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Rental Cars Insurance: Why Do You Need It?

Car insurance is a protective cover that provides monetary assistance and saves your hard-earned money in case of accidents and collisions. In most states, it is compulsory to have auto insurance if you own or drive a vehicle. Does it include rental cars? Do you need separate insurance for rental cars? Can you use your existing auto insurance for rental cars?

It can be infuriating to not know when you need separate license insurance for rental cars and when it’s nothing more than extra expenditure. Ideally, you don’t want to pay more or delay your trip because the rental company insists that you take separate auto insurance for the rental vehicle. It’s always safer to be prepared and informed to avoid such complications.

We’ll read in detail about rental car insurance, the types, and which one to choose. After all, the insurance coverage should adhere to the state’s laws, provide at least minimum protection, and come within your budget. Nonetheless, don’t forget that finding legal representation after a car accident is also key to avoiding increased costs.

What is Rental Car Insurance?

Rental car insurance is a policy that provides protection for rental cars. It is similar to own car insurance but comes with multiple options. Depending on the type of protection you choose, the insurer will calculate the premium price. Though rental car insurance can be cheap, it can easily become expensive if you don’t make the right choice.

The first thing to do before taking rental car insurance is to thoroughly go through your existing auto insurance and determine if has a provision to cover rental cars too. Contact the insurance company or the insurance agent to confirm if you are not sure of the provision.

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Rental car insurance usually covers the following situations:

  • Damages caused by collision
  • Theft of the rental vehicle
  • Theft of the insured’s belongings from the rental car
  • Bodily injury or property damage coverage for the third party
  • Bodily injury to the insured

The above list is not a default offering by insurance companies. The actual protection depends on the type of rental car insurance you choose.

In some cases, the driver might have liability coverage that extends to rental vehicles. Taking another insurance policy for the same purpose doesn’t make sense, isn’t it? You’ll end up paying double the premium for no reason.

Rental Car Insurance Vs. Own Car Insurance 

Generally speaking, people with collision or comprehensive insurance coverage can use their own car insurance for rental cars as long as they rent the vehicle in the US or Canada. The rules of deductible still apply. You have to pay the deductible to claim insurance for rental cars.

However, some states and other countries do not accept personal car insurance for rentals. There is no option but to comply with the state laws and buy another insurance policy for the rental car you’ll be using within that state.

The other crucial element is the type of rental car you choose. If you rent a luxury or expensive car, while your auto insurance policy is for a regular vehicle, your existing policy won’t cover the luxury car. You need to take the fresh rental car insurance for the luxury car.

Which Insurance Coverage to Choose? 

Loss Damage Waiver (LDW)/Collision: This is specific to rental car insurance where the driver or renter chooses the coverage to prevent the rental company from collecting collision damage charges in case of a crash.

Liability Coverage: The renter uses liability coverage to pay for claims by the other party if there’s an accident.

Personal Effects Coverage: This protects the personal belongings that you carry around in the rental car when driving or traveling. You can invoke this claim if the belongings get stolen from the rental car.

Personal Accident Insurance: This plan pays for medical bills if the renter has an injury when using the rental car.

Credit Card: Credit card companies also provide a provision for rental car insurance coverage though it is not as expansive as comprehensive coverage.

Travel Insurance: This usually covers collision damage and personal bodily injury if you choose a cheap car for rental.

Rental companies offer insurance along with the car. You can buy rental car insurance over the counter and be insured in just a few minutes.


Typically, rental car insurance takes less time to process as you are more likely to have provided all the necessary documents for identification when booking the rental car. But what if the rental company charges more for the insurance?

You can find cheaper rates by contacting an insurance agent and asking for more quotes. That said, it is easier when you get rental car insurance in advance and not at the last minute. You’ll have more time to look at options and choose a cheap and affordable policy so that it doesn’t mess up your budget.







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