With over a decade of experience as a personal finance writer, Jackie Lam simplifies complex financial topics for consumers who want to improve their financial situations, develop a healthy relationship with money, and work toward their goals. Her wo.
Jackie Lam AFC®, Insurance WriterWith over a decade of experience as a personal finance writer, Jackie Lam simplifies complex financial topics for consumers who want to improve their financial situations, develop a healthy relationship with money, and work toward their goals. Her wo.
Written By Jackie Lam AFC®, Insurance WriterWith over a decade of experience as a personal finance writer, Jackie Lam simplifies complex financial topics for consumers who want to improve their financial situations, develop a healthy relationship with money, and work toward their goals. Her wo.
Jackie Lam AFC®, Insurance WriterWith over a decade of experience as a personal finance writer, Jackie Lam simplifies complex financial topics for consumers who want to improve their financial situations, develop a healthy relationship with money, and work toward their goals. Her wo.
AFC®, Insurance Writer Jason Metz Lead Editor, InsuranceAs a former claims handler and fraud investigator, Jason Metz has worked on a multitude of complex and multifaceted claims. The insurance industry can be seemingly opaque, and Jason enjoys breaking down confusing terms and products to help others mak.
Jason Metz Lead Editor, InsuranceAs a former claims handler and fraud investigator, Jason Metz has worked on a multitude of complex and multifaceted claims. The insurance industry can be seemingly opaque, and Jason enjoys breaking down confusing terms and products to help others mak.
Jason Metz Lead Editor, InsuranceAs a former claims handler and fraud investigator, Jason Metz has worked on a multitude of complex and multifaceted claims. The insurance industry can be seemingly opaque, and Jason enjoys breaking down confusing terms and products to help others mak.
Jason Metz Lead Editor, InsuranceAs a former claims handler and fraud investigator, Jason Metz has worked on a multitude of complex and multifaceted claims. The insurance industry can be seemingly opaque, and Jason enjoys breaking down confusing terms and products to help others mak.
| Lead Editor, Insurance
Updated: Oct 9, 2023, 6:17am
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If you’re renting a car, it’s in your best interest to understand your rental car insurance options before you get to the rental car counter. Drivers sometimes don’t realize they may already have rental car insurance coverage through personal auto insurance, a credit card used to book the rental or other insurance policies.
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At the bare minimum, you need liability car insurance before you drive a rental car. Liability insurance covers injuries and property damage you accidentally cause to others and is required in most states.
You’ll also likely want other types of coverage that can help pay to repair a rental car you damage or for your medical bills after causing an accident.
But you don’t need to buy all this coverage from the rental car company. In fact, you might already have some coverage through a combination of existing policies, such as:
If you don’t have coverage through your personal car insurance, credit card and other forms of insurance—or if you have gaps in coverage—you’ll want to purchase rental car insurance to make sure you’re adequately covered.
Your personal car insurance generally covers rental cars with the same coverage limits and deductibles as your policy. But your personal car insurance only extends coverage to rental cars for personal use, such as driving a rental car while on vacation. It won’t cover business use, such as driving a rental car to meet a client for work purposes.
You may have some gaps in coverage between your personal car insurance and your rental car. For example, your personal car insurance typically won’t cover the rental company’s “loss of use” fee, which is the charge for lost income while the rental car is in the repair shop.
Here are some common coverage types and how they apply when you’re driving a rental car.
Liability car insurance pays for injuries and property damage you accidentally cause to others, such as backing into someone’s fence while driving a rental car. You’ll be covered up to the policy limits that you chose for in your car insurance policy.
For example, if you have liability insurance with limits of $100,000 for bodily injury to one person per accident, $300,000 for bodily injuries to more than one person per accident and $100,000 in property damage per accident (known as 100/300/100), you’ll be covered up to those limits if you cause an accident in your rental car.
Collision and comprehensive insurance can pay to repair or replace a rental car after problems like car accidents, theft, fire, floods, collisions with animals, falling objects, severe weather and vandalism. Your car insurance deductible will apply if you need to file a car insurance claim for a rental car under your collision or comprehensive coverage.
If you have personal injury protection (PIP) and/or medical payments coverage (MedPay), your insurance will cover you and your passengers for medical expenses if you get injured while driving a rental car.
For example, if you get hurt while driving a rental car, your PIP coverage can cover expenses like medical bills, lost wages and replacement services for tasks you cannot perform due to the injuries, such as house cleaning and childcare.
MedPay covers you and your passengers’ medical bills no matter who is at fault for an accident. It’s not available in all states and is typically sold in small amounts between $1,000 and $5,000.
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If you buy rental car insurance from a rental car company, you’ll have several options. Here are some of the common coverage types you’ll find.
A collision damage waiver (CDW) covers your rental car if it is damaged or stolen. This coverage is also called a loss damage waiver (LDW). The cost of a CDW is usually about $30 per day.
A CDW can be a good option if you don’t have:
Here are scenarios in which you may want to pay for a CDW:
If you decline a CDW, the rental car company could charge you for the following expenses:
Rental car companies sell supplemental liability protection (SLP), which covers property damage and bodily injuries you accidentally cause to others. For example, if you crash your rental car into another car and the driver gets hurt, liability insurance can pay for their medical expenses. This coverage might be called by a different name, depending on the company. For example, Hertz’s liability coverage is called “liability insurance supplement” (LIS).
The policy limits will depend on the company. For example, SLP from Alamo and Enterprise provides up to $300,000 in liability coverage while Hertz provides up to $1 million in most states and up to $2 million in California and Florida.
Do I need to buy liability coverage from the car rental company?
You may already have adequate liability coverage through your personal car insurance policy.
