What Insurance You Actually Need When Renting a Car
You probably already have some coverage, but the rental company will push you to buy more
Most people who rent a car already have insurance that covers them in a rental — either through their personal auto policy, their credit card, or both. The rental company will offer you their own insurance at the counter, and they will make it sound necessary. It usually is not. Before you pay for rental coverage, check what you already have, because buying duplicate protection wastes money.
The catch is that rental companies do not know what your existing coverage includes, and you may not either. You need to call your insurance company or credit card issuer before you pick up the car — not after — to find out what is actually covered. A five-minute phone call can save you $15 to $30 a day.
Key Takeaways
- Your personal auto insurance may cover rental cars, but only if you have collision and comprehensive coverage on your own vehicle — liability-only policies do not.
- Many credit cards cover rental car damage if you charge the full rental to that card, though the coverage often excludes luxury vehicles, trucks, and certain countries.
- The rental company's insurance (called Loss Damage Waiver or Collision Damage Waiver) covers damage to the rental itself but not your personal belongings or injuries.
- Call your insurance company and credit card issuer before you rent to confirm what they cover, because coverage limits and exclusions vary widely.
- If you have no coverage through insurance or credit cards, the rental company's damage waiver is worth buying to protect yourself from repair bills.
What your personal auto insurance covers in a rental
If you carry collision and comprehensive coverage on your own car, that coverage typically extends to rental vehicles. Collision pays for damage from accidents; comprehensive covers theft, weather, and vandalism. This is the most common way renters stay protected without buying extra insurance.
The limits are usually the same as your personal policy — if you have a $500 deductible at home, you will pay a $500 deductible on rental damage too. Some insurers charge a slightly higher deductible for rentals, so ask. If you only carry liability insurance (which covers damage you cause to other people or their property), your policy does not cover damage to the rental car itself, and you will need coverage from another source.
Your personal policy also does not cover your belongings stolen from the rental, injuries to you or your passengers, or medical payments — those are separate coverages that most renters do not need to add. Call your insurance company before you rent and ask them to confirm in writing what is covered, including the deductible amount.
What credit card rental coverage includes and excludes
Many credit cards offer rental car damage coverage if you charge the entire rental to that card. This coverage is free and can save you from buying the rental company's waiver. However, the coverage has strict rules about what is included.
Most credit card programs cover damage to the rental car from collision or theft, but they exclude luxury vehicles (often defined as cars over $75,000 or from brands like Mercedes, BMW, or Porsche), trucks, vans, and vehicles rented for commercial use. Some cards also exclude rentals outside the United States. A few cards exclude rentals longer than 14 or 31 days. You need to know your card's specific rules before you rent, because the rental counter is too late to find out your coverage does not apply.
Credit card coverage also does not cover your personal belongings, injuries, or liability — it only covers damage to the car. If you cause an accident and injure someone, your personal auto insurance (if you have it) handles that, not the credit card. Call the customer service number on the back of your card and ask them to send you the rental coverage details in writing, or look them up on the card issuer's website.
The rental company's insurance options and what they actually cover
Rental companies offer two main types of damage coverage: Loss Damage Waiver (LDW) and Collision Damage Waiver (CDW). These are the same thing with different names — they waive your responsibility to pay for damage to the rental car. The cost ranges from $15 to $30 per day depending on the car type and location.
This coverage only protects the rental vehicle itself. It does not cover your personal items left in the car, injuries to you or passengers, damage you cause to other people's property, or liability if you cause an accident. Those are separate purchases (called supplemental liability, personal effects coverage, and so on), and rental companies will offer those too. Most people do not need them if they have personal auto insurance.
The rental company's waiver also comes with a deductible — often $0 to $1,500 depending on what you buy. Read the contract carefully, because some waivers exclude damage from off-road driving, towing, or driving in certain weather. If you decline the waiver and then damage the car, the rental company will charge you for repairs, and that bill can easily exceed $1,000.
