Does Your Insurance Cover Rental Cars?
Demystify rental car insurance. Understand your existing coverage and the various options available to ensure you're protected on the road.
Understanding whether your existing insurance covers a rental car can be confusing. Coverage depends on your personal auto policy, credit card benefits, and options from the rental company.
Your Personal Auto Insurance Policy
Many personal auto insurance policies extend coverage to rental cars. If your personal vehicle has liability coverage, it covers damages or injuries you cause to others while driving a rental car. Your policy generally responds to claims from other drivers for property damage or bodily injury if you are at fault.
If your personal policy includes collision and comprehensive coverage, these extend to cover physical damage to the rental vehicle from accidents, theft, or vandalism. Your personal policy’s deductible still applies.
Despite this extension, personal policies have limitations. They might not cover administrative fees, “loss of use” charges (income lost by the rental company while the car is being repaired), or “diminished value” (the car’s reduced resale value after an accident). Your policy’s coverage limits might also be insufficient for a high-value rental. Some policies exclude certain vehicle types, such as luxury cars or large vans, and may have geographical restrictions, particularly for international travel.
Credit Card Rental Car Benefits
Many credit cards offer rental car insurance as a complimentary benefit. This coverage applies to damage or theft of the rental vehicle, often called a Collision Damage Waiver (CDW) or Loss Damage Waiver (LDW). To activate, pay for the entire rental with that credit card and decline the rental company’s CDW/LDW.
Credit card coverage is commonly secondary, paying out only after your personal auto insurance is exhausted. You would first file a claim with your personal insurer, and the credit card benefit would then cover remaining costs like your deductible or amounts exceeding your primary policy’s limits. Some premium credit cards offer primary coverage, allowing you to file a claim directly with the card issuer without involving your personal insurer.
Be aware of common exclusions with credit card benefits. These often include coverage for personal injuries, damage to other vehicles or property (liability), and personal belongings stolen from the car. Coverage may not extend to certain vehicle types (luxury cars, trucks, recreational vehicles) or for rentals exceeding a specific duration (typically 15 to 31 days). Some credit cards also have geographical exclusions, not covering rentals in specific countries.
Rental Car Company Insurance Offerings
Rental car companies provide optional insurance products at the rental counter. The Loss Damage Waiver (LDW) or Collision Damage Waiver (CDW) is a contractual agreement where the rental company waives your financial responsibility for damage or theft of the rental vehicle. This waiver often covers “loss of use” and “diminished value” fees your personal policy might not.
Supplemental Liability Insurance (SLI) or Liability Insurance Supplement (LIS) provides additional liability coverage beyond state-required minimums included with the rental agreement. This enhances protection for damages or injuries you cause to others or their property. These policies often increase liability limits to substantial amounts, up to $1 million.
Other offerings include Personal Accident Insurance (PAI), providing medical expense and accidental death coverage for the renter and passengers. PAI typically covers medical expenses up to a few thousand dollars and death benefits, such as up to $175,000 for the renter. Personal Effects Coverage (PEC) covers personal belongings stolen or damaged within the rental vehicle, with limits ranging from $600 per person to a total of $1,800.
What to Do Before You Rent
Before renting a car, thoroughly review your personal auto insurance policy. Contact your agent or company to confirm rental car coverage specifics, including limits, deductibles, and exclusions like “loss of use” or certain vehicle types. This clarifies what your existing policy covers.
Next, investigate the rental car benefits offered by the credit card you plan to use. Verify if coverage is primary or secondary, understand any vehicle or geographical exclusions, and confirm activation requirements, like declining the rental company’s waiver. This helps determine the protection available through your card.
Once you understand your personal policy and credit card benefits, identify any potential coverage gaps. If existing coverages do not adequately address your concerns, or if you prefer to avoid using your personal policy for a rental car incident, consider additional insurance options offered by the rental car company at the counter.