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Rental Car Insurance Options

Jason Metz

Before you get to the counter of a rental car company, know your rental car insurance options. You may already have insurance through your auto policy or the credit card you're using. Before you purchase any coverage from the rental car agency, check if you already have enough insurance so you don't overpay.

What can I purchase from the car rental agency?

A Loss Damage Waiver (LDW) is sometimes referred to as the Collision Deductible Waiver (CDW). It typically costs anywhere from $9 to $45 extra per day.

The LDW typically waives:

  • Your financial responsibility if the rental car is damaged or stolen
  • A "loss of use" fee you'd pay to the rental agency for the time a damaged rental car is being repaired
  • Administrative fees
  • Towing fees

You'll want to read the rental contract for the LDW carefully. In some cases, the LDW might not apply if damage was caused by doing something not allowed by the rental company. This can include:

  • Speeding
  • Driving drunk
  • Driving on unpaved roads
  • Driving while committing a felony or criminal act
  • Racing
  • Using the vehicle to tow or push any object
  • Driving the car outside of a designated territory (for example: driving into Mexico)
  • Getting paid to transport people or property
  • Intentionally damaging the vehicle
  • Transporting explosives, chemicals, corrosives and other hazardous materials
  • Failing to provide the police or authorities with a full report upon discovering theft or vandalism

If you cause a car accident, liability car insurance pays for the medical bills and property damage for others. You can also purchase liability insurance from the car rental agency.

Personal Accident Insurance (PAI) typically costs between $5 and $11 per day. This generally covers the renter and passengers for:

  • Medical expenses
  • Ambulance costs
  • Death benefits

Supplemental Liability Protection (SLP) covers you for any injury claims someone makes against you. The price of this coverage will vary depending on the rental agency, location and the type of car you rent. To give you an idea, at Enterprise Rent-A-Car, SLP costs between $9.99 and $11.50 per day for up to $1,000,000 in coverage.

Does my car insurance cover my rental car?

If you carry liability, collision and comprehensive insurance, you're probably already covered for damage to the rental car and other property damage and injuries that you cause. It's smart to verify your coverage with your insurance agent before you pick up your rental car.

If you have an accident with the rental car and use your own insurance, keep in mind:

  • You will have to pay your deductible if you make a collision or comprehensive claim. If you have a higher deductible (such as $1,000 or more), you may want to consider buying the LDW. If it's a short-term rental, like a weekend trip, spending an extra $18 to $60 might be worth it.
  • You may be responsible for loss of use. With an average repair time of two weeks, according to the Insurance Information institute, loss of use fees can add up quickly. Many insurance companies may not cover the rental agency's loss of use fee.

Your personal car insurance policy might not extend to the rental car if:

  • The rental period is more than 30 days
  • The rental car is being driven in another country
  • The rental car is not being rented or operated by you, your spouse and/or eligible partner
  • You're using the car for business, not personal use.

Does my credit card cover my rental car?

Many credit card companies offer rental car coverage if you use the card to pay for the rental and it's in your name. Credit cards offer both "primary" and "secondary" coverage for car rentals.

  • Primary coverage means the credit card will pay out a claim first. You may not need to get your auto insurance company involved in a claim and you won't have to pay any auto insurance deductible.
  • Secondary coverage means that your auto insurance pays first but the credit card may reimburse your deductible and other fees such as administrative, towing or loss-of-use fees that aren't covered by your auto insurance.

Some credit cards offer additional coverage for purchase. For example, with American Express car rental insurance, you have secondary coverage for collision and theft. You can also purchase primary LDW coverage for $19.95 to $24.95 for the entire rental period.

For both primary and secondary coverage, contact your credit card company to find out exactly what it will cover, such as the loss of use, towing and administrative fees.

Insurance from a credit card typically doesn't cover liability claims, meaning damage to others that you cause. But your auto insurance policy has liability coverage. And your health insurance should cover you for any injuries you might suffer. If you're not sure what you have, contact your insurance agent to review your coverage.

Travel insurance car rental insurance

Some travel insurance companies specialize in insuring rental cars and can be cheaper than the insurance you would buy from the rental car agency. For example, Allianz Global Assistance offers up to $40,000 of coverage if the car you rented is stolen or damaged. For $9 per day it covers you anywhere in the world. You may want to go with a travel insurance company if:

  • You don't have an auto insurance policy of your own
  • The credit card you're using doesn't offer coverage
  • You want to cover gaps between your auto insurance and credit card, such as rental periods of more than 30 days and loss of use

Other insurance policies

Other policies that might kick in include:

  • Non-owner car insurance covers liability, but not collision and comprehensive. It is for people who don't own cars but want liability insurance.
  • Umbrella insurance covers liability claims after your auto (or homeowners) insurance has been used up.
  • Renters and home insurance cover personal items that are damaged or stolen while in a rental car.