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Last updated: January 13, 2025

Tips for Choosing a Safe Rental Car and Insurance When Traveling Abroad

Driving in another country can make navigating insurance more complicated, but it's just as important to be adequately covered while traveling as it is at home.

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Maya Afilalo Headshot MBA Photo
Maya Afilalo
Managing Editor & Industry Analyst

Renting a car abroad offers an exciting opportunity to explore a new country at your own pace. However, ensuring you’re adequately insured in case of an accident or damage is essential for a worry-free experience. Navigating insurance options can feel daunting, especially when dealing with unfamiliar rules and potential language barriers. With a bit of research and preparation, you can ensure your rental experience is hassle-free and you’re properly insured.
Here are some key tips for choosing a safe rental car and securing the right insurance when traveling abroad.

Do You Need Insurance When Traveling Abroad?

Generally speaking, if you’re driving abroad, you should have insurance coverage similar to what you have at home. If you get into an accident or the rental car is otherwise damaged, you won’t want to be financially responsible for repairs. The type of rental car insurance you need will depend on several factors, including what coverage you already have and what the rental company offers.

Comparison of Rental Car Insurance Options

Insurance Option Average Cost Coverage Levels Best Situations for Use Limitations
Credit Card Insurance Typically free (as a perk of the card) Covers collision damage, theft, and sometimes loss-of-use fees. Some cards offer primary coverage. Best for travelers with eligible credit cards and those wanting cost-effective, hassle-free coverage Coverage varies by card; may exclude specific countries, vehicle types, or rental durations
Rental Agency Insurance $10–$30/day for CDW/LDW, $5–$15/day for liability Collision Damage Waiver (CDW) and Loss Damage Waiver (LDW) protect against vehicle damage and theft. Liability insurance covers damages to others. Ideal for peace of mind when other options are insufficient, or in high-risk driving locations Expensive; coverage overlaps with other options in some cases, and may have high excess charges
Third-Party Insurance $5–$15/day or $50–$200/year (annual policies) Collision damage, theft protection, liability coverage, and often roadside assistance Great for frequent travelers or those seeking cost-effective alternatives to rental agency insurance May require up-front payment for damages and reimbursement later; not always accepted by rental companies
Personal Auto Insurance Included in your existing premium May cover damage to rental cars (collision/comprehensive) and liability in Canada. Limited coverage in other international locations Best if your policy extends abroad (check with your insurer) and you want to avoid purchasing extra coverage Usually excludes liability outside the U.S. and Canada; requires filing a claim through your policy
Travel Insurance Add-Ons $50–$200 per trip, depending on the provider and length of coverage May include collision damage, theft, and liability coverage. Also covers other travel-related incidents (e.g., trip delays) Useful for travelers who want comprehensive trip protection beyond just rental car coverage Limited to the trip duration and may exclude certain vehicle types or high-value cars

Know What Coverage You May Already Have

While you do need car insurance to cover you while renting a car abroad, you don’t necessarily need to purchase it from the rental company. Some credit cards, such as the Chase Sapphire Preferred Card or United Explorer Card, offer rental car insurance as a perk. This coverage may include both collision damage and theft protection, but the details vary depending on the card.

  • Primary Coverage: Some credit cards offer primary coverage, meaning you won’t need to involve your personal insurance company.
  • Secondary Coverage: Other cards provide secondary coverage, which means they will kick in after your personal insurance covers the claim.

GOOD TO KNOW:

Double-check the terms and conditions if you plan to use credit card coverage. Some cards may exclude certain countries or vehicle types, so confirming that your destination is covered is vital.

If you have a full-coverage auto insurance policy in the United States, it may provide some level of coverage for rental cars abroad. But there are limitations to consider. Liability coverage from your U.S. policy generally doesn’t extend internationally, except in Canada, depending on your insurer. However, comprehensive and collision coverage might apply to damage or theft of the rental car itself, provided the rental is within your policy’s terms and you’re using the car for personal (not commercial) purposes. Before traveling, check with your insurer to confirm whether your coverage applies abroad, and ask about any exclusions or additional steps, such as notifying them of international travel.

Understand What Coverage Is Offered by the Rental Company

Most car rental companies include basic liability coverage in the rental cost. However, they may also offer a collision damage waiver, meaning that the company will waive any costs you might otherwise be responsible for if your rental is damaged during your rental period. This is similar to collision coverage.

These waivers are typically priced per day and can, therefore, add a lot to your rental bill, depending on the duration of your rental. However, they avoid the hassle of having to file an insurance claim — whether through your insurance company or credit card — and waiting for reimbursement.

TIP:

If you already have coverage through a credit card or travel insurance, check whether the rental company’s waiver is necessary. Sometimes the waiver is redundant if you’re already covered.

Research Alternative Insurance Options

Purchasing insurance from the rental company is usually the most expensive option, especially for tourists. If you’d like a more affordable alternative, consider purchasing insurance through a third-party travel insurance provider like Allianz.

