Car rental insurance

by Stable MARK | Updated: August 8, 2022

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Car rental insurance is not obligatory if you want to rent a car. Coverage can come from the rental car counter, your personal auto policy, or a third-party insurer.

Let's get started and understand what your personal auto insurance covers, and what offers the rental counter.

There are a few different ways that you can get rental car insurance coverage. Your personal auto policy from an insurance company might cover you, or you can get it through a rental car company or a third-party insurer. No matter where you get your coverage, make sure you understand what is and is not included. That way, you can be sure you're protected in case of an accident.

Image 1: Rental car insurance explained | Image: jcomp

Rental car insurance is not the same as rental car reimbursement coverage, which is a common auto policy option that covers the cost of a car rental if your vehicle is being repaired as part of a claim. So make sure you know what you're buying before you say yes to any extra insurance. No matter where you get your coverage, make sure you understand what is and is not included. That way, you can be sure you're protected in case of an accident.

Is the insurance obligatory when renting a car?

Although you don't need your own auto insurance policy to rent a car, it's important to be aware that rental agencies typically have minimal coverage on their vehicles. If you get into an accident, you could be responsible for significant expenses.

To avoid this, you could buy additional insurance from the rental car company, use a credit card for coverage or get a standalone policy through a third party.

Your own auto insurance vs. rental car insurance

Below is the standard insurance options that rental car companies offer, as well as how to determine if your own auto insurance policy already provides coverage.

Damage to others you do

With rental car insurance policy: If you want to be protected against damages you may cause to other's vehicles or property, you should consider buying supplemental liability protection. Typical limits for this type of coverage range from $300,000 to $1 million. Even if you don't own a car and don't usually need auto insurance, it's a good idea to have this coverage when traveling in case your regular policy doesn't offer any coverage in that country.

With your own insurance policy: If you have your own liability insurance, it will typically cover you when you drive rental cars within the U.S. and Canada. However, if you only have minimum liability coverage, you may want to consider buying supplemental protection to increase your coverage.

Car theft and car accident

With rental car insurance policy: you have the option to purchase a loss-damage waiver (LDW) or collision damage waiver (CDW). This waiver protects you from being held responsible for any damage to the rental vehicle or theft of the car. While it's not technically insurance, it does provide peace of mind knowing that you won't be held liable if something happens to the rental car.

With your own insurance policy: If you have collision and comprehensive coverage on your regular auto insurance policy, it will usually extend to a rental car as long as you're renting within the United States or Canada. You will still be responsible for your deductible. 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 can buy LDW (loss damage waiver) from the rental company. This will protect you from having to pay for any damage to the rental car.

Personal stuff stolen

With rental car insurance policy: Personal effects coverage is a great way to protect your belongings if they’re stolen from your rental car. It will pay for your belongings up to a set dollar amount, so you don’t have to worry about replacing them yourself.

With your own insurance policy: Your possessions are typically covered under a homeowners or renters insurance policy if they are stolen, even when you are traveling out of the country. To make a theft claim, you will likely 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 increase.

Own injuries

With rental car insurance policy: This type of insurance covers medical costs for you and your passengers, including ambulance services, medical care, and death benefits.

With your own insurance policy: If you already have personal injury protection or medical payments coverage through your auto insurance policy, you likely won't need to purchase personal accident insurance when renting a car in the U.S. or Canada. Your regular health insurance may also cover you if you're staying within the U.S. When traveling overseas, you probably won't need personal accident insurance if you have travel medical insurance.

For death benefits, you may want to consider buying a life insurance policy.

Paying with credit card for rental car insurance

If you're renting a car, you may be able to use your credit card to cover the costs. This can be especially useful when you're traveling overseas, and your personal auto insurance won't cover you. In most cases, this coverage is automatic – you don't need to sign any forms or call anyone. However, it's usually secondary coverage, which means that your own auto insurance policy will pay out first if it's available. Before you rely on credit card coverage, call your credit card issuer to confirm the details.

If you don’t want to buy insurance at the counter

Bonzah

Bonzah has you covered, starting at just $7.99 per day. Their policies provide up to $35,000 in coverage for repairs or replacement of your vehicle, and they pay out before your own insurer. Plus, their policies generally cover travel abroad - but be sure to check the fine print just in case. Why wait? Get protected today with Bonzah.

Insure My Rental Car

Their loss damage waiver coverage protects your rental vehicle against damage up to $100,000. You can purchase coverage for as little as one day, starting at just $9.75. And because their policy provides primary coverage, you don't need to use your own auto insurance first. Plus, their policies extend to rentals outside the U.S., so you're always covered no matter where you go.

Allianz Global Assistance

Allianz Global Assistance offers a Rental Car Damage Protector for just $11 a day. With coverage of up to $75,000, it's a great way to enjoy your rental car without stress. Plus, their primary coverage means you don't have to use your own auto insurance, and they offer 24-hour emergency assistance.

Rental Cover

If you're looking for a rental car insurance policy that won't break the bank, Rental Cover is worth checking out. Their no-deductible policies can serve as primary coverage, so you don't have to make a claim with your auto insurer first. Plus, coverage options vary by country, so you're sure to find a policy that meets your needs. Prices for Rental Cover's policies aren't listed on their website, but they claim to be up to 50% cheaper than what you'd pay at the rental desk.

Take away: Is really the rental car insurance a must-have?

There are some instances when you may not need to buy the rental car company's insurance, such as if you're traveling within the U.S. or Canada and your own auto policy provides sufficient coverage. However, there are also times when it may be beneficial to purchase the rental car company's insurance. For example, if you're worried about having to pay a deductible or a higher rate on your auto insurance if you damage a rental car. If you don't have your own car insurance or coverage through a credit card, then purchasing rental car insurance can give you peace of mind while traveling.

Car rental insurance

Is the insurance obligatory when renting a car?