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. Unless you carry very minimal liability insurance or no car insurance at all, your current car insurance probably extends to a rental car. Even if you don’t have your own auto insurance policy, more affordable rental car insurance alternatives exist.

Car insurance for a rental vehicle — table of contents:

1. What is it?
2. Is it required?
3. Alternatives to rental car insurance
4. What is rental reimbursement coverage?

What is rental car insurance coverage?

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:

Loss Damage Waiver (LDW):

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.

Supplementary Liability Protection:

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.

Rental Reimbursement Coverage:

Rental reimbursement is a coverage you can buy through your insurance company which reimburses you if you need a rental car after an accident. The total amount of coverage varies based on your policy. See our in-depth article for more information.

When do you need rental car insurance?

If you’re planning on renting a vehicle, the first thing you should do is call your current car insurance company and ask if your coverage extends to a rental car. While it’s not set in stone, many car insurance companies will extend your coverage to a rental vehicle if you carry comprehensive and collision coverage. This isn’t a hard and fast rule, so you should check with your current company before making any assumptions. You’ll also want to check the fine print of your coverage to determine the insurance you need for a rental car.

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 to 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 into 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?

While we can’t provide definitive answers to these questions, a representative of your company will be able to provide the answers you need.

Rental car insurance alternatives

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.

Rental car insurance overview

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.

What is rental reimbursement coverage?

Rental reimbursement is a popular coverage option offered by most car insurance companies as a supplement to an auto policy. Whether or not you’re at-fault in an accident, this coverage ensures you’re not stranded without a ride if your own car is rendered undrivable.

A claim must precede your rental reimbursement coverage, meaning you must file a claim before you can get coverage for a rental car. Continue reading to learn more about how rental reimbursement coverage works, along with a comparison of popular insurance companies’ rental car programs.

A guide to rental car reimbursement in auto insurance — table of contents:

1. Rental reimbursement coverage defined
2. How does rental reimbursement coverage work?
3. Rental reimbursement coverage from top insurance companies
4. Is rental reimbursement coverage worth it?

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. It’s important to remember that rental reimbursement never covers a rental car used for leisure or while your own is undergoing routine maintenance.

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

1. File a claim with your insurance company to use your collision coverage.
2. Get an estimate at a local mechanic or insurer-affiliated collision center.
3. Drop off your vehicle and pick up the rental car.
4. Return the rental when your car is repaired or you meet the coverage limit — whichever comes first.
   
   

If you’re not at-fault

1. 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.
2. Get an estimate at a local mechanic or insurer-affiliated collision center.
3. Drop off your vehicle and pick up the rental car; save any receipts and documents provided by the car rental company.
4. Return the rental when your car is repaired or you meet the coverage limit — whichever comes first.
5. 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.

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 car coverage?

For those who can afford the extra premium to have rental car 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:

• How reliant are you on your vehicle? If you have quite the 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.
• How expensive are rental cars in your area? The cost of car rental varies by location. Rental reimbursement may not be worth it if it’s cheap to rent a car on your own, or if you can get by using rideshare services.
• Do you have access to adequate public transportation? 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.