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What is rental car insurance and why do I need it?

You’ve picked a rental car and are ready to zoom off on vacation. Then the representative at the desk asks if you want rental car insurance. As it turns out, most people won’t need rental car insurance. You may want to consider buying it if your personal car insurance lacks coverage in some areas.

  • Top-rated insurer
  • Online quotes & claims
  • Bundle and save

Our top pick: Progressive

Save up to 31% with safe driver discounts and bundling all your rides in one convenient policy.

  • Top-rated insurer with 80 years of experience
  • Easy online sign-up and reporting
  • Multiple discounts available
  • Transparent quoting

Compare cheap car insurance for rentals

Name Product Roadside assistance New car protection Accident forgiveness Available states
Yes, 3 years accident free
All 50 states
Save up to 31% with safe driver discounts and bundling all your rides in one convenient policy.
All 50 states
Enjoy having your own dedicated agent to help you get the best discounts and coverage.
Drive less than 30 miles a day? Save on the coverage you need with pay-per-mile insurance from Metromile. Get a low monthly rate then pay just a few cents per mile. Available in AZ, CA, IL, NJ, OR, PA, VA and WA.
Yes, 5 years accident free or bought
All 50 states
Car insurance through Liberty Mutual will give coverage options for almost any situation.
Yes, history based
Root offers simple, affordable insurance that’s ideal for good drivers. Try the Root app for 2 weeks and see how much you could save. Available in 24 states.
All states except AK, DE, HI, MT, NH, VT, WY
Esurance offers a modern online and mobile experience that helps you take your insurance on the go. Available in 42 states.
All 50 states
Backed by nearly 100 years in the business, Farmers Insurance aims to offer options and support to help you find the coverage you need.
All states except Hawaii, Massachusetts, Michigan and New Jersey
The General offers affordable coverage for nearly any driver who needs car insurance.

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What is rental car insurance?

Rental car insurance, also called car insurance for hire cars, covers you in case something happens while you’re driving your rental car. You can be covered for car accidents, medical payments after an accident, hitting someone’s property and more.

The rental car insurance you’re offered at the counter comprises several policy options. None of these policies are mandatory. In fact, certain types of coverage may be unnecessary because you may already be covered by your own car insurance or credit card benefits.

Check your credit card's terms for rental car coverage

Your credit card may offer some form of insurance for rental cars. But to qualify for the coverage, you’ll probably need to use the card for the entire cost of the rental.

If your credit car does offer this benefit, be sure that it applies in your situation. Are you renting a car abroad? Make sure your credit card covers rentals in that country. Are you renting an RV or motorcycle? The rental coverage benefit might be excluded for these types of vehicles.

What are the types of rental car coverage?

You’ll likely come across four types of rental car coverage:

  • Personal accident insurance
  • Collision damage waiver
  • Personal effects coverage
  • Supplemental liability protection

Let’s talk about each of these policies and why you might need them.

Personal accident insurance

Personal accident insurance covers you and your passengers in any accident. Specifically, you’ll be covered for the costs of medical assistance, ambulances and death up to your coverage level.

Should I get it? You probably don’t need medical coverage if you have health insurance. Most insurance policies offer reimbursement for ambulance rides too. It could be worth buying if you’re worried about death benefits and don’t have life insurance.

  • Typical cost: $1 to $5 per day
  • Typical medical coverage: $3,500
  • Typical ambulance coverage: $150
  • Typical death benefit: $175,000 for renter; $17,500 for passenger

Collision damage waiver

With a collision damage waiver, you’ll pay a reduced cost or nothing at all if your rental car is stolen or damaged. This is also called a physical damage waiver or a loss damage waiver.

Should I get it? Double check your own auto insurance, since it probably already covers damage to rental cars. It’s worth doing a bit of research in case your insurance doesn’t protect you.

  • Typical cost: $9 to $19 per day
  • Typical coverage: Varies depending on rental car agency

Personal effects coverage

Personal effects coverage reimburses you for the theft of your possessions from the rental car. This coverage typically extends to members of your family as well.

Should I get it? Coverage for stolen items usually falls under homeowners insurance. Check your own insurance policy terms to see if you’re protected.

  • Typical cost: $1 to $4 per day
  • Typical coverage: $500 to $1,500 per person

Supplemental liability protection

Supplemental liability protection will cover you if you damage someone’s car or property or if you’ve incurred medical costs for injuring someone.

Should I get it? You probably have liability coverage from your own insurance policy. If you think your coverage is too low, supplemental liability protection can be a stopgap measure — but you may want to consider umbrella insurance for the long term.

  • Typical cost: $7 to $14 per day
  • Typical coverage: $1 million

Why should I buy rental car insurance?

The main reason you should buy rental car insurance is if your own policy doesn’t protect you. Even then, you might decline rental car coverage. For example, you may feel your belongings are easily replaceable; in that case, you might decline personal effects coverage.

Generally, your insurance will cover rental cars — but it’s a good idea to be sure. Check your own policy or call your insurance agent. And keep in mind that if your insurance does cover rental cars, you will still have to pay your deductible in case of an accident or any damage.

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How do I buy rental car insurance?

When you rent a car, the representative at the counter will ask whether you’d like to add insurance. To make a smart decision, it’s a good idea to know beforehand what your personal insurance already covers.

How to protect yourself from a damage claim

It’s not often that a car rental company will make a damage claim against you, but it can happen. And if it does, you could be on the hook for hundreds or even thousands of dollars in damage if you’re not covered by insurance. So you’ll want to be protected.

Here are some steps you can take to protect yourself from a possible damage claim from the rental company:

  • Inspect the rental car with an employee and note in writing all of the existing damage, no matter how minor.
  • Take pictures of any damage before leaving the lot and make sure the photos are timestamped.

Even if you are covered against damages by insurance, it’s a good idea take these precautions to insure you’re not held liable. Some rental companies even require that you inspect the car before they turn over the keys. A little precaution could prevent a future headache.

Bottom line

You probably won’t need to buy rental car insurance. However, it can be a smart choice if your personal car insurance lacks coverage in certain areas.

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