What your car insurance covers for rentals
Most car insurance policies do not automatically cover rental cars. Your coverage depends on which type of insurance you have and what your specific policy says. The most common way renters get covered is through collision and comprehensive coverage, which extends to rental vehicles in many cases — but you need to check your actual policy documents to know for certain.
If you have only liability insurance (the minimum required in most states), rental cars are not covered at all. Liability pays for damage you cause to someone else's property or injuries to other people, not damage to your own vehicle or a rental you're using.
The other route is the rental car company's own insurance, which you can buy at the counter when you rent. This is separate from your personal policy and costs extra, but it covers the rental vehicle itself while you're driving it.
Key Takeaways
- Collision and comprehensive coverage on your personal policy may cover rental cars, but only if your policy explicitly includes rental reimbursement or rental coverage — you must read your actual policy or call your insurer to confirm.
- Liability-only insurance does not cover rental vehicles under any circumstances.
- Rental car companies offer their own insurance at the counter, typically costing $15 to $30 per day, and this covers damage to the rental vehicle regardless of your personal policy.
- Credit card rental protection covers some damage but usually has exclusions and limits, and it is secondary to your personal insurance if you have it.
- Your insurer can tell you in one phone call whether your policy covers rentals and what the limits are.
How collision and comprehensive coverage extends to rentals
If your policy includes collision coverage (which pays for damage from accidents) and comprehensive coverage (which pays for theft, weather, vandalism, and other non-accident damage), these may cover a rental car — but only if your policy was written to include it. Some policies automatically extend these coverages to rentals; others require you to add a rental reimbursement endorsement or state that rentals are excluded.
The coverage limits are usually the same as your personal vehicle. If you have a $500 deductible on your own car, you will pay a $500 deductible on a rental claim too. Some policies cap the daily reimbursement amount — for example, paying up to $30 per day toward rental costs while your car is being repaired — which is different from covering the damage itself.
The key step is calling your insurance company before you rent. Ask whether your policy covers rental vehicles, what the deductible is, and whether there are any exclusions (for example, some policies exclude rentals outside the United States). Get the answer in writing if possible, because you may need to show it to the rental company.
When rental car company insurance makes sense
The rental company's insurance — called a Damage Waiver or Loss Damage Waiver (LDW) — covers the rental vehicle itself while you are driving it. You buy it at the rental counter, and it typically costs $15 to $30 per day depending on the vehicle class and location. Once you buy it, you are not responsible for damage to the rental, even if the accident is your fault.
This is worth buying if you do not have collision and comprehensive coverage on your personal policy, or if you are unsure whether your coverage extends to rentals. It is also the simplest option because you do not have to file a claim with your own insurer or coordinate between two companies.
The downside is cost. A week-long rental with the waiver can add $100 to $200 to your bill. If you already have collision and comprehensive coverage that applies to rentals, buying the waiver is paying twice for the same protection.
Credit card rental protection and its limits
Many credit cards offer rental car coverage as a cardholder benefit. This coverage is secondary, meaning it only pays after your personal insurance has paid its share. It typically covers collision and comprehensive damage but has significant exclusions: luxury vehicles, commercial use, rentals longer than 30 days, and rentals in certain countries are often not covered.
Credit card coverage also has limits. Some cards cap reimbursement at $50,000 or $75,000 per incident, which sounds high but may not cover a totaled luxury rental. You also have to file a claim with the credit card company after the rental company has processed the damage, which takes time.
Check your credit card's terms before relying on it. The coverage details are usually in the benefits guide that comes with your card or on the card issuer's website. If you have collision and comprehensive coverage on your personal policy, the credit card coverage is redundant.
What happens if you have only liability insurance
Liability insurance covers damage you cause to other people or their property, not damage to your own vehicle or a rental. If you have only liability and you damage a rental car, your personal insurance will not pay for the repairs. The rental company will bill you directly, and you are responsible for the full cost.
In this situation, you must buy the rental company's damage waiver to protect yourself. The waiver is your only option for coverage. Some renters also use a credit card with rental protection as a backup, though remember that credit card coverage is secondary and has exclusions.
If you frequently rent cars and have only liability insurance, adding collision and comprehensive coverage to your personal policy is usually cheaper than buying the waiver every time you rent.
How to find out what your policy covers
The fastest way to know is to call your insurance company directly. Have your policy number ready and ask three specific questions: Does my policy cover rental vehicles? What is the deductible? Are there any exclusions? Write down the answers and the name of the person you spoke with.
You can also review your policy documents. Look for sections titled "Coverage Extensions," "Additional Coverages," or "Rental Reimbursement." If you see language that says "coverage applies to rental vehicles" or lists a daily rental limit, you have coverage. If the policy says "rental vehicles are excluded," you do not.
If you cannot find the answer in your documents, your insurance agent can explain it in plain language. This is a simple question for them, and the answer takes minutes.
Rental coverage when your car is being repaired
Some policies include rental reimbursement coverage, which pays toward the cost of a rental car while your own vehicle is in the shop after a covered accident. This is different from coverage that protects the rental vehicle itself. Rental reimbursement typically pays a set amount per day — often $30 to $50 — toward whatever rental you choose.
This coverage is useful if you need transportation while your car is being repaired, but it does not cover damage to the rental. You still need collision and comprehensive coverage, or you still need to buy the rental company's waiver, to protect the rental vehicle itself.
Check your policy to see whether you have rental reimbursement and what the daily limit is. If the limit is $30 per day and the rental costs $60 per day, you pay the difference out of pocket.
Frequently Asked Questions
Does my car insurance cover a rental if I'm in an accident?
Only if your policy includes collision coverage and that coverage extends to rental vehicles. Liability insurance does not cover this. Call your insurer to confirm whether your collision coverage applies to rentals, or buy the rental company's damage waiver to be certain.
What if I rent a car and it gets stolen?
Comprehensive coverage on your personal policy covers theft of rental vehicles if your policy extends to rentals. If you have only liability insurance, comprehensive coverage does not apply, and you must rely on the rental company's waiver or your credit card's coverage.
Can I use my credit card instead of buying the rental company's insurance?
Credit card rental protection is secondary, meaning it pays only after your personal insurance. It also has exclusions and limits. If you have collision and comprehensive coverage on your personal policy, the credit card is redundant. If you have only liability, the credit card may help but is not a complete substitute for the rental company's waiver.
Does my insurance cover a rental car in another country?
Some policies exclude rentals outside the United States or limit coverage to specific countries. Call your insurer before renting internationally. Many travelers buy the rental company's waiver for international rentals because personal policies often do not cover them.
How much does rental car insurance cost?
The rental company's damage waiver typically costs $15 to $30 per day. A week-long rental can add $100 to $200 to your bill. If your personal policy covers rentals, you avoid this cost by using your own insurance instead.