Rental Car Insurance
Is rental car insurance an essential coverage or unnecessary expense? The Zebra breaks down coverages, pros and cons, and more in our handy guide.
Do you need car insurance for a rental vehicle?
If you have ever rented a vehicle, you’ve probably been asked — or perhaps aggressively encouraged — to buy rental car insurance. But do you need to accept it? This depends on your personal auto insurance policy. Sometimes your policy will cover your rental car, rendering the insurance offered by the rental car company unnecessary. But this is not always the case. Let's explore rental car insurance, its coverages and potential alternatives.
"First and foremost, you'll want to call your own insurance carrier to see if your coverage will transfer over to your rental car: it depends on your insurance company and selected coverage. If you don't have time to call your current insurance, it's best to purchase the rental car company’s insurance. It's usually not too expensive and will give you peace of mind that you're covered for anything that happens."
Hunter Black — Sales Manager at The Zebra
What is rental car insurance?
Rental car insurance should not be confused with rental reimbursment coverage, which we'll touch on later. Rental car insurance refers to the package the rental car company will offer when lending out their vehicle to you. It is not required to accept, so drivers often wonder whether it's necessary when they have a personal auto insurance policy.
Rental car insurance coverages
Rental car coverage works quite similarly to an average auto insurance policy. Basically, it’s split into protection against damage to your vehicle and damage you cause. Broken out, the coverage looks like this:
Liability typically covers bodily injury and property damage liability. This will usually extend to a certain amount of damage you cause to other people or their property. A typical limit is $1 million in damages.
Also known as a collision damage waiver (CDW), this coverage mirrors your collision and comprehensive coverage. Here, however, the coverage is simply a waiver which states the rental car company won’t pursue you for damage you cause to the vehicle. So, there isn't a deductible that you would need to pay first.
This part of the rental car insurance will cover any personal effects you may have in the vehicle should they be lost or stolen. However, your home or renters insurance policy also covers personal items, even when in transit.
This coverage would kick in if you or a passenger were injured in an accident in the rental vehicle. It would pay your medical bills, much like medical payments coverage or personal injury protection would.
| Rental car insurance coverage | Personal insurance policy coverage name | |
|---|---|---|
| Liability | → | Liability |
| Loss damage waiver (LDW) | → | Comprehensive/collision coverage |
| Personal effects | → | Personal property coverage (Home or renters) |
| Personal accident | → | Medical payments or personal injury protection |
When do you need rental car insurance?
If you’re planning to rent a car, first check with your current car insurance company to see if your coverage extends to rental vehicles. Many insurers will extend coverage to rentals, especially if you have comprehensive and collision coverage. This isn’t a hard and fast rule, so you should check with your current company before making any assumptions, and review the details of your policy to understand what coverage you need for the rental.
The big questions you’ll want to ask your current car insurance company regarding rental car insurance:
- Will my coverage extend only liability insurance to my vehicle? This is something to really consider if you’re looking at renting a car. With liability insurance, you have no protection for your vehicle if you’re in an at-fault accident. Meaning, you would be liable for any damages you cause to your vehicle without the help of an insurance company.
- Will my insurance company reimburse administrative fees, loss of use, or towing charges?
- Does this provide coverage outside of the US? Some companies provide some insurance coverage in Mexico and Canada, but that might not extend to a rental vehicle. If you’re traveling abroad and will be renting a vehicle, make that clear to your insurance company.
- Does it apply to all vehicle types?
- What are the limits of my liability coverage?
- Is there a time limit on my auto insurance?
Your insurance agent will be able to provide the answers you need to these questions. The bottom line? You should accept the rental car insurance if there are any gaps in coverage with your personal policy.
As you can see in the table above, every coverage that the rental car company is offering has an equivalent coverage within your own car, renters or homeowners insurance policies, provided you carry all of these coverages already. Make sure to confirm with your insurance company, though — state minimum coverage will not cut it.
Further, if you do get into an accident in the rental car, you will have to file a claim with your insurance company, subjecting you to out-of-pocket deductibles and likely, an increased monthly rate going forward.
