Does My Car Insurance Cover Rental Cars? What You Need to Know Before You Rent

If you’re renting a car for a holiday, business trip, vacation, or while your vehicle is being repaired, you may wonder if your car insurance policy extends to the rental car. The good news is that, in many cases, your existing car insurance may cover a rental car. However, the details depend on your policy, the coverage limits, and the type of rental car you’re considering.

Here’s a closer look at how car insurance coverage typically applies to rental vehicles, what types of insurance are available at the rental counter, and when you might need additional protection.

1. Does My Existing Car Insurance Cover Rental Cars?

In many situations, your personal car insurance coverage extends to rