Does Costco Car Insurance Cover Rental Cars?

Costco members can book a rental car through the member-exclusive booking site Costco Travel; however, rental car insurance is not included.
Written by Melanie Johnson
Reviewed by Alita Dark
While Costco doesn’t sell car insurance directly, it partners with American Family to offer members discounts through Costco CONNECT Insurance. Costco members can reserve rental cars through the member-exclusive booking site Costco Travel; however, rental car insurance is not included.  
If you’ve ever rented a car and been uncertain whether or not you should purchase rental car insurance to go with it, you’re not alone. It can be difficult to know if your
insurance covers rental cars
or not. In this article, we’ll discuss what’s included in your Costco CONNECT
car insurance
policy and what you can expect when renting a car through Costco Travel. Let’s get started!

Does Costco offer rental car insurance?

Costco does not offer rental car insurance. If you book a rental car through
Costco Travel
, you will be eligible for discounts—Costco has partnerships with Avis, Alamo, Budget, and Enterprise—but you will have to purchase your own rental car insurance through the rental company.
Some insurance companies offer or include rental car insurance if you have
full-coverage insurance
. However, Costco does not. Your Costco CONNECT Insurance only covers the vehicles on your policy—so you should think twice before declining rental car insurance at the agency counter.
If you’re in an accident while using the rental and are deemed at fault, your Costco CONNECT
liability insurance
should still cover
bodily injury
property damage
expenses for the other drivers involved in the collision—but the physical damage to the rental car will not be covered. Purchasing rental car insurance from the rental company will prevent you from having to pay for the damages out of pocket.
MORE: How to avoid being unfairly charged for rental car damage
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Costco rental reimbursement

rental reimbursement coverage
is a separate coverage option that should not be confused with rental car insurance.
Rental reimbursement coverage is an add-on that can help cover the cost of renting a car if your vehicle is in the shop following an accident. This coverage provides $30 a day and up to $900 total to help cover the cost of a rental car.
Be sure to check your
insurance declaration page
to see what your policy covers, or you can call your Costco CONNECT insurance rep at 1-888-742-4572 for assistance.
MORE: All about American Family car and home insurance

Is it worth it to get insurance on a rental car?

It can be worth it to purchase insurance for a rental car—especially if you have Costco CONNECT Insurance!
Because COSTCO Connect does not offer
rental car insurance
, you may be on your own paying for damages incurred in an accident. That said, if you paid for the rental car with a credit card, you may have insurance through the credit card company—make sure to check your member benefits.
You’ll likely benefit from purchasing rental car insurance if:
  • You don’t currently have any car insurance or you only have liability coverage
  • Your insurance policy doesn’t cover rental cars
  • Your comprehensive and collision coverage have a high deductible
  • You’re renting a commercial vehicle
  • You want rental car insurance add-ons like roadside assistance,
    medical payments coverage (MedPay)
    , or
    personal injury protection (PIP)
    that you don’t have with your current insurance policy 
So what’s included in your rental car insurance? 
The rental car company will usually provide you with a collision damage waiver, which will cover damages resulting from an accident, as well as a loss damage waiver, which protects you from being held financially responsible for a stolen or damaged rental car. These waivers will inevitably be overpriced—but keep in mind that paying a little extra now may save you a lot of money (and potentially jail time) down the line, should you choose to get behind the wheel of a rental car while being uninsured.
MORE: How to save money on car rentals
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