When you should buy the rental company's coverage
If you do not have collision and comprehensive coverage on your own car, and your credit card does not cover rentals, then buying the rental company's damage waiver is the right choice. The daily cost is high, but it protects you from a much larger bill if the car is damaged.
You should also consider buying it if you are renting a vehicle type your credit card excludes — for example, if your card does not cover trucks and you are renting a pickup. Some people also buy it for peace of mind when driving in unfamiliar areas or bad weather, even though their insurance covers it. That is a personal choice, but it is not necessary.
Do not buy coverage you already have. If your personal insurance covers the rental and your credit card also covers it, you do not need the rental company's waiver — you would just be paying three times for the same protection. The rental company counts on customers not knowing what they already have.
How to check your coverage before you rent
Contact your auto insurance company at least a few days before you pick up the rental. Tell them the rental company, the type of vehicle, and the dates. Ask them to confirm in writing: whether collision and comprehensive coverage apply to rentals, what the deductible is, whether there are any exclusions, and what to do if you have an accident.
Then call the credit card issuer you plan to use for the rental. Ask them the same questions: whether rental damage is covered, what vehicles and countries are excluded, what the coverage limit is, and whether you need to do anything to activate it. Some cards require you to decline the rental company's coverage in order for the card's coverage to apply, so ask about that too.
Write down the answers or ask for them by email so you have proof. When you arrive at the rental counter, you can confidently decline the extra insurance because you know what you have. If the rental agent pushes back, show them the confirmation from your insurance company or credit card.
What happens if you have an accident or damage occurs
If the rental car is damaged, report it to the rental company immediately — do not wait until you return it. Take photos of the damage, get the names and contact information of any other drivers involved, and file a police report if another vehicle hit you. Keep all receipts and documentation.
If you have collision coverage through your personal insurance, report the damage to your insurance company as well. They will handle the claim and pay the rental company directly (up to your policy limits). If you bought the rental company's damage waiver, tell the rental agent and they will process the claim themselves. If you have neither, you will be responsible for the full repair cost.
If another driver caused the damage, your insurance company (or the other driver's insurance) may be able to recover the cost from them, which could lower or eliminate your deductible. This is called subrogation, and it takes time but can save you money.
Frequently Asked Questions
Does my insurance cover a rental car if I was not the one who caused the damage?
Yes. Collision and comprehensive coverage apply whether you caused the damage or someone else did. If another driver hit the rental, their insurance should pay for repairs. If the car was vandalized or stolen, your comprehensive coverage applies. In both cases, you pay your deductible, and your insurance company may recover it from the responsible party later.
What if I rent a car in another state or country?
Your personal auto insurance usually covers rentals in other U.S. states, but coverage outside the United States is less common — check with your insurer. Credit card coverage often excludes rentals outside the U.S., so call your card issuer to confirm. If you are renting internationally and have no coverage, buying the rental company's waiver is important.
Can I use my credit card coverage if I do not have auto insurance?
Yes, if your credit card covers rentals and you charge the full rental to that card. However, credit card coverage only protects the rental car itself, not liability if you cause an accident and injure someone. If you do not have personal auto insurance, you have no liability coverage, and you could be personally responsible for injuries or damage you cause. Consider buying the rental company's supplemental liability coverage in that case.
What is the difference between Loss Damage Waiver and Collision Damage Waiver?
They are the same thing — different rental companies use different names. Both waive your responsibility to pay for damage to the rental car. Some companies call it LDW, others call it CDW. The coverage, cost, and exclusions are the same regardless of the name.
Do I need to buy extra coverage for my belongings in the rental car?
Probably not. Rental companies offer personal effects coverage, but it is expensive and your homeowners or renters insurance usually covers your belongings no matter where they are — including in a rental car. Check your homeowners or renters policy first. If you do not have that coverage, personal effects insurance from the rental company may be worth buying if you are traveling with expensive items.