Guide to Rental Car Insurance Coverage

First, let’s differentiate between insurance for a rental car (rental car insurance) and rental car coverage. While these terms sound similar, they’re actually two different things. One is your existing personal auto insurance, which may include rental car reimbursement, and the other is insurance from the rental company.

What Is Rental Car Coverage?

Rental car coverage is optional coverage from your personal auto insurance policy that pays for renting a car while your vehicle is being repaired under a covered claim. This differs from the coverage for a car you are renting and driving in a non-repair situation. This coverage must be added, as minimum coverage does not include rental car reimbursement.

If you added this coverage and your car is being repaired under a covered claim, your insurer will pay for your rental car. In other words, you won’t have to pay a company like Enterprise out of pocket in order to rent a car.

What is Rental Car Insurance?

Rental car insurance is the optional insurance an employee at a rental counter offers you when you rent a car. However, you should know you are not obligated to purchase any additional rental car coverage from the rental company.

If you have collision or comprehensive coverage, it extends to rental cars and your own vehicle. Additionally, some credit cards, like those from Chase, Capital One, and American Express, offer rental car insurance.

Consider rental car insurance if:

• You don’t have a car insurance policy or another source of coverage (e.g., credit card)
• Your current policy lacks comprehensive and collision coverage
• You’re insured only under a commercial policy
• You want to avoid paying a high deductible
• You’re renting abroad, excluding Canada

If you already have comprehensive coverage, purchasing additional insurance at the rental counter will only duplicate your existing coverage.

What Rental Car Insurance Covers

Rental car insurance from the rental company can cover:

• Bodily injury liability
• Property damage liability
• Collision coverage
• Comprehensive coverage
• Medical bills coverage
• Roadside assistance
• Loss of use of the car (reimbursing the rental company for the revenue lost while the car was being repaired)
• Personal items stolen from the car in an auto burglary

If you add additional drivers to the rental agreement, your rental car insurance will also cover them.

To avoid making a financial decision on the spot, before you rent your car, familiarize yourself with what the rental company will offer you in terms of coverage. These include:

• Liability coverage: Liability coverage includes bodily injury and property damage liability insurance.
• Collision/loss damage waiver/damage waiver (LDW, CDW, or DW): The DW isn’t technically insurance; it’s a waiver that states that if you damage the rental car, it could help cover the cost of the repairs.

  If you don’t have DW or collision/comprehensive coverage and damage the rental car, you’ll have to pay for repairs out of pocket. Additionally, the rental company could charge you for loss of use, which is the revenue it lost while the car was being repaired.

On average, rental insurance costs $40 a day, ranging from $11 at Allianz to $56 at Hertz and Rental Cover. Most rental car companies don’t list the costs of these add-ons, and prices differ by location and vehicle type.

Young drivers can rent cars, but fees ranging from $19 to $84 a day, with an average of about $36 per day, apply for those under 25. Here’s a summary of minimum ages and fees:

The most expensive place for drivers 18 to 20 years old to rent cars is New York, with an $84 daily addition from Avis, in particular.

Don’t feel pressured at the rental counter. If you already have collision and comprehensive coverage, buying add-ons is unnecessary and expensive. However, if you lack auto insurance or other types of duplicate insurance, the add-ons could be worth it, especially if you damage your rental car.

To give yourself peace of mind, check with your current insurance policies and credit card terms to see if you’re already covered and check out the best auto insurance for rentals to see our top picks.