Rental car insurance is coverage you can purchase for $5 to $120 a day from a rental agency when you rent a car. If you have insurance, you may not need it.

Written by Hillary Kobayashi

Edited by Kianna Walpole

Updated on May 31, 2024

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Rental car insurance, explained
Is rental car insurance right for you?
How to get rental car insurance
Alternatives to rental car insurance
FAQ
Meet our experts

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Rental car insurance is a type of coverage offered by a rental car company. You can purchase it for $5 to $120 per day when you rent a car. However, you might not need rental car insurance if you already have a personal

car insurance

policy or a credit card that provides coverage.

Rental car insurance, explained

When you rent a car, you’ll need to decide if you want to purchase daily rental car insurance through the rental car company or waive it. You’re not legally required to buy rental car insurance.

Rental car companies offer insurance options that fall under four different categories:

Collision or loss damage waiver

Liability coverage

Personal accident coverage

Personal effects coverage

Short-term auto insurance coverage from a car rental agency costs $5 to $120 per day depending on the add-ons you select. Keep in mind that purchasing rental car insurance in a big city will probably be more expensive than if you live in a suburban or rural area.

Our experts explain the four coverage categories and their costs in detail down below:

Rental car coverage	Cost per day
A Collision Damage Waiver (CDW) prevents the rental car company from charging you for collision, parking, or towing-related damages. It may also extend to loss of use, diminished value , towing, and administrative fees.	$20–$40
A Loss Damage Waiver (LDW) works like a CDW, but it applies to theft, vandalism, animal, or weather-related accidents. Some rental companies include theft in a CDW, while others lump everything under a single-limit LDW.	$9–$30
Supplemental liability coverage pays for any bodily injuries or property damages you cause while driving the rental car. Some states require minimum liability coverage to be included in the rental fee, but buying supplemental liability protection can raise your coverage limits as high as $2 million.	$8–$25
Personal Accident Insurance (PAI) covers car-accident-related medical bills and funeral expenses for you and your passengers. Coverage limits vary according to the type of injury suffered, your chosen coverage level, and state laws. This will be covered under your personal car insurance if you have medical payments coverage (MedPay) or personal injury protection (PIP) .	$5–$13
Personal Effects Coverage (PEC) insures most personal items from theft or physical damage. For example, Hertz won’t approve a claim for household furniture, coins, pets, or guns. You can sometimes get both PAI and PEC for a single daily fee. If you have homeowners insurance or renters insurance , you can use them to cover your items.	$5–$13

Coverage limits, inclusions, and exclusions vary by company, so check the rental agreement before signing or declining any add-ons.

Rental car insurance is not the same as
rental car reimbursement insurance
, which is a coverage option that helps pay for a rental car if your car is not drivable after an accident or covered loss.

Is rental car insurance right for you?

It’s probably a good idea to purchase rental car insurance if you find yourself in the following situations:

You do not have personal car insurance or health insurance.

Your auto insurance policy does not cover rental cars and you do not have rental car insurance coverage through your credit card.

Your auto insurance policy doesn’t include

comprehensive coverage

and

collision coverage

You are traveling to Canada (covered by some insurance companies), Mexico, or an overseas destination, such as Europe.

You are renting a car for a job. Your car insurance policy or your credit card coverage might not cover commercial or business rental vehicles.

How to get rental car insurance

You can get rental car insurance through the rental car company, your own auto insurance provider, or as a perk on select credit cards.

Rental car coverage through the agency

You’ll be offered the chance to purchase rental car insurance at the time you rent your vehicle. Just be mindful that this is usually the most expensive option, so if you have alternate coverage available, it could help you save money.

Rental car coverage through your car insurance policy

Many car insurance companies include rental car coverage in their policies. You can check your policy or contact an insurance agent to see what is covered under your plan. If your rental car is covered, your coverage limits and

deductibles

will apply to your rental car.

Rental car coverage through your credit card

Credit card issuers often offer complimentary rental car insurance to cardholders, but it has its own rules and exclusions.

Basic cards usually provide secondary coverage. This means that you’ll file a claim with your own car insurance company, then claim any remaining damages with the coverage that comes with your card. Premium cards with primary coverage enable you to file for all damages immediately.

If you don’t have an existing car insurance policy, you may be able to use secondary coverage as your primary source of coverage, but it will depend on your credit card company’s policies. Depending on your cardholder agreement, you may also have to:

Pay the entirety of the car rental fee with your credit card

Make the paying credit card holder the rental vehicle’s primary driver

Decline any Collision Damage Waivers (CDW) or Loss Damage Waivers (LDW) offered by the rental car company

Rent a car for a certain number of days

Purchase rental car insurance for luxury cars, pick ups, motorcycles, and other types of vehicles that might be excluded by your credit card company1

Alternatives to rental car insurance

The cost of rental auto insurance can add up fast, so it’s good to know that you can save money by opting for a cheaper alternative, such as:

Non-owner car insurance

: This type of coverage is designed for drivers who don’t own a vehicle. Non-owner policies provide supplemental liability insurance whenever you rent, borrow, or share a car. As a bonus, it only costs $26 to $45 a month on average.

Travel insurance: Most travel insurance plans include personal accident insurance (PAI), personal effects coverage (PEC), and up to $50,000 of damage to a rental car, making them a better buy than rental car insurance.

Rental reimbursement

: Rental reimbursement can cost as low as $10 per month and will cover the cost of a rental vehicle or other transportation methods while your vehicle is being repaired.

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FAQ

Is rental car insurance necessary?

Rental car insurance may not be necessary if you have an existing car insurance policy, a credit card with primary or secondary coverage, or a route that stays within the US or Canada.

Does my credit card have rental car insurance?

Your credit card may offer primary or secondary coverage for rental vehicles, but you’ll need to check your cardholder agreement to be sure.

Does car insurance cover rentals?

Most standard car insurance policies cover rental vehicles (up to the same coverage limits and with the same deductibles) as long as the driver remains within the US or Canada.

What’s the difference between CDW and LDW?

There’s no standard definition for either one, but a Collision Damage Waiver (CDW) usually protects you from accident-related damages to a rental car, while a Loss Damage Waiver (LDW) does the same for theft or vandalism.

Meet our experts

Hillary Kobayashi

Hillary Kobayashi is an insurance writer and editor specializing in insurance and finance topics. Hillary’s mission is to use her knowledge and love of education to help car owners better understand how they can save time and money on car ownership. The articles Hillary has published for Jerry span topics from state-specific bill of sale requirements to SR-22 insurance information.

Prior to joining Jerry, Hillary spent over ten years in education at Pacific University and the University of Oregon.

Kianna Walpole

Expert Insurance Writer & Editor

Kianna Walpole is an insurance writer and editor with a comprehensive background in consumer behavior and online publishing. With experience in car insurance, maintenance, and repair, she is dedicated to building informative content that helps customers reduce costs while achieving the best service. Prior to joining the Jerry editorial team, Kianna worked as a junior editor in the content marketing industry, using consumer data and key insights to create and edit content for an array of large-scale clients in the real estate, cybersecurity, and healthcare industries.

SOURCES

https://www.cnbc.com/select/credit-card-car-rental-insurance-how-it-works-cards-that-have-it/