Rental car insurance alternative: your credit card
If your car insurance policy doesn’t provide coverage or you simply don’t want to speak with your company, there's a chance you may have rental car insurance through your credit card. Many credit cards include rental car insurance as a perk. Just like using your personal policy, this comes with some caveats:
- Some credit card companies offer coverage only as secondary rental car insurance. The coverage would only kick in after your current coverage has been exhausted. In some cases, credit card rental car insurance only covers your “loss of use” fees: the amount you are charged for the time the rental vehicle spends in the repair shop, unable to be rented out.
- You might need to use that specific credit card to pay for the rental.
- You’ll need to entirely decline the rental company’s CDW or LDW.
- The credit cardholder might need to be the primary driver of the car.
Should I get rental car insurance?
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You are conscious of your driving record or insurance score— filing a claim with the rental car company will not impact car insurance rates.
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You have liability-only car insurance and/or do not carry renters or homeowners coverage.
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You're only insured under a commercial car insurance policy.
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You don't want to risk paying a high deductible.
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Your personal car insurance policy is "full coverage" — rental car insurance would be a redundant expense if your personal policy provides equivalent coverage.
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Your credit card company offers rental car coverage.
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You also have a homeowners or renters insurance policy that covers personal belongings.
Rental car alternative: Car-sharing services
A newer option in the rental car market, car-sharing services offer rentals for short periods, for as little as an hour at a time. Companies in the car-sharing space include Zipcar and Turo. The key differences from traditional car sharing include:
- A fully self-service model for reservation, pickup and return
- Vehicles available to rent by the minute, hour, or day
- Monthly membership fees may apply
- Fuel costs are often included in rates
You may opt for this type of service if you're looking for a short-term rental. Or, many people who don't own a vehicle subscribe to Zipcar, choosing to pay the membership and rental fees over a traditional car payment. Insurance is included for Zipcar members.[1]
Turo differs slighty, as the cars available to rent are owned by an individual rather than a corporation (think Airbnb for cars). As a renter, you may choose to accept or decline Turo's insurance based on the same criteria outlined in this article. Learn more about Turo car insurance.
With both of these rental car options, always consult the insurance coverage options carefully. These companies often offer a variety of protection packages, with some protection included automatically and further coverage added with more comprehensive packages. You always have the option to contact the car sharing company or your insurance agent to verify coverage.
What about rental reimbursment coverage?
It's easy to confuse rental car coverage with rental reimbursement coverage — after all, they both cover rental cars, right? The key difference is this: rental reimbursment coverage, an optional add-on to a personal car insurance policy, kicks in only if your personal vehicle is rendered inoperable due to a covered loss. Rental reimbursement covers the rental car you need to drive around while your car is in the shop. It’s important to remember that rental reimbursement never covers a rental car used for leisure or while your own is undergoing routine maintenance.
Rental reimbursement coverage defined
Rental reimbursement coverage pays for temporary use of a rental vehicle to ensure you have transportation after a covered loss and subsequent claim. Insurance companies set limits on how long you may drive the rental car — typically per day and claim — while your own vehicle is being repaired. To obtain rental reimbursement coverage, you must first carry collision and comprehensive coverages on your car insurance policy. This insurance coverage follows a comprehensive or collision claim.
What does rental reimbursement cover?
If you need to use this coverage, the insurance company will provide a rental vehicle of like kind and model as long as the cost is agreeable with what your policy is willing to pay. If your SUV is being repaired, expect a similar make and model. Policyholders can typically choose any rental car agency but most insurance companies have affiliate partnerships with specific rental companies; this allows for a more seamless process so that you don’t have to file for a reimbursement. Simply pick up and drop off the rental car within the time period specified on your policy.
You will be held responsible for the cost of gas and any deposits or fees charged by the rental car company for the duration of your rental period. If you select a rental agency of your choice, confirm that the daily rate is at or below your policy's rental reimbursement limit — when you file for reimbursement, this will be the maximum amount your insurer will reimburse, no matter the total cost of a rental car.
