so staff will need to confirm your coverage if you refuse the rental company’s offering.
If you’re unsure, rental car agents may try to sell you coverage you don’t actually need. On the other hand, you may want to get additional coverage if you’re renting a more expensive car or hope to avoid filing a claim on your personal auto insurance policy.2
When your credit card covers rental car insurance
Some credit cards offer rental car coverage as a cardholder benefit. Not all credit card companies offer this benefit, and some only offer it for certain tiers of credit cards. Call your card issuer to review your benefits information so you know what’s available to you before renting.
Typically, you can unlock free credit card rental insurance if you pay the entire rental amount with the card and decline the rental company’s collision damage waiver.
The nature of rental car coverage may differ between credit card companies. For example, the insurance may include collision, theft, and towing charge coverage but only for a specific number of days.
Credit card rental car insurance typically doesn’t cover your liability, or the injuries or damage you cause in an accident. If you don’t have personal liability coverage, you may have to purchase that from the rental company in addition to your card rental car insurance. Other possible exclusions include exotic cars, motorcycles, mechanical breakdowns, and stolen items.
If you read the fine print, you may also see the terms “primary” or “secondary” coverage. In this case, your primary coverage is your personal auto policy. Most credit card rental insurance is secondary, meaning it’s supplemental to your primary policy and kicks in to cover what your primary coverage won’t.
Rental car insurance coverage types
The next time you rent a car, you have a few different types of coverage to consider. Each can provide you with some level of financial protection, but they operate a bit differently.
Collision damage waiver (CDW)
A collision damage waiver (CDW) is an optional coverage you can purchase at the rental car counter when you pick up your vehicle. Sometimes, your credit card issuer may offer this coverage as well.
Having a CDW limits your financial liability for damage to the rental car. A CDW can cover any damage to the vehicle and help you avoid paying out-of-pocket repair costs or filing a claim on your car insurance policy.
Though many rental companies use the terms collision damage waiver and loss damage waiver (LDW) interchangeably, the two coverages sometimes have an important difference: CDW coverage only kicks in following a collision. If someone steals the vehicle, you may still be on the hook for any losses.
An LDW can waive your financial obligation to any eligible damages that occur while you’re renting — including theft, vandalism, weather, and sometimes collision.3
Supplemental liability protection (SLP)
Rental car companies often also offer supplemental liability protection (SLP). This coverage provides excess liability protection if you or other authorized drivers cause an accident while driving your rental vehicle.
You can use your SLP with — and even primary to — your liability coverage. It doesn’t protect you against financial responsibility for the damage or loss of the rental car, but it can help cover medical bills and property damage expenses for other parties involved in an at-fault accident.
Personal accident insurance (PAI)
Personal accident insurance (PAI) provides you and your passengers with coverage for accidental injury, death and dismemberment, and hospital expenses. Some rental companies offer a combined option called personal accident and effects (PAE) coverage, which covers stolen or damaged personal belongings in the vehicle.
In most cases, rental car companies sell this as supplemental coverage for a daily fee. You can usually add it when you make your rental reservation or when you pick up the vehicle. Before spending the money on this, check your health insurance, MedPay coverage, or personal injury protection (PIP) to see if you already have coverage.
Personal effects coverage (PEC)
Personal effects coverage (PEC) is another supplemental coverage you can add to a rental car reservation. It offers damage and theft coverage for any personal items belonging to the driver or family members traveling with them. If you have renters or home insurance, review your coverage before you buy PEC since those policies may cover you.
PEC typically has relatively low coverage limits on a per-item or per-person basis. Common exclusions for the coverage include currency, medical devices, animals, and certain electronics.
If the loss appears suspicious, the rental company may deny your claim. For example, the rental company or insurer may deny your claim if you say an item was stolen from a locked vehicle but there’s no sign of damage or a break-in.
Pros and cons of purchasing rental car insurance
For many drivers — especially those with full-coverage car insurance — it’s not necessary to buy extra insurance at the rental car counter. But buying rental car insurance may be worthwhile in some circumstances. It’s important to weigh the advantages and disadvantages before renting a vehicle.
How to file a claim on a rental car
How to file a claim — and even whether you need to — depends on the coverage options you choose when renting the vehicle. Accidents happen, so here’s what to do if an incident damages your rental.
If you purchased a collision or loss damage waiver
You don’t have to file a claim for damage to the rental vehicle. Just let the rental car company know as soon as possible after the incident. The coverage you purchased waives your financial responsibility for the damage or loss, so the rental company will submit any claims to its insurer and coordinate repairs.
But if you caused an accident that damaged another vehicle or caused bodily injury to another driver or their passengers, you’ll need to file a claim under your personal insurance’s liability coverage. If you purchased SLP coverage, though, you might not need to file a claim with your own insurance.
If you declined a collision or loss damage waiver and have coverage under a traditional policy
If you didn’t opt for a collision or loss damage waiver, you’ll have to file a claim with your personal auto insurer to get coverage for damage to the rental vehicle.
Here’s what to do:
If you took advantage of credit card rental car insurance
Since most credit card companies offer secondary rental car insurance, it will only cover what your traditional policy doesn’t — typically only the deductible.
After following the steps to file a claim with your personal insurer, you can call your card issuer or review your benefits guide. You’ll need to determine what documentation the company requires to reimburse you for your deductible or any other costs your insurer doesn’t cover.
If your card issuer offers primary credit card rental insurance, the claim process is also like it would be with your traditional auto policy. The only difference is you’d contact and file a claim with your credit card company first, and your personal insurance would become a secondary coverage (after the deductible).
Rental car insurance FAQs
No matter what rental coverage you choose, examine your finances so you take on the costs and risks that work for you. To help along the way, here are some common questions and their answers.
Do you need car insurance to rent a car?
No. You don’t have to have a personal, traditional car insurance policy to rent a car. But without your own policy, you’ll have to buy coverage from the rental agency or ensure you have coverage through your credit card issuer.
Do you need insurance to rent a car in New York?
New York has a minimum liability insurance requirement, but you can still rent a car if you don’t carry your own auto insurance. State law requires rental companies to insure their own vehicles for the minimum amount of liability coverage.4 That said, if you don’t opt for additional coverage like a loss waiver, you’d be financially responsible for any damage to the rental car.
If you do have a personal car insurance policy, your insurance will cover physical damage to the vehicle even if you don’t have collision or comprehensive coverage. In New York, auto insurers have to extend that coverage to liability-only policies for people or married couples who insure fewer than five vehicles.
Rental companies offer damage and loss waivers for people without personal auto insurance and anyone who doesn’t wish to risk making a claim with their own insurer.
What documents are required to rent a car?
In most circumstances, you’ll need a valid driver’s license and credit card. Most companies will also accept a debit card, but they’ll place a hold on your account, which may limit available funds.
Some car rental companies may also require a second form of identification. For instance, if you’re from Canada and renting a car in the U.S., you may need to present a passport with your license.
What is stand-alone car rental insurance?
Stand-alone rental car insurance is rental coverage you purchase separately, as opposed to buying coverage from the rental counter, using your personal policy, or credit card rental insurance. Some insurance companies offer stand-alone policies at much lower rates than what you can get at the rental counter, so you can pay less while still avoiding the possibility of filing a claim with your personal insurer.
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