Knowing Your Coverage - Rental Cars

The holidays are upon us, and with that, brings road trips, long-distance travel, and the possibility of needing to rent a vehicle. Imagine this, you and your family decide to take a cross-country Christmas trip which includes flights and that dreaded airport rental car experience. You finally make it to the counter after traversing the long lines, and the rental car employee asks you the question you were hoping to avoid, “will you be purchasing our rental car insurance coverage today”. You freeze in a panic because truthfully, you’ve never taken the time to understand if it’s necessary or not. 

The answer to this question can be complex, and it often depends on your individual insurance policy. This is where an independent insurance agent can be a valuable resource. An independent insurance agent is a licensed professional who works with multiple insurance companies to find the best coverage and rates for their clients. They can help you navigate the complexities of rental car insurance and determine whether you need to purchase additional coverage when asked.

Although standard auto insurance policies may extend to rented vehicles, you should never assume you are covered. Picking up the phone and calling your friendly independent insurance agent may save you some major headaches later. They will gladly assist in examining your insurance policies, for example, checking to see if you have liability, collision, and/or comprehensive car insurance. Liability, collision, and comprehensive insurance are the three main coverage options when purchasing auto insurance. Although having all three coverages is not always required, it does provide the most robust coverage and protection in the event of an accident.

  • Liability Insurance: provides coverage if you damage or injure another person or their personal property.
  • Collision Insurance: provides coverage if your vehicle is involved in a collision, either with another vehicle or object.
  • Comprehensive Insurance: provides coverage if your car is damaged by a variety of exposures such as theft, vandalism, or natural disasters.

In many cases, your independent insurance agent can help explore if your auto policy will cover administrative fees, loss of use, or towing charges. This can be helpful in the event of your rental car being lost, stolen, or damaged. Furthermore, they will likely review your renters' or homeowners’ policy as well to see if there is coverage extended in the event your personal belongings are lost or damaged while traveling. Your homeowners or renters’ policy covers your personal belongings from theft, fire, or vandalism within your home and sometimes provides off-premises coverage that can extend coverage to outside of your residence. So, imagine you come out of a restaurant after enjoying a beautiful and peaceful dinner with friends and family, only to find your rental car was broken into—the window shattered, and your personal belongings gone. Your homeowners or renters’ policy may help cover a percentage of your losses—always check with your agent to see what your personal renters or homeowners’ policy will cover.

It’s important to note that rental car insurance purchased directly from the rental company is often intended to supplement the insurance you already carry. Rental car companies generally offer four different coverage options:

  1. Supplemental liability insurance: most rental car companies require you to have the minimum liability coverage required by the state you are renting your vehicle in. Sometimes, you do not have adequate coverage, so they may require you to buy supplemental liability insurance. If you generally carry a high liability limit, for example, $250/$500, you likely will NOT need this additional protection.
  2. Loss damage waiver (LDW)/Collision damage waiver (CDW): This is not insurance, but rather coverage they are offering by way of a document that you sign, alleviating your financial responsibility should your rental vehicle be damaged or stolen. This also encompasses loss of use coverage if the rental company charges you for time the damaged car could not be used while being repaired. It’s important to note that the LDW portion may become void if the incident that caused the damage was due to reckless behavior, speeding, or the rental vehicle being driven on unpaved roads.
  3. Personal accident insurance: This is meant to cover the driver and any passengers within the rented vehicle for any medical bills caused by an auto accident. This coverage may be useful if you do not carry health insurance or personal injury protection insurance.
  4. Personal effects coverage: This covers any personal belongings that are stolen from your rental vehicle. Remember, if you already have renters or homeowners’ insurance, this may already be covered under your policy.

Overall, the coverage offered by rental car companies are oftentimes coverages you already pay for and have through your personal home and auto policies. To avoid paying for coverage you already have, review your policy with your agent before renting a vehicle.

One last avenue we may also suggest checking is if your credit card provider extends any type of rental car coverage. Many reputable credit card companies offer rental car insurance to their customers as a perk. To utilize this secondary form of coverage, they advise you to put the total amount of the rental car purchase on your credit card. When doing so, many credit card companies will require you to deny any insurance offered by the rental car company to access their coverage. In the event your rental car is in a covered incident, your credit card company may help cover costs of damage or theft up to a certain dollar amount. In short, call your credit card company, let them know you plan to rent a vehicle, and let them walk you through the coverage options they offer as well. In general, credit card rental insurance is classified as a secondary form of coverage so they may ask that you lean on your personal auto, homeowners, or rental coverage first.

As you can see, an independent insurance agent can be a valuable resource when it comes to understanding rental car coverage. They can help you assess your insurance needs, review your policy, and explore other options for coverage. An independent agent can also help you understand the risks associated with declining rental car coverage. If you're involved in an accident while driving a rental car, you could be responsible for paying for damages and other costs out of pocket. An independent agent can help you weigh the potential costs of purchasing additional coverage against the potential costs of being uninsured. If you're planning to rent a car soon, consider reaching out to an independent agent to help you navigate the complexities of rental car insurance. If you do not currently work with an independent insurance agent and would like to experience the value firsthand, please visit us at

Written by Kellie Eastham - Vice President of Personal Lines at Dimond Bros. Insurance

This article is not intended to be exhaustive, nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.