Personal accident insurance (PAI) pays for you and your passengers’ medical bills if you get hurt in an accident while driving a rental car. PAI typically covers:
Do I need to buy personal accident insurance from the car rental company?
You may already have adequate coverage through your PIP and MedPay coverage in your personal car insurance policy and through your health insurance policy.
Personal effects coverage (PEC) covers your personal belongings if they are stolen from the rental car, such as your laptop or luggage.
Certain types of personal items may be excluded from coverage. For example, Hertz excludes PEC coverage for items such as:
Do I need to buy personal effects coverage from the car rental company?
You may already have adequate coverage for personal items stolen from a rental car through your home, condo or renters insurance policy.
Roadside assistance plans cover rental car problems such as:
Do I need to buy roadside assistance coverage from the car rental company?
You may already have adequate roadside assistance coverage through your personal car insurance policy, credit card or auto club (such as AAA).
Book in advance. You can usually snag a lower rental rate if you book a rental car in advance because rates typically increase the closer you get to your rental date.
Rent from offices close to the airport. Consider renting from locations near—but not at—the airport. Though you will have to pay for an Uber or taxi to get to the rental office, you can still save a lot of money. Car rental rates are usually much lower at locations that are not at an airport.
Use membership perks. Costco, AAA, AARP and other companies provide discounted rental car rates through partnerships with rental companies. Check to see if you qualify for any affiliate price breaks.
Forced upgrades
Let’s say you arrive at the car rental counter and an agent tells you they’re out of cars in your class. You have two choices: wait for a few hours or upgrade to a vehicle in the next class. Sometimes the agent is telling the truth—the location actually is out of cars.
But the second part is less true. The industry standard practice is to give you an upgrade at no charge. Offering a choice between a lengthy wait or paying more is yet another way to ding you at the car rental counter.
You don’t have to fall for it. If an agent asks you to make that choice, you can ask for a supervisor. If that doesn’t work, go to the next car rental company and give them your business.
Fuel purchase options
Another car rental issue to be aware of is the fuel purchase option, which allows you to avoid refilling your car before returning it. Erik Hastings, host of the PBS series Beyond Your Backyard, calls this fee “nefarious.”
“For refueling, there are typically three options available,” he explains.
So which one do you pick? It depends, says Hastings.
“Either buy the full tank of gas upfront at the time of rental and return the car on empty, or refill before returning your car to the rental location,” he says. “A quick search on Waze will let you know if there are gas stations close to the airport. If so, refilling the tank before returning the car will be your best bet economically.”
Car seats
Another way car rental costs add up: charges for children’s car seats. Avi Wilensky, founder of the taxi and rideshare cost comparison app Up Hail, calls these fees “egregious and detestable.” They typically range between $10 and $15 per day.
Considering that you can rent a car for $30 a day, that’s a lot of money. It also targets parents with young children, who are often trying to save money when they travel. Over one week, you pay more in rental fees than the seat is worth.
“Paying more to rent an item than the value of the item itself makes us feel we are being taken advantage of,” says Wilensky. “Many parents don’t anticipate the fee at the counter—it is not included in the rate quoted during the booking process—and are generally forced to pay up.”
The workaround? Bring your own car seat. Airlines will let you check it with your luggage and won’t charge you for it.
Before you get to the rental car counter, it’s important to know what options you might already have with existing coverage. You don’t want to buy coverage from the rental car company that you already have. In addition to your personal auto insurance, here are some other policies to consider.
Your credit card might offer rental car coverage if you use your credit card to pay for the rental car. Credit cards offer primary and secondary rental car insurance. Here’s the difference between the two:
If you get hurt in a car accident, your health insurance policy will cover your medical expenses for trips within the U.S. Your deductible, copays and coinsurance will apply.
Homeowners insurance, condo insurance and renters insurance all cover your personal belongings for theft, even when they are stolen from a rental car. For example, if a thief swipes your laptop from a rental car, you can file a claim under your homeowners insurance policy.
Non-owner car insurance is a liability policy for people who don’t own a car but need car insurance. It’s a good option for drivers who frequently rent cars.
Roadside assistance insurance typically extends to rental cars and covers problems like dead batteries, flat tires, locking yourself out of your car and running out of gas. You can usually get roadside assistance from your car insurance company, credit card or an auto club, such as AAA.
For example, AAA members can get roadside service while driving a rental car.
Some insurance companies sell rental car insurance as a standalone policy that you can purchase before your trip. You may be able to find policies cheaper than you would find at the rental car company, so it’s a good idea to compare quotes before you get to the rental car counter.
Here are some companies that sell rental car insurance:
Some travel insurance company’s include coverage for rental cars, but it may be limited. For example, some AIG travel insurance plans will cover up to $50,000 for rental car damage and $50 for roadside assistance, but it does not include liability coverage.
If you cause a car crash in your rental car that exceeds your liability limits on another policy (like your personal auto insurance or home insurance), umbrella insurance pays the excess amount, up to your policy limits.
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In some cases, rental car insurance might not be needed if you have similar coverage through your personal car insurance policy. It also might not be worth it if there’s overlap between what’s offered at the counter and your existing coverage on other insurance policies, such as your health insurance and homeowners insurance.
Rental car insurance from the rental car company may be worth it if you don’t have other options or need to plug any gaps in coverage from your existing policies. For example, if you have a car insurance policy but don’t carry collision or comprehensive insurance, you may want to consider buying the CDW from the rental car company to cover any damages to the rental car.
But even if you lack certain coverage types, like collision and comprehensive insurance, it’s better to shop around before you get to the rental car counter. You could find better prices for rental car insurance from another company.
