What You Need to Know About Rental Car Insurance

Rental car insurance covers damage to the car you're renting, theft, and liability if you cause an accident — but your own auto policy or credit card may already cover some or all of it

When you rent a car, the rental company will offer you insurance at the counter. Before you buy it, check what you already have. Your personal auto insurance may extend to rental cars, your credit card may cover collision damage, and your homeowners or renters insurance might cover personal belongings stolen from the car. Understanding what you own versus what you need to buy can save you money and prevent paying twice for the same protection.

The rental company's insurance is called a Loss Damage Waiver (LDW) or Collision Damage Waiver (CDW). It costs roughly $15 to $30 per day, though prices vary by location and car type. If you decline it and damage the car, you pay the repair bill out of pocket — sometimes thousands of dollars. The decision depends on what coverage you already have and how much risk you're willing to take.

Key Takeaways

• Your personal auto insurance often covers rental cars, but only if you have collision and comprehensive coverage on your own policy.
• Premium credit cards frequently cover collision damage to rental cars, but you must decline the rental company's insurance to use the card's coverage.
• The rental company's Loss Damage Waiver costs $15 to $30 per day and covers damage you cause, but excludes certain damage like windshield cracks and undercarriage damage.
• You need to know your deductible — the amount you pay out of pocket — before you decide whether to buy the rental company's insurance.
• Liability coverage (required by law) is usually included in your personal auto policy and extends to rental cars, so you rarely need to buy it separately.

What your personal auto insurance covers

If you have an active auto insurance policy, call your insurer before you rent. Ask whether your collision and comprehensive coverage extend to rental cars. Most standard policies do cover rentals, but some exclude them or limit coverage to the United States.

Your collision coverage pays for damage you cause in an accident. Your comprehensive coverage pays for theft, weather, vandalism, and other damage not caused by a collision. Both come with a deductible — typically $500 to $1,000 — which you pay if you file a claim. If the rental car costs $25,000 and you cause $3,000 in damage, your collision coverage pays $2,000 and you pay the $1,000 deductible.

If you don't have collision or comprehensive coverage on your own policy, your insurer won't cover rental car damage. In that case, you'll need to buy the rental company's insurance or use a credit card that covers rentals.

How credit card rental coverage works

Many premium credit cards include rental car collision coverage at no extra cost. Visa Signature, Mastercard World Elite, and American Express cards often have this benefit. Check your card's benefits guide or call the card issuer to confirm what's covered.

Credit card coverage typically pays for collision damage only — not theft, vandalism, or comprehensive claims. It also has a deductible, usually $500 to $1,000, and may not cover luxury cars, trucks, or vans. Some cards exclude coverage if you're renting for business purposes.

To use your credit card's coverage, you must decline the rental company's Loss Damage Waiver at the counter. If you buy the rental company's insurance, your credit card won't reimburse you. Read the fine print before you rent, because coverage rules vary widely by card and issuer.

What the rental company's insurance covers and costs

The Loss Damage Waiver (LDW) or Collision Damage Waiver (CDW) offered by the rental company covers damage to the car from collisions, theft, and vandalism. If you cause an accident and the repair bill is $4,000, the LDW covers it and you pay nothing. Without it, you pay the full $4,000.

The LDW does not cover certain damage: windshield and window cracks, undercarriage damage, tire and wheel damage, and damage from off-road driving. Some rental companies exclude damage from driving through water or driving under the influence. Read the rental agreement to see what's excluded.

The cost ranges from $15 to $30 per day depending on the car type, location, and rental company. A week-long rental can cost $105 to $210 in insurance alone. If you're renting for a month, that's $450 to $900.

Liability coverage and what it protects

Liability coverage pays for injuries and property damage you cause to other people. If you hit another car and injure the driver, liability pays their medical bills and car repairs (up to your policy limit). This coverage is required by law in every state.

Your personal auto insurance liability extends to rental cars in most cases. The rental company will ask you to confirm your liability limits at the counter. If you have a $100,000 liability limit on your own policy, that same limit applies to the rental car.

The rental company may offer additional liability coverage if your personal limit is low. In South Carolina, the minimum liability requirement is $25,000 per person and $50,000 per accident. If your personal policy meets or exceeds this, you don't need to buy extra liability coverage from the rental company.

Personal belongings and roadside assistance

The rental company's insurance does not cover your personal belongings — luggage, electronics, clothing — if they're stolen from the car. Your homeowners or renters insurance may cover theft from a rental car, but check your policy first. Some policies exclude coverage for items in vehicles.

Rental companies also offer roadside assistance coverage, which pays for towing, lockouts, and fuel delivery if you break down. This coverage costs $5 to $10 per day. If you have roadside assistance through your auto insurance or a membership like AAA, you don't need to buy it from the rental company.

How to decide whether to buy the rental company's insurance

Start by listing what you already have: your auto insurance deductible, whether your policy covers rentals, your credit card's rental coverage, and your homeowners or renters insurance. Then ask yourself how much out-of-pocket risk you can afford.

If you have collision coverage with a $500 deductible and a credit card that covers rentals, you're protected up to your card's limit. You probably don't need the rental company's insurance. If you have no collision coverage and no credit card coverage, buying the rental company's LDW is the safer choice.

If you're renting a luxury car or a truck, the repair costs are higher, and the rental company's insurance becomes more valuable. If you're renting for a week or less, the daily cost of insurance is smaller, so the total expense is lower. If you're renting for a month, the cumulative cost of daily insurance is significant, and you may want to rely on your existing coverage instead.

What to do at the rental counter

When you arrive to pick up the car, the rental agent will ask whether you want to buy insurance. Have your answers ready: your auto insurance policy number, your deductible amount, and whether your credit card covers rentals. If you're declining the rental company's insurance, say so clearly and ask the agent to note it in your agreement.

Walk around the car with the agent and photograph any existing damage — dents, scratches, cracks — before you drive away. The rental company will compare the car's condition when you return it to these photos. If damage appears that wasn't there when you picked it up, the company will charge you or your insurance.

Keep your rental agreement and insurance documents in the car. If you're in an accident, you'll need to show police and the rental company proof of what coverage you have.

Frequently Asked Questions

Does my auto insurance cover rental cars in other countries?

Most U.S. auto insurance policies do not cover rentals outside the United States and Canada. If you're renting a car abroad, ask your insurer whether your coverage extends internationally. If not, you'll need to buy the rental company's insurance or purchase a separate international rental policy.

What happens if I get in an accident and I declined the rental company's insurance?

You file a claim with your personal auto insurance or credit card, whichever is covering you. You'll pay your deductible, and your insurer pays the rest. The rental company may charge you a loss of use fee while the car is being repaired, which your insurance may or may not cover.

Can I buy rental car insurance after I've already declined it at the counter?

Most rental companies allow you to buy insurance after you've picked up the car, but you'll need to return to the counter or call the rental location. It's easier to decide before you leave the counter, so take time to review your coverage options before you sign the agreement.

Does the rental company's insurance cover damage I cause while driving under the influence?

No. The Loss Damage Waiver excludes damage caused by driving under the influence of alcohol or drugs. If you're arrested for DUI while driving a rental car, the rental company will hold you liable for all damage, and your insurance may deny your claim as well.

What if the rental car is stolen?

If you bought the rental company's Loss Damage Waiver, it covers theft and you pay nothing. If you declined it, your personal auto insurance comprehensive coverage or your credit card's coverage will pay for the theft, minus your deductible. You'll need to file a police report and provide it to your insurer.