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Car Rental Insurance: What You Need To Know


WRITTEN BY: Julia Matseikovich

UPDATED: JUNE 06, 2022 | 3 MIN READ

When you’re traveling, you’re already spending a lot of money on accommodations and travel. Will car rental insurance drive up the price? Or is it an investment to save your bank account in the long run? It all depends on your current situation. Keep reading to learn more.

Table of Contents

What Is Car Rental Insurance?

Car rental insurance is the coverage you buy from your car rental company. There are four main types of coverage: 

  • Loss damage waiver (LDW), which applies to accidents, environmental damage, theft, vandalism, and total loss. This is similar to a collision damage waiver (CDW), but a CDW doesn’t protect you against theft.
  • Liability coverage, which covers the other driver’s property damage and injury costs if you cause an accident.
  • Personal accident insurance, which pays the medical bills for you and any of your passengers.
  • Personal effects coverage, which protects your personal items.

What happens if you need to file a claim?

If you need to file a claim, take these steps:

  • Gather information from the other drivers involved (including name, phone number, insurance company, policy number, license number, and license plate number)
  • Take notes and pictures
  • Contact the car rental company

Other insurance options

When you’re looking to rent a car, it’s important to know that there are other insurance options available. Credit card insurance and travel insurance are two of the most popular choices. 

  • Credit card insurance covers your rental car while you’re on the road, but only if you use a major credit card like Visa or Mastercard. 
  • Travel insurance is another option that can be purchased from a third party (like an online travel agency), though it might be more expensive than using your credit card for coverage.

Do You Need To Purchase Car Rental Insurance?

If you have your own car insurance, then your policy should cover any damages or injuries that occur while driving the rental car. If you don’t have your own car insurance, then it’s recommended that you consider purchasing car rental coverage from the car rental company. This will protect you from liability and damage costs if an accident occurs while you’re driving a rental vehicle.

Do you have to have insurance to rent a car?

You don’t need your own auto insurance to rent a car. However, you should buy car rental insurance if you don’t have a policy. 

Why might you decide to get rental insurance even if you already have your own?

If you’re worried about having to pay a deductible or a higher rate on your auto insurance if you damage a rental car, then you may want to consider purchasing the rental company’s insurance. You’ll also want to buy rental insurance if you’re out of the country.

Is Car Rental Insurance Coverage Worth It?

If you want peace of mind knowing that any damage is covered by the rental car company’s insurance policy, car rental insurance is worth it. You’ll also sleep well knowing you don’t have to submit a claim to your own insurance company.

However, if you have your own great auto coverage with few accidents in your past, you may not want to pay for coverage you already have. 

How much does it cost?

Not surprisingly, rental car insurance costs vary. The location you’re in, your insurance company, plus the vehicle you’re driving all impact the cost. It can range anywhere from $30 – $60 per day.

Does your car insurance policy extend to a rental car?

Yes, if you have car insurance, it will extend to the car you’re driving. 

Does the insurance on your credit card apply to your rental car?

It depends on your credit card insurance policy, but it is common that the policy applies to rental cars. However, you do have to pay for the rental car with your credit card to receive that coverage.

Car Rental Insurance FAQs

Should I get rental car insurance?

If you don’t have insurance, yes. If you do have insurance, but your coverage isn’t great or you don’t want to submit a claim, then yes. If you’re traveling internationally, yes. If your coverage is great, and you don’t mind submitting a claim, then no. 

How much is car rental insurance from the rental company?

Typically it’s anywhere from $30 – $60 per day.

Can I add car rental insurance to my auto insurance policy to cover a car I rent?

It depends on your insurance company, but if they do provide car rental insurance, yes, you can. However, some companies don’t offer this.

Is car rental insurance necessary?

It’s only really necessary if you don’t have your own auto insurance or if you’re traveling internationally, where your auto insurance policy doesn’t apply. 

What is the best rental car insurance coverage?

Wallethub writes, “The best rental car insurance is a personal car insurance policy.” If you have car insurance, check with your insurance company to ensure you’re covered in a rental car and skip the extra coverage.

Car Rental Insurance: The Bottom Line

Before you even get to the car rental counter, you should know whether you want the extra car rental insurance or not. Answering wisely saves you money in the long run. If you’re looking for an auto policy to protect you no matter what car you’re driving, compare policies today. 

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