Rental car insurance: Do you need it to rent a car?

By Allstate

Last updated: February 2024

For some drivers, rental car insurance is a necessity. For others, it's a redundant expense. But how do you know which category you're in?

Before you rent a car, it's worth reviewing the coverage on your personal car insurance policy. In some cases, the coverage you have on your own car extends to a rental car. In other words, buying rental car insurance coverage may duplicate what you already pay for.

The extra cost of the rental company's coverage might make sense in a few cases, however. For that reason, it's important to understand what your personal auto insurance covers, and what the rental agency is offering.

What is rental car insurance?

Rental car insurance is typically offered by the rental car company but is not required. And depending on your personal insurance and coverage offered by your credit card company, you may not need extra coverage offered by the rental car company.

quality auto coverage starts here

When you drive with quality coverage, you drive with peace of mind. Allstate auto insurance can help you stay protected for wherever the road takes you.

Does my personal car insurance cover rental cars?

If you have a personal car insurance policy, it includes liability coverage and any additional coverage you've opted for, such as comprehensive or collision. If you drive a rental car for personal use, you may have coverage under your personal car insurance policy. The coverage limits and deductibles on your personal policy also apply to your use of a rental car.

  • Liability coverage helps pay for another person's medical bills or damage to another person's property if you cause an accident in your vehicle (or your rental vehicle). In some states, damage to the rental car must be paid under property damage liability coverage.
  • Comprehensive coverage helps pay to repair your vehicle (or your rental car) if it's damaged by a covered peril, such as theft, wind, fire or natural disasters. Your comprehensive coverage's deductible will apply.
  • Collision coverage helps pay to repair your vehicle (or your rental car) if it's damaged when you collide with another vehicle or object, such as a fence or a tree. Your collision coverage's deductible will apply.

Does my credit card have rental car coverage?

In addition to your auto insurance, certain credit cards offer extra insurance if you pay for a car rental using that card, according to the Insurance Information Institute (III). If you have extra rental car insurance through a credit-card issuer, call the toll-free number on the back of your card and have them explain your options in detail before you reserve your car.

For example, if your credit card provides collision coverage for rental cars, then you might decide not to purchase that coverage from the car rental agency. The card issuer's insurance is typically "secondary," according to the III. That means it may pay your deductible and expenses that exceed what your primary insurance company will pay.

Forbes says some credit card providers may exclude coverage for certain types of rental vehicles, such as:

  • Luxury vehicles
  • Motorhomes
  • Trucks
  • Motorcycles

Be sure to check your benefits before you rent.

Do you need insurance to rent a car?

Remember, rental car insurance is not required by law and may already be covered by your personal car insurance. You do, however, need some sort of liability insurance to legally drive in most states. Check with your insurer to see if your personal auto policy extends to rental cars. It's worth noting, too, that many auto policies will cover your rental car if your personal vehicle is in the shop due to a covered accident, like a collision.

When is rental car insurance coverage a good idea?

If you don't currently have insurance, you'll need to at least buy liability coverage from the rental company before you hit the road. That's because liability coverage for all drivers is required by law in most states.

If any of the following scenarios apply, the extra protection provided by rental insurance is worth considering.

  • Your current policy doesn't have comprehensive and collision coverage
  • You're only insured under a commercial car insurance policy
  • You don't want to risk paying a high deductible

And if you're driving abroad (apart from Canada), your current car insurance probably won't cover you. Check your specific car insurance policy to find out.

What are the different rental car insurance options?

Rental car agencies typically break out extra rental car insurance offerings into four sections, according to the III.

  • Liability coverage
  • Collision/loss damage waiver
  • Personal effects coverage
  • Personal accident coverage

Liability coverage

Liability coverage is intended to help protect you if you injure someone or damage their property while driving. If you have sufficient liability coverage through your own auto insurance, you may not need to buy extra rental car liability insurance coverage from the agency. Your insurance provider can help you review your coverage, so you can set the liability limit that's right for you.

Collision/loss damage waiver

A collision/loss damage waiver (also known as an LDW or CDW) isn't technically insurance. If you damage the rental car, this waiver may help cover the cost of repairing it. The waiver typically does not cover damage from speeding or driving on unpaved roads.

A collision damage waiver may duplicate your existing coverage if you have collision and comprehensive coverage on your own car. However, if you've dropped collision or comprehensive coverage from your policy, and you don't purchase the waiver, you would likely have to pay out of pocket for damage you cause to the rental car.

Additionally, a rental agency could charge you for "loss of use" of the car (lost rental income) while the car is in the shop being repaired. Your own auto policy typically won't reimburse you for that. Be sure to read your car rental agreement carefully to clarify what kinds of charges you could incur if you were to damage the vehicle.

Personal effects coverage

Personal effects coverage may help cover your personal belongings, such as your laptop or clothing, if they're stolen from the rental car. If you have renters or homeowners insurance, the personal property coverage on that policy typically helps cover your personal items through what's known as "off-premises coverage."

Off-premise items are usually only covered up to a certain percentage of your personal property coverage. The deductible on your homeowners insurance or renters insurance will apply. Check with your insurance provider about the limits of your coverage.

Personal accident insurance

Personal accident insurance helps pay your and your passengers' medical bills, if you're injured in a rental car accident. The III says if you have health insurance, medical payments coverage or personal injury protection on your car insurance policy, you may already have coverage comparable to what the rental company offers.

Medical payments coverage and personal injury protection (not available in all states) may help pay for medical bills due to a covered car accident.

Supplemental liability protection (SLP)

Additionally, SLP is offered by rental vehicle companies and covers you for property damage or injuries you cause behind the wheel, according to Forbes. If, for example, you hit someone else's vehicle, SLP may help cover damages to that vehicle. While SLP is designed to offer an extra layer of protection beyond what your personal auto policy might offer, you may already have enough liability protection from your personal policy. Again, it's worth checking with your insurer.

How to evaluate your rental car insurance needs

Before you rent a car, take a few minutes to find out whether you have coverage through existing channels, such as your credit card company, health insurance plan, renters insurance or homeowners insurance. And be sure to check your personal car insurance coverage. Buying extra rental car insurance may not make financial sense if you already have the coverage you need.

Assess your existing coverage

Consult your existing policy to see if it offers coverage for rental vehicles or reach out to your insurer to help you go over your policy. In many cases, a personal auto policy will extend to rentals. You might also check with your credit card company to see if they also offer coverage, and what those coverage limits are.

Weigh the risks and benefits

If you've consulted your insurer, it makes it that much easier to know the risks and pitfalls of turning down rental car insurance. Another thing to consider, though, is the type of vehicle you are renting. If, for instance, you're renting a classic or exotic car, a normal auto policy may not cover it, given they're of higher value and need specialized coverage, like classic car insurance.

Tailor your insurance for the specific trip or use

If your personal auto policy does extend to rentals but its coverage limits fall short of adequately covering a specific vehicle, work with your insurer to increase those limits to assure you have the right coverage. Conversely, your credit card company may offer supplemental insurance – so again, check with them as well.

Rental car insurance tips

Research and compare insurance options

It's always important to shop around and compare auto insurance quotes before committing to an insurer. Compare not only prices and discounts but also protection. Additionally, choose the same coverages for each quote for a more accurate comparison. 

Read and understand policy terms

No matter the insurance policy – home, renters or auto – it's important to know what you're covered for, and what you're not covered for. If something is amiss, you can always update your coverage or see if you qualify for a discount you overlooked. Many insurers even allow you to do this online.

What to do in the event of an accident

If you get in an accident, don't panic. The Insurance Information Institute (III) recommends you take these steps after an accident:

  • Pull the vehicle over to a safe place
  • Assess possible injuries
  • Evaluate the damage on your car
  • Don't leave the scene of the accident before getting contact info
  • Collect as much information as possible (details, photos, etc.)
  • Alert the police and file an accident report
  • Get in touch with your insurer

No matter the size of the incident, it's always a good measure to contact your insurer.