Do you need insurance to rent a car?

Rental car insurance is not required as long as your current policy provides liability coverage for rentals. You may want rental car insurance to get additional coverage for your rental car.

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A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: Jul 22, 2021

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Here's what you need to know...

  • Your existing vehicle coverage usually covers rental cars.
  • Your existing coverage may not have the breadth of coverage you need for a rental car.
  • Some credit cards include rental insurance.

Can’t you just see yourself in that long line of motorists waiting at the local car rental company? It’s finally your turn, and the entire rental process takes minutes on end to finish. Then the agent asks you if you want insurance for your rental car.

Suddenly, you panic. You do need insurance for a rental car, don’t you? Or do you? Have you heard some conflicting information about rental insurance?

In truth, you are not obligated to buy that insurance, as long as you have your own liability coverage. What often happens is that the motorist fails to plan ahead and then decides, on an impulse, to take a regular insurance policy with the rental company.

After all, when you are standing at the car rental counter with a line behind you, you do feel a certain pressure. All the more so if you get a “smart” agent who informs you that driving without insurance is dangerous.

You make a hasty—and expensive—decision all the while never knowing the answer to the question. Don’t get pressured into making a snap decision that you may regret.

Do your research by continuing to read below and then do your own car insurance comparison and enter your zip code in the tool above.

Do you need insurance for a rental car?

Car keys on a form.

You will notice one thing—the insurance agent you deal with will never require you to purchase insurance for the car. Renting a car is not like driving an automobile on a regular basis.

You do have the right to refuse car insurance, on the basis of having your own liability insurance policy.

Most of the 50 U.S. states require that you have a minimum amount of liability coverage. In some cases, though not all, the liability policy you currently pay will protect you for a rental car.

It is important to note, however, that a lot of insurance companies are changing their policies and are not accommodating rental cars under their new terms.

Therefore, instead of presuming that you’re covered for liability, why not call the insurance company and verify before declining renter’s liability insurance?

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Credit Card Companies and Insurance Providers

Another issue is that of credit card companies. Some credit card companies have special terms that cover liability or damage waiver policies for rental cars. However, it is definitely a mistaken notion to assume that any Visa or MasterCard will cover your rental vehicle.

There are some variables to keep in mind that could affect your coverage:

  • Gold/Platinum cards – Some of these offer rental car protection.
  • Banks decide – Remember, though, that banks are the parties that issue the credit card and work out the terms. The credit card company itself has no universal standard regarding what insurance policies are covered.
  • Vastly varied programs – While some credit card programs offer free protection against theft or damages to a rental vehicle others do not. Some may only agree to pay partial damages; namely, whatever the traditional rental insurance company doesn’t cover.

The rental car insurance agency will verify that you have a license, credit card and possibly a liability insurance policy. They will then offer you a “collision damage waiver policy.

This is not technically an insurance plan, but an agreement that shifts liability for any damage that occurs to the vehicle from the renter to the rental company. This is a product that usually costs approximately $20 a day, perhaps more for an expensive rental vehicle.

It should be noted that just because you have a collision damage waiver does not mean you are totally scot-free if the car is destroyed.

If you were doing anything illegal or driving in a dangerous situation, the contract could be voided and you could still wind up owing for damages.

Should you purchase a collision damage waiver contract?

This, and other plans offered by rental companies are still optional to the driver:

  • Collision damage waiver – You are not obligated to take a collision damage waiver at any time, but if you do not, you will be responsible for paying all of the damages on the car, from minor scratches to major on-road collisions—even if they are not your fault.
  • Personal injury – You also have to consider personal accident insurance, which covers medical and ambulance bills for all of your passengers. This damage may or may not be covered by your healthcare plan.
  • Personal effects – This coverage protects you in the event of theft, but sometimes this coverage is included in a homeowners insurance policy.

Bear in mind that the liability insurance coverage offered by rental companies is usually not enough to cover serious accidents.

Given the fact that both the liability and damage waiver policies offered by the renter might be inadequate, it might suit you to order additional auto liability insurance for rentals from your own insurance company, or from a new insurance company on a temporary basis.

This is sometimes called a non-owner auto liability insurance policy.

Here are some easy steps to follow:

  1. Call your credit card company and make sure that their regular terms do not cover liability or a damage waiver contract.
  2. Call your insurance company and verify coverage information.
  3. Search online for a renter’s insurance policy.

Rather than succumbing to the pressure and ordering multiple insurance policies from the rental company, why not order your policy online for a substantial discount? You can use our free car insurance comparison tool right now and compare car insurance rates!



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Enter your ZIP code below to view companies that have cheap car insurance rates.

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