Whether you need rental car insurance depends on what coverage you already have
You may already be covered. If you have a personal auto insurance policy, it often extends to rental cars within the United States and Canada — but only the liability and collision portions, not the rental company's loss-damage waiver. If you have a credit card that offers rental car protection, that card may cover damage to the vehicle itself. Before you rent, call your insurance company and your credit card issuer to find out exactly what they cover and what they don't. This takes 10 minutes and can save you $15 to $30 per day.
If you have no personal auto insurance and no credit card coverage, you will need to buy something from the rental company or buy a standalone policy. Rental companies sell collision damage waiver (CDW) and liability insurance separately, and both are expensive when bought at the counter. A standalone rental car insurance policy from a company like Allianz or Avis Insurance Plus costs less and covers more situations, but you have to buy it before you pick up the car.
Key Takeaways
- Your personal auto insurance may already cover rental cars, so contact your insurer before renting to confirm what is and is not included.
- Credit cards often provide rental car damage coverage, but you must charge the full rental to that card and meet other conditions — call the card issuer to verify.
- Rental company insurance sold at the counter is the most expensive option and should be your last resort if you have no other coverage.
- Standalone rental car insurance policies bought in advance cost less than counter insurance and cover situations like theft and weather damage that rental company waivers often exclude.
- You are always required to carry liability insurance; the question is whether you buy it from the rental company, bring it from your personal policy, or buy it separately.
What your personal auto insurance covers on a rental car
If you own a car and carry a standard auto insurance policy, your liability coverage and collision coverage usually extend to rental vehicles. Liability covers damage you cause to other people or their property. Collision covers damage to the rental car itself from an accident. However, your personal policy does not cover the rental company's loss-damage waiver, which is the company's own insurance product.
The catch is that your deductible applies. If your personal policy has a $1,000 deductible and you damage a rental car, you pay $1,000 out of pocket before your insurance pays the rest. Some people buy the rental company's collision damage waiver specifically to avoid paying their own deductible, though this is usually more expensive than paying the deductible would be.
Call your insurance company before you rent. Ask whether your policy covers rental cars, whether it covers rentals outside the United States, and what your deductible is. Some insurers exclude rentals longer than 30 days or rentals of luxury vehicles. Get the answer in writing or take notes with the agent's name and date — if a claim happens later, you will need to prove what you were told.
How credit card rental car coverage works
Many credit cards offer rental car damage coverage as a cardholder benefit. The coverage typically pays for damage to the rental vehicle if you charge the full rental cost to that card. However, the coverage is secondary, meaning your personal auto insurance pays first, and the credit card covers what your insurance does not.
Credit card coverage has strict conditions. You usually must decline the rental company's collision damage waiver in order for the card's coverage to activate. You must charge the entire rental to the card — if you pay part with cash or another card, the coverage may not apply. The coverage often excludes certain vehicle types, such as luxury cars, trucks, or vans. Some cards do not cover rentals outside the United States.
Call your credit card company before you rent and ask what the coverage includes, what it excludes, and what you have to do to activate it. Ask whether you need to decline the rental company's waiver in writing or if declining it verbally at the counter is enough. Different card issuers have different rules, and the rules change.
Rental company insurance sold at the counter
The rental company will offer you collision damage waiver, liability insurance, and sometimes other products like roadside assistance when you check out. These are the most expensive options available. Collision damage waiver alone often costs $15 to $30 per day, which adds up to $100 to $210 for a week. Liability insurance sold at the counter costs $10 to $20 per day.
Rental company insurance is convenient because you buy it on the spot, but it is a poor choice if you have other options. The coverage is narrower than you might think — many rental company waivers exclude damage from weather, theft, or off-road use. Read the terms before you buy, or ask the agent to explain what is and is not covered.
Buy rental company insurance only if you have no personal auto insurance, your credit card does not cover rentals, and you cannot buy a standalone policy in advance. If you are in this situation, the collision damage waiver is worth the cost because you are otherwise liable for the full value of the car if it is damaged.
Standalone rental car insurance policies
Companies like Allianz, Avis Insurance Plus, and others sell rental car insurance policies that you buy before you rent. These policies cost $6 to $15 per day, which is less than half the price of rental company insurance. They cover collision, theft, vandalism, and weather damage. Some also cover liability if your personal insurance does not.
To buy a standalone policy, you visit the company's website, enter your rental dates and location, and buy the policy online. You receive a confirmation email with a policy number. When you pick up the rental car, you show the confirmation to the rental company and decline their insurance. The standalone policy then covers damage to the car.
Standalone policies have limits and exclusions too. Most do not cover damage from driving off-road, towing costs, or damage from mechanical failure. Some exclude rentals longer than 30 days. Read the policy details before you buy. If you have questions, call the company before you rent — do not wait until you have already picked up the car.
Liability insurance: the one thing you cannot skip
Liability insurance is not optional. It covers damage you cause to other people or their property while driving the rental car. If you cause an accident and injure someone or damage their vehicle, liability insurance pays for it. Without liability coverage, you are personally responsible for those costs, which can be thousands of dollars.
Your personal auto insurance provides liability coverage on rental cars in most cases. If you do not have personal auto insurance, you must buy liability coverage from the rental company or from a standalone policy. Do not rent a car without liability coverage under any circumstances. The rental company will not let you take the car without it, and if you somehow do, you are taking on enormous financial risk.
What to do before you rent
Make these calls or checks before you book the rental. First, contact your auto insurance company and ask what coverage extends to rental cars and what your deductible is. Second, call the credit card you plan to use and ask what rental car coverage it provides and what conditions apply. Third, if you have no personal insurance and your credit card does not cover rentals, visit a standalone rental car insurance website and get a quote for your rental dates.
Write down the names of the people you spoke with, the date, and what they told you. When you pick up the rental car, tell the agent what coverage you already have and decline the rental company's insurance. If the agent pushes back or says your coverage does not apply, you have documentation of what you were told by your insurer or credit card company.
Frequently Asked Questions
Does my auto insurance cover rental cars outside the United States?
Many personal auto policies cover rentals in Canada, but coverage in Mexico and other countries is less common. Call your insurance company and ask specifically about the country where you are renting. If your policy does not cover international rentals, you will need to buy coverage from the rental company or a standalone policy.
If I buy a standalone policy, do I still need to tell the rental company?
Yes. When you pick up the car, tell the agent you have your own coverage and decline their collision damage waiver. Show them your standalone policy confirmation. The rental company needs to know you are not buying their insurance so they do not charge you for it.
What happens if I damage the rental car and I have no insurance?
The rental company will charge you for the damage. The cost includes the repair bill, the cost of renting a replacement vehicle while yours is being fixed, and sometimes a daily loss-of-use fee. For major damage, this can easily exceed $5,000. You are also liable for any injuries or property damage you cause to other people.
Can I buy rental car insurance after I pick up the car?
Standalone policies must be bought before you rent. Rental company insurance can be bought at the counter, but it is more expensive than buying it in advance. If you forgot to buy coverage before you arrived, buying it at the counter is better than having no coverage, but it should be your last resort.
Does rental car insurance cover damage from an accident that was my fault?
Yes, both collision damage waiver and standalone rental car insurance cover accidents where you are at fault. They do not cover damage from intentional acts, mechanical failure, or driving under the influence. Read the policy terms to understand what is excluded.