Rental Car Insurance: Do You Need It? - NerdWallet (2024)

If you’ve rented a car, you’ve probably been warned by salespeople at the counter about the possible consequences of walking away without buying their company’s rental car insurance. But if you already have auto insurance, you’re likely already covered up to your policy’s limits.

However, when you're put on the spot, you may forget to ask yourself, “does my auto insurance cover rental cars?” And that’s what rental companies are counting on — along with their commissions for selling you the coverage.

The information below will help you understand whether you need car insurance for a rental and how to get it before you arrive at the rental counter.

Do you need insurance to rent a car?

No, you don’t need to have your own auto insurance policy to rent a car, but rental agencies typically have minimal coverage on their vehicles. You could end up responsible for significant expenses if you're in an accident with the rental and don't have your own car insurance.

Other options include buying additional insurance from the rental car company, using a credit card for coverage or getting a standalone policy through a third party.

Does my car insurance cover rental cars?

In most cases, your auto insurance policy will provide equivalent coverage for a rental car as long as you use it for personal purposes. For example, if you have comprehensive and collision insurance, your rental car will likely be covered if it’s damaged, stolen or totaled, as long as the rental is of similar value to your own vehicle. Your deductible, a predetermined amount subtracted from the claim payout, will still apply if you file a claim with your insurer.

Liability insurance pays for injuries or property damage you cause to others in a crash, up to your policy limits. Your own injuries and any damage to your rental car aren't covered.

If you don’t have comprehensive or collision coverage, or you’re renting a luxury vehicle that your insurer won’t cover, you can purchase a loss-damage waiver, or LDW, from the rental company. An LDW waives your financial responsibility for the rental car if it’s lost or damaged, as long as you abide by your rental agreement.

Be sure to check with your insurer to confirm your policy covers rental cars before you head to the rental car office. Some insurance companies’ personal car insurance policies won’t cover rental cars.

Rental car insurance vs. your own auto insurance

Here are the typical insurance options from rental car companies, along with how to determine if you already have coverage within your own auto insurance policy.

Crashes and car theft

Rental car insurance coverage at the counter: A loss-damage waiver or LDW, also called a collision damage waiver or CDW, gets you off the hook for damage to the rental vehicle or theft of the car. It’s technically not insurance but rather a waiver that says the rental car company won’t come after you.

Your policy: If you have collision and comprehensive coverage on your own policy, it generally will extend to a rental car as long as you’re renting within the U.S. or Canada. However, you will still be responsible for your deductible, and filing a claim on your auto insurance policy could raise your premium.

If you don’t have comprehensive and collision on your regular policy, or you’re renting in a location where this coverage isn’t in effect, you’d have to pay for the damage unless you buy the LDW.

Damage you do to others

Rental car insurance coverage at the counter: Supplemental liability protection will pay for damage you do to others’ vehicles or property. Typical limits range from $300,000 to $1 million. If you don't have auto insurance (for example, if you don’t own a car), or if you’re traveling in a country where your own policy doesn’t offer coverage, you should buy this.

Your own policy: Your own liability insurance will typically cover you when you’re driving rental cars within the U.S. and Canada. If you have minimal liability coverage on your auto policy, you could buy the supplemental protection to boost your coverage.

Injuries to you

Rental car insurance coverage at the counter: Personal accident insurance covers medical costs for you and your passengers if you’re involved in an accident. This includes ambulance, medical care and death benefits.

Your own policy: If you have personal injury protection or medical payments coverage through your auto policy, you likely won’t need personal accident insurance as long as you’re renting in the U.S. or Canada. Your own health insurance may also cover you if you’re staying within the U.S. Overseas, you probably don’t need personal accident insurance if you have travel medical insurance.

For death benefits, consider buying a life insurance policy. You can get life insurance quotes online.

Your stolen stuff

Rental car insurance coverage at the counter: Personal effects coverage pays for your belongings if they’re stolen from the rental car, up to a set dollar amount.

Your own policy: A homeowners or renters insurance policy will generally cover your possessions if they are stolen, even when traveling out of the country. To make a theft claim, you’ll typically need to file a police report, and your deductible amount will apply. As with auto insurance claims, filing a property claim could cause your rates to go up.

Using your credit card for rental car coverage

Credit cards often provide rental car insurance coverage, assuming you used the card to pay for the rental and the rental is in your name. They can be a particularly useful option overseas in places where your personal auto insurance won’t cover you.

You’ll automatically have this coverage if it’s included with your credit card — no need to call or sign forms. But it’s usually secondary coverage, meaning your own auto insurance policy will pay out first if it’s available. NerdWallet assessed credit cards that offer good rental car insurance.

If you’re planning on credit card coverage, call your credit card issuer to confirm the details.

Buying rental car insurance on your own

Some companies sell standalone policies for rental cars if you don’t want to buy insurance at the counter. Generally, you need to decline the rental company’s coverage to use these.

Allianz Global Assistance

Allianz Global Assistance sells a OneTrip Rental Car Protector for $11 a day that pays out up to $50,000 for damage and loss. It’s primary coverage, so it pays out before your own auto insurance and includes 24-hour emergency assistance.

Bonzah

Bonzah sells insurance starting at $21.95 per day that pays out for up to $35,000 in repairs or replacement of the vehicle. It's primary insurance, so it pays out before your regular insurer. Policies generally cover travel abroad, but check the fine print.

Rental Cover

Rental Cover offers no-deductible policies that count as primary coverage so you wouldn’t need to make a claim to your auto insurer first. Coverage options vary by country. Rental Cover doesn’t list prices on its website but claims to be up to 50% cheaper than the rental desk.

Sure

Sure offers rental car insurance that covers up to $100,000 worth of damage to a vehicle, plus any of your belongings inside of it. The coverage also includes flat tires and lost keys, and you can get an online quote from its website.

Car rental insurance: The bottom line

You may not need to buy the rental car company’s insurance if:

You may want to buy the rental car company’s insurance if: