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Do You Need Insurance to Rent a Car?

By April 7, 2021September 29th, 2021Automobile

The convenience of renting a car often begins in confusion when the salesperson at the rental counter asks if you want to purchase rental car insurance. Inexperienced travelers can be caught off-guard by the question and choose the seemingly safer route by declining it.

But do you need this rather expensive rental car insurance coverage? The answer to this question is usually not a simple yes or no, but a definite “it depends.” You need to know if you are already protected elsewhere—your personal auto policy or your credit card, for instance—before you decide.

Here is what you need to know about rental car insurance, so that you are not caught unaware at the rental office:

Does my personal auto insurance cover rental cars?

Here’s the deal when it comes to car insurance for rental cars: if you already own or lease a car that is insured, you probably don’t need to purchase the liability portion from the rental car company. Review your auto insurance policy or check with your agent for verification. Most policies will extend the liability coverage to any vehicle you rent. However, this does not apply if you do not own or lease any autos under your personal name.

The same liability limits that are on your personal auto policy will apply to your rental car. Your liability coverage will protect you if you injure someone or damage their property while using the rental. The comprehensive and physical damage insurance of your personal auto will not cover any collision, vandalism or theft to the rental.

What about Comprehensive and physical damage? Do I need a Loss Damage Waiver (LDW)?

Your personal auto insurance does not cover the comprehensive and physical damage or LDW if you rent a car. This coverage can be provided through your credit card company, but only if you have subscribed for it and paid an annual fee. The subscription makes the coverage primary; otherwise, it is excess depending on the credit card used. In addition, they have limits on the value of the car you rent and other restrictions. Read the fine print!

What about renting a car abroad?

If you are renting a car abroad, check with your credit card company on whether they will cover physical damage and comprehensive coverage outside the US and its territories. In this case, it would make sense to purchase the coverage from the rental car company and avoid hassles in foreign countries.

What is the difference between the LDW coverage from the car rental company and the credit card?

The rental agreement that you sign makes you liable for the following:

  • The full value of the vehicle.
  • Towing and storage
  • Loss of use
  • Administrative fees
  • Diminished value

None of the above are guaranteed to be covered by a credit card company, but they are 100% covered by the LDW provided by the car rental company. If you get into an accident, the rental car company will charge you for the time that the car was not rented, including an administrative fee and determining the full value of the vehicle. The “full value” may even be the price of buying a new one!

So what should I do?

Usually, you are better off buying the coverage from the rental car company. All of the hidden costs in the contract will be covered by them without subjecting you to any deductibles. The additional cost of $30 per day is worth it. Most of us already have a $500 to $1,000 deductible on our policies and it will not take much to have a claim that exceeds $3,000 based on all the hidden costs embedded in the rental agreement.

Do you have any other questions about rental car insurance?

Talk to a White Cloud Insurance expert today for the best rental car insurance advice! Their experienced Auto Insurance Team has the answers to keep you protected the next time that you need to rent a vehicle. They can also advise you on the auto insurance coverage that is right for you and your family. Simply fill out our contact form, call us at 305-556-1488, or send us a message at