How rental reimbursement coverage works
How the claims process plays out when a rental car is needed after a car accident is typically fairly straightforward. Keep in mind your experience may vary depending on the circumstances of the claim.
If you’re at-fault
- File a claim with your insurance company to use your collision coverage.
- Get an estimate at a local mechanic or insurer-affiliated collision center.
- Drop off your vehicle and pick up the rental car.
- Return the rental when your car is repaired or you meet the coverage limit — whichever comes first.
If you’re not at-fault
- File a claim with the at-fault driver’s insurance company; if the other party is slow to respond, there are delays, or if you need an immediate rental vehicle, you may need to file a claim with your own insurance provider instead.
- Get an estimate at a local mechanic or insurer-affiliated collision center.
- Drop off your vehicle and pick up the rental car; save any receipts and documents provided by the car rental company.
- Return the rental when your car is repaired or you meet the coverage limit — whichever comes first.
- Submit a claim for reimbursement, if required by the insurance company.
Where to get rental car reimbursement coverage
Though it’s optional, rental reimbursement can be found at most insurance companies as it’s a popular coverage. When you finalize your auto insurance policy, you’ll have the opportunity to choose the daily limit allotted for rental car coverage.
Below are common limits from some top insurance providers.
| Insurance Company | Rental Reimbursement Maximum |
|---|---|
| Allstate | $30-$100 per day |
| GEICO | $35-$50 per day, $1,051-$1,501 per claim |
| Liberty Mutual | $30 per day |
| Nationwide | $30-$500 per day, $900-$7,500 per claim |
| Progressive | $30-$60 per day, $900-$1,800 per claim |
| State Farm | $25-$50 or 80% per day, $600-$1,500 per claim |
It is difficult to calculate exactly how much extra you’ll pay for rental reimbursement — every insurance company is different — but the coverage typically adds between $2 and $15 per month to your premium.
Do you need rental reimbursment coverage?
For those who can afford the extra premium to have rental reimbursement coverage, it’s a great way to get the most out of your insurance for extra peace of mind during the oft-stressful claims process. But if you’re wondering if this optional coverage is worth it, there are a few questions to think about:
If you have quite a busy schedule in which a car is integral in your daily routine — for instance, chauffeuring your children around — being without a vehicle would throw a wrench in your lifestyle. Rental reimbursement may come in handy especially if you drive often, which increases your chances of getting into an accident.
The cost of car rental varies by location. Rental reimbursement may not be worth it if it’s cheap to
If you can commute to work via public transportation, rental reimbursement may seem unnecessary. However, public transportation expenses are often included as part of this coverage.
Above all, additional coverage like rental reimbursement should be affordable for your financial situation. If you’re unhappy with what you’re paying for auto insurance, shopping around and comparing quotes are your best bet in finding a cheaper rate. Enter your ZIP code below and let The Zebra guide you to savings.
Rental car insurance: the verdict
While $30-a-day rental car insurance may not seem like a substantial investment, you could be overpaying by purchasing coverage you already have. Before renting a vehicle, review your policy information to see if rental car insurance is worth purchasing. Ask the important questions mentioned above to see what coverage — if any — applies, and be sure any coverage gaps are addressed.
Find auto insurance that covers you completely, even in a rental car.
Frequently asked questions: Rental car insurance
What is the basic insurance coverage Zipcar provides? Zipcar
Rental car insurance. Insurance Information Institute
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About The Zebra
The Zebra is not an insurance company. We publish data-backed, expert-reviewed resources to help consumers make more informed insurance decisions.
- The Zebra’s insurance content is written and reviewed for accuracy by licensed insurance agents.
- The Zebra’s insurance editorial content is not subject to review or alteration by insurance companies or partners.
- The Zebra’s editorial team operates independently of the company’s partnerships and commercialization interests, publishing unbiased information for consumer benefit.
- The auto insurance rates published on The Zebra’s pages are based on a comprehensive analysis of car insurance pricing data, evaluating more than 83 million insurance rates from across the United States.