Rental car insurance costs between $15 and $50 per day, depending on the car type, your location, and which coverage you add

The base daily rate for a rental car covers the vehicle itself — the cost to rent the car for 24 hours. But that is not insurance. Insurance is optional coverage you buy on top of the rental, and it protects you if the car is damaged, stolen, or involved in an accident. Most rental companies offer three types: collision damage waiver (CDW), liability coverage, and personal effects coverage. The price varies by rental company, the value of the car, and your state's insurance laws.

Your own auto insurance may already cover a rental car, which is why many people decline the rental company's offer. Your homeowners or renters insurance might cover personal items in the car. A credit card used to book the rental sometimes includes rental car coverage. Before you pay for rental insurance, check what you already have — it could save you $20 to $40 per day.

Key Takeaways

  • Rental car insurance through the rental company typically costs $15 to $50 per day and covers damage to the vehicle, liability, or both, depending on what you purchase.
  • Your personal auto insurance policy may already cover rental cars, so calling your insurer before renting can prevent paying twice for the same protection.
  • Credit cards used to book the rental sometimes include collision coverage at no extra cost, though liability coverage is rarely included.
  • Declining all insurance and relying on your own coverage leaves you personally responsible if the rental company's damage assessment disagrees with yours.
  • State law, the rental company's policies, and the type of vehicle all affect what insurance costs and what it actually pays for.

What the rental company's insurance actually covers

Collision damage waiver (CDW) is the most common rental insurance option. It covers damage to the rental car from an accident, theft, or vandalism. If you cause a collision and the car needs $3,000 in repairs, CDW pays for those repairs instead of charging you. Most CDW policies cost $12 to $30 per day. The catch: you usually pay a deductible (often $500 to $1,500) out of pocket before the coverage kicks in, and some rental companies charge extra to waive that deductible.

Liability coverage protects you if you damage someone else's property or injure another person while driving the rental. If you hit another car and the other driver sues, liability coverage pays their medical bills and car repairs up to a limit (usually $100,000 to $300,000). Liability costs $10 to $25 per day. Many states require you to carry liability insurance, and your personal auto policy usually covers you in a rental car — but the rental company will not know that unless you tell them, and they may pressure you to buy theirs anyway.

Personal effects coverage protects items inside the car — luggage, electronics, clothing — if they are stolen or damaged. This is the cheapest option, usually $3 to $8 per day, but it has a low limit (often $500 to $1,500 total) and a high deductible. Your renters or homeowners insurance almost always covers personal items better than this does.

Whether your own insurance covers the rental

Your auto insurance policy likely covers you when you drive a rental car, but only if your policy includes collision and liability coverage — not if you carry liability-only. Call your insurer before you rent and ask: "Does my policy cover me in a rental car, and what is my deductible?" Write down the answer. If your policy covers the rental, you do not need to buy the rental company's collision coverage.

Your deductible for the rental is the same as your deductible at home. If you have a $1,000 deductible on your own car, you will pay $1,000 out of pocket if the rental is damaged, even though you did not cause the damage. Some people buy the rental company's coverage specifically to avoid paying their own deductible on a car they do not own. That is a legitimate choice, but do the math: if the rental company's CDW costs $25 per day and you are renting for five days, you pay $125. If your deductible is $1,000 and you never file a claim, you saved money by declining their coverage.

Liability coverage is trickier. Your auto policy covers you in a rental, but only up to your policy limit. If your limit is $50,000 and you cause a serious accident, that may not be enough. Some rental companies offer higher limits (up to $1 million) for a few dollars more per day. If you regularly rent cars or rent in high-risk situations, buying the rental company's liability coverage can make sense.

What credit card rental coverage actually does

Many credit cards offer rental car coverage if you use that card to book the rental. The coverage is usually collision damage waiver — it pays for damage to the car — but not liability. The coverage typically has the same deductible as your personal auto insurance ($500 to $1,500), and it only works if your personal insurance does not cover the rental. In other words, the credit card is a backup, not a primary policy.

To use credit card coverage, you usually have to decline the rental company's insurance at the counter. If you buy the rental company's coverage, the credit card will not pay anything. Read your credit card's rental car coverage section before you rent — the limits, deductibles, and exclusions vary widely. Some cards cover luxury cars; others do not. Some cover damage from off-road driving; others exclude it. A few cards do not cover rentals longer than 30 days.

How location and car type affect the price

Rental insurance costs more in some states than others because state law sets minimum liability limits and some states restrict how much the rental company can charge. California, for example, caps what rental companies can charge for CDW. New York does not. A mid-size sedan might cost $18 per day for CDW in California and $28 per day in New York.

Luxury cars and SUVs cost more to insure through the rental company because they cost more to repair. A compact car's CDW might be $12 per day; a full-size SUV's might be $35 per day. The rental company bases the price on the car's replacement value, not on how likely it is to be damaged.

Airport rentals often cost more than off-airport rentals because airports charge the rental company a concession fee, which gets passed to you. The same car from the same company might cost $20 per day for insurance at the airport and $15 per day at an off-airport location.

What happens if you decline insurance and damage the car

If you decline all insurance and damage the rental car, you are responsible for the full repair cost. The rental company will inspect the car, estimate the damage, and charge your credit card. If you disagree with their estimate, you can dispute it with your credit card company, but the rental company has photos and a damage report, and you do not. Many disputes go against the renter.

If the damage is severe enough that the car cannot be rented out while repairs happen, the rental company may charge you for lost rental income — sometimes $50 to $100 per day for weeks. If the car is totaled, you could owe $20,000 or more. This is why many people buy insurance even if their personal policy covers the rental: the rental company's damage assessment is final, and their deductible is usually lower than yours.

If you cause an accident and the other driver sues, your personal liability insurance covers you — but only if you have it. If you do not carry liability insurance (which is illegal in most states), you are personally liable for all damages. The rental company's liability coverage would protect you in this situation.

How to decide what to buy

Start by calling your auto insurer and asking what your policy covers in a rental car. If your policy includes collision and liability, and your deductible is low enough that you are comfortable paying it, decline the rental company's coverage and use your own. If your deductible is very high ($1,500 or more), buying the rental company's CDW might be cheaper than risking a claim on your own policy.

If you do not have auto insurance, or if your policy only covers liability, buy the rental company's collision damage waiver. The cost is worth the protection. If you have a credit card with rental car coverage, check what it covers before you rent — if it covers collision and has a reasonable deductible, use that instead of the rental company's coverage.

For liability, your personal auto policy almost always covers you adequately. Buy the rental company's liability coverage only if your personal limit is very low (under $100,000) or if you are renting in a high-risk situation (a major city, a high-value car, or a long trip). Personal effects coverage is rarely worth buying — your renters or homeowners insurance covers your belongings better.

Frequently Asked Questions

Does my credit card cover rental car damage?

Many credit cards offer collision damage waiver if you book the rental with that card, but the coverage is secondary — it only pays if your personal auto insurance does not cover the rental. Check your card's terms for limits, deductibles, and exclusions. Some cards do not cover luxury cars or rentals longer than 30 days.

What if I cause an accident and do not have liability insurance?

You are personally liable for all damages to the other vehicle and any injuries. The other driver can sue you for medical bills, lost wages, and pain and suffering. This is why liability insurance is required by law in most states. If you do not have personal auto insurance, buy the rental company's liability coverage.

Can I negotiate the insurance price at the rental counter?

No. The rental company sets the price, and it does not change based on negotiation. You can decline coverage entirely, buy what they offer, or use your personal insurance instead. Prices vary by location and company, so comparing rental companies before you book can save money on the base rental rate, which sometimes includes insurance.

Does insurance cover damage I cause while driving off-road?

Most rental car insurance excludes off-road driving, racing, and driving on unpaved roads. If you plan to drive on gravel roads or rough terrain, ask the rental company what their policy covers before you rent. Some companies exclude this damage entirely; others charge extra for it.

What is the difference between a deductible and a daily rate?

The daily rate is what you pay per day for the insurance ($15 to $50). The deductible is what you pay out of pocket if you file a claim ($500 to $1,500). If you rent for five days and buy $20-per-day coverage, you pay $100 total. If you damage the car and the deductible is $750, you pay $750 when you file the claim.