When hiring a vehicle, it can be difficult to understand the insurance rental companies offer, and how it may intersect with your personal car insurance or credit card coverage.
In our complete guide, we'll break down the types of insurance rental car companies automatically include in the cost of your hire car, and what else you need to know to be fully protected.
Key takeaways
- Your rental vehicle may come with some level of insurance automatically included, such as third party liability coverage.
- Rental companies also offer a wide range of additional policies to purchase, such as damage protection through Collision Damage Waivers.
- You have other options to cover your rental vehicle in a more straightforward and comprehensive way, including external rental insurers like RentalCover.
Do rental cars include insurance?
Rental cars may come with some level of insurance automatically included. Here's what you need to know.
Do rental cars come with theft and damage insurance?
Theft and damage insurance is generally not automatically included when you rent a vehicle. This coverage is usually offered by policies known as Collision Damage Waivers (CDW) or Loss Damage Waivers (LDW).
Rental car companies will often give you a "hard sell" for these policies at the rental desk. They may even refuse to rent the vehicle to you if you don’t purchase their CDW or LDW, and also don’t have equivalent protection.
Do rental cars come with liability insurance?
Third party liability insurance provides cover for injuries to third parties and damage to their property. Rental car companies may automatically include liability insurance in the daily cost of their rental vehicle. However, this is not the case in all states.
If this cover is not automatically included by your rental car company, you'll be responsible for meeting the legal minimum level of third party liability insurance yourself. This could involve coverage from your personal auto insurance, an external provider like RentalCover, or purchasing the rental company's Supplemental Liability Insurance.
Optional additional rental car insurance
In addition to a basic level of liability insurance that may be included when hiring a rental vehicle, your car rental company may offer additional policies including:
- Super Collision Damage Waiver: The basic CDW your rental company offers is likely to contain many exclusions for types of damage and administrative fees. A Super Collision Damage Waiver is a more expensive and comprehensive policy that covers some of these exclusions. They also usually reduce your deductible (the amount you pay out-of-pocket for a claim) to zero.
- Supplemental Liability Insurance: Supplemental Liability Insurance offers an increased level of liability coverage, often up to $1,000,000.
- Personal Accident Insurance: Personal Accident Insurance offers cover for the drivers of a rental car and their passengers for accidental medical costs, emergency care and accidental death during a rental trip.
Personal Effects Insurance: Personal Effects Insurance offers cover for personal items if they are damaged or stolen in a rental vehicle. It can cover items like clothes, electronics and jewelry.
Who else offers rental car insurance?
It's important to remember that your car rental company is far from your only option for purchasing rental vehicle insurance. Here are a few alternatives you should keep in mind.
RentalCover
At RentalCover, our entire focus is rental vehicle insurance. We offer policies that are more comprehensive than car rental companies, while also being 50% cheaper.†
Our policies cover items rental companies commonly exclude like:
- Multi-vehicle accidents.
- Full fire, theft and vandalism cover.
- Towing.
- Lockouts.
- Car key cover.
- Windscreens.
- Headlights.
- Tires.
- Underbody damage.
Plus, you'll have no deductible to pay in the event of a claim. Get a quote and travel with confidence
Credit cards
Many credit cards also offer rental vehicle insurance. This cover is usually secondary, meaning it won't "kick in" until a primary insurance policy, like personal auto insurance, takes effect.
Using secondary coverage can result in long waiting periods in which you are out of pocket, as you have to go through the process of filing claims with your car rental company, personal auto insurance and credit card company.
Credit card insurance can also be primary, particularly if your personal auto insurance policy doesn't offer rental vehicle cover internationally.
Credit card coverage can also have extensive exclusions, including underbody damage, headlight damage, towing costs and more.
Personal auto insurance
In Canada and the United States, your personal auto insurance often extends to providing some coverage for your rental vehicle. Check your policy documents to confirm the coverage you have.
Personal auto policies can extend to providing coverage in the following areas:
- Liability coverage
- Vehicle damage
- Theft
Usually, the coverage limits and deductibles you have for your own car will match your rental vehicle. This could be problematic if your rental car is worth significantly more than your regular drive.
Travel insurance
Some level of rental car insurance can also be an inclusion for some travel insurance policies. This could include cover for your rental car's deductible.
This cover can have many exclusions and may be capped at a price well below what rental companies charge. You could also find yourself facing long waiting periods for reimbursement from your travel insurer.
Do I need rental car insurance when hiring a car?
Yes, some level of cover is legally required before you can hit the road in a rental car in Canada and the United States. This varies from province to province and state to state.
Some level of third party liability coverage is necessary before you are allowed to drive. This may be automatically provided by your car rental company, or the responsibility might fall on you to provide it yourself.
Your rental company may also demand you purchase a Collision Damage Waiver, or possess equivalent cover such as a RentalCover policy.
Get superior coverage with RentalCover
Want a simple approach to rental car insurance that offers real protection? Our Collision Damage Waiver policy offers more substantial cover than what rental companies offer, at 50% of the cost.† This means you can say "no" to hard sells at the rental desk.
We also have a Supplemental Liability Insurance product with liability cover up to $1,000,000. Purchasing these policies from RentalCover means you can be confident that you're meeting all the legal requirements for car rental insurance while enjoying true peace of mind.
Hear from our rental car insurance expert
"Your rental vehicle may come with some level of insurance automatically included. However, it's important to carefully review the protection it actually offers.
Purchasing a policy from RentalCover can offer significantly better cover at a more affordable price. Make sure to weigh all your options before making a decision and kicking off your holiday."
Frequently asked questions
Are the rules for rental vehicle insurance the same around the United States?
There are some differences in legal requirements for rental vehicle insurance around the United States. For example, different states have different minimum requirements for liability insurance.
New York is a significant outlier in terms of rental vehicle rules. You can read about how things work in New York here.
What is a Collision Damage Waiver (CDW)?
A Collision Damage Waiver (or Loss Damage Waiver) is a type of car insurance that reduces your liability for damages to a rental vehicle if it is damaged or stolen.
A CDW is a waiver that transfers the risk of financial loss for damages like towing and administrative fees to the rental company. CDWs often come with high excess costs.
CDWs are typically offered by your rental company. However, you can also purchase insurance from an external insurance provider like RentalCover, allowing you to reject the CDW offered by your rental company.
What is secondary rental car insurance?
Secondary rental car insurance refers to coverage that comes into effect after your "primary coverage". It provides additional cover on top of this primary coverage.
In the case of credit card rental car insurance, your primary insurance is generally your personal auto insurance. So, your credit card rental car insurance will come into effect after your primary insurance.