Do I Need Car Insurance to Rent a Car?

Do You Need Insurance to Rent a Car?

Personal auto insurance isn't required to rent a car, but you do need some type of insurance coverage. If you don't have your own car insurance, you can:

• Buy temporary insurance from the car rental company.
• Rent the car using a credit card that provides rental car coverage.
• Purchase short-term car insurance or non-owner car insurance.

Even if you have personal auto insurance, you'll be offered the option to buy coverage from the rental car company. Rental car insurance can be expensive and may duplicate coverage you already have. You can decline the rental company's offer of coverage and use your own car insurance, credit card insurance or other policy instead.

Does My Car Insurance Cover Rental Cars?

Your existing car insurance policy most likely provides adequate coverage for vehicles you rent for personal use in the U.S. or Canada. To be safe, check with your insurer to confirm your coverage before heading to the rental counter.

Auto insurance policies typically include the following coverage:

• Liability insurance kicks in if you're at fault in an accident. This coverage pays medical expenses for bodily injuries you cause to people in other vehicles. It also covers damage you cause to someone else's property.
• Medical payments coverage or personal injury protection (PIP) covers the cost of medical care for you and your passengers.
• Collision insurance pays to repair or replace your car if it's damaged in a collision with a vehicle, object or animal.
• Comprehensive insurance covers repairing or replacing your car after loss or damage not due to a collision—for example, theft, fire, vandalism or a tornado.
• Uninsured and underinsured motorist insurance covers your medical care and property damage if you're in an accident caused by a driver without adequate insurance.

What if your luggage or camera are stolen from the rental car during your trip? Homeowners insurance and renters insurance often cover personal belongings while in your car. Check with your insurance issuer to see if this extends to rental vehicles.

Does My Credit Card Cover Rental Car Insurance?

Find out if your credit card offers car rental insurance by checking your credit card agreement or calling the number on the back of your card. Get the details in writing so you know exactly what's covered. If you have multiple credit cards offering rental car insurance, compare each card's coverage to find the best protection.

Credit card rental insurance usually covers the same things as collision and comprehensive insurance—that is, collision damage to or theft of the rental car. However, credit cards generally don't cover liability, personal belongings, medical expenses or personal injury. For those, you'll need to rely on your personal car insurance or rental car insurance.

Even if your personal car insurance covers rental vehicles, renting a car with a credit card that includes rental insurance may save you money. Credit card rental insurance is usually secondary to your car insurance, which means you file a claim with your car insurance company (the primary insurance) first. Once they pay out, the credit card insurance kicks in to cover any remaining costs. It may even cover your insurance deductible.

Types of Rental Car Insurance

Between your auto insurance and your credit card, your rental car may be fully protected. If not, you can fill in coverage gaps with insurance from the rental car company.

Rental car companies typically offer four kinds of insurance:

Loss Damage Waiver (LDW)

Also called collision damage waiver (CDW), this coverage is similar to collision and comprehensive coverage. It waives your financial responsibility for theft of or damage to the rental car. Some policies also cover towing, administrative fees or a replacement vehicle while your rental car is repaired. This waiver typically costs $12 to $30 per day.

Liability Insurance

Liability coverage pays lawsuit-related costs if you cause an accident while driving a rental car. By law, rental car companies must offer minimum levels of liability coverage. For additional protection, buy supplemental liability insurance, which generally costs $8 to $17 per day.

Personal Accident Insurance (PAI)

Like medical coverage or PIP, PAI pays medical expenses for you and your passengers. (Your health insurance may cover this, too.) PAI averages $1 to $5 per day.

Personal Effects Protection (PEP)

PEP pays to replace personal property stolen from your rental vehicle. This might be covered by your homeowners or renters insurance, but you'll have to pay the insurance deductible if you file an insurance claim. Since PEP averages just $1 to $2 per day, a PEP plan with no deductible could be a good deal.

Is Rental Car Insurance Worth It?

When should you buy rental car insurance, and when can you rely on your own car insurance or a credit card? You may want to buy rental car insurance if:

• Your personal auto insurance policy has a high deductible. If you have a $1,000 deductible, for instance, paying $300 for rental car insurance may make financial sense.
• You want to avoid filing an insurance claim. If you're concerned that filing a claim could increase your insurance premiums, rental car insurance could be worthwhile.
• You don't have collision or comprehensive coverage on your personal vehicle. Without this coverage, you're responsible for all costs if the rental is damaged or stolen.
• You have minimal liability coverage. Increasing your coverage with rental car insurance can give you peace of mind when driving in unfamiliar territory.
• The rental car is worth more than your personal car. Collision and comprehensive insurance sufficient for a 2008 Honda Civic won't cover a rental Tesla.
• You plan to drive the rental car outside the U.S. or Canada. Personal car insurance policies don't extend outside these areas.
• Your home or renters insurance doesn't cover personal belongings stolen from your car.
• You don't have auto insurance because you don't own a car.
• You don't have a credit card that can supplement your personal auto insurance.

If you don't own a car but frequently rent vehicles, purchasing short-term or non-owner car insurance might cost less than constantly buying rental car insurance. Both types of coverage are designed for people borrowing or renting a car.

Short-term auto insurance is usually limited to basic liability coverage. Non-owner car insurance includes basic liability coverage and may also offer personal injury protection or medical coverage. However, neither type of insurance covers you if the rental vehicle is stolen or damaged. For full protection, either rent the car with a credit card that provides the missing coverage or buy the appropriate coverage from the rental car company.

Protect Yourself

While checking whether your car insurance covers rental cars, why not do some price shopping, too? Use Experian's auto insurance comparison tool to get quotes—and possibly save hundreds of dollars on car insurance.

Credit cards with perks such as rental car coverage often require good credit. Check your credit report and credit score before applying for a new credit card to see where you stand. You can help improve your credit score and qualify for rewards credit cards by reducing debt and paying bills on time.