  • Single-Trip or Annual Policies: Many third-party insurance providers offer policies for a single trip or annual coverage, if you travel frequently.
  • Compare Coverage and Costs: Always get quotes from multiple providers to ensure you’re getting the best deal.

How Does Car Rental Insurance Work in Other Countries?

Insurance requirements vary by country, and each destination may have different rules regarding collision damage waivers or liability limits. For instance, some countries require foreign renters to sign a collision damage waiver, while others may prohibit third-party insurance.

Before you travel, research the specific rental car laws in the country you’re visiting. Some countries may already include higher liability coverage in the rental price, while others might have lower limits. You may need to purchase additional liability insurance to meet your preferences or local requirements.

How to Choose a Rental Company and Car

Research is your friend when it comes to selecting the best car rental company abroad. Depending on which country you’re traveling to, most rental companies will likely be familiar to you. For example, well-known brands such as Avis, Hertz, and Enterprise operate in countries around the world and are generally a safe bet. You may have your own preferences based on previous experiences, so you can also take that into account when choosing a company.

In addition to these chains, local rental companies are also an option. However, if you prefer to rent from a local company, read reviews and recommendations from other travelers. Travel forums such as Lonely Planet, TripAdvisor, and Reddit are great places to gather information.

Choosing the Right Car

Manual transmission cars are the default in many countries, and the cheapest rentals are often stick shifts. If you’re not comfortable driving a manual, make sure to specifically request an automatic transmission.

In addition, before renting a car while traveling, familiarize yourself with the local driving norms and laws where you’re traveling. For example, in the United Kingdom, drivers drive on the left side of the road, which can take some getting used to. If you’re uncomfortable with this, you may want to consider using public transportation instead.

Also, think about your personal needs. If you’re traveling with children, large luggage, or need extra space, an SUV or larger vehicle may be the best option.

TIP:

Book your car rental in advance to secure the best rates, especially if you’re traveling to a popular destination. This will help avoid any last-minute surprises at the rental counter, particularly in countries where there’s a language barrier.

International Driver's Licenses

In most cases, your U.S. driver’s license will suffice for renting a car abroad. However, some countries require an International Driver’s Permit (IDP) in addition to your U.S. license. The IDP translates your license into multiple languages, which can be helpful if local authorities stop you. Check the driving requirements for the country you’ll be visiting to determine if an IDP is necessary. You can get an international driver’s license at AAA, even if you’re not a member.

Recap

Renting a car abroad can be a convenient and enjoyable way to explore a new country, but ensuring you have the proper insurance coverage is important. Before you rent, check your existing insurance options through credit cards or travel insurance, and understand what the rental company includes in their standard package. Research country-specific laws and be mindful of local driving norms to make your experience as smooth as possible.

Frequently Asked Questions

Does travel insurance cover rental car damage?

Yes, many travel insurance policies cover rental car damage via collision damage insurance. Be sure to check the specifics of any policy you’re looking to purchase to ensure it has the coverage you need.

What is the best rental car insurance?

The best rental car insurance will depend on the coverage you’re looking for and how convenient you want the process to be. You may have coverage included with your credit card, or you may choose to purchase coverage directly from the car rental company or a third-party insurance company like Allianz.

What is the difference between CDW and LDW?

A Collision Damage Waiver (CDW) covers damage to the rental car from collisions but usually excludes theft or vandalism. A Loss Damage Waiver (LDW) offers broader protection, covering both collision damage and loss of the vehicle, such as theft, and may also include fees like loss-of-use charges. LDW is essentially a more comprehensive option compared to CDW.

Do all Visa credit cards have car rental insurance?

No, not all Visa credit cards offer car rental insurance. If you’re relying on this coverage, check the specific card benefits to confirm if rental car insurance is included, and if so, under what conditions. Some popular Visa credit cards that offer rental car insurance include:

  • Chase Sapphire Preferred: This card provides primary rental car insurance coverage, meaning you can file a claim without involving your personal auto insurance. It covers collision damage and theft for most rental vehicles.
  • Chase Sapphire Reserve: Offers primary rental car insurance with higher coverage limits, including reimbursement for up to $75,000 in case of theft or collision damage.
  • United Explorer Card: Provides primary rental car insurance when renting for business purposes or outside your country of residence, covering collision damage and theft.
  • Ink Business Preferred Credit Card: Designed for business owners, this card offers primary rental car insurance when renting for business purposes, covering collision damage and theft.
  • Wells Fargo Autograph Card: This card provides rental car insurance coverage, though it’s typically secondary, meaning it covers expenses not paid by your personal auto insurance.
Maya Afilalo Headshot MBA Photo
Written by:Maya Afilalo
Managing Editor & Industry Analyst
Maya Afilalo holds over 10 years of professional experience in writing, communications, and research, which she leverages to provide accurate and reliable information to empower consumers. In addition to overseeing content production, Maya has herself written many articles on auto insurance costs, company comparisons, state laws and requirements, and other topics. She is committed to helping consumers navigate the complex world of car insurance with clarity and confidence. Maya holds a bachelor’s degree from the University of Pennsylvania and a master’s from North Carolina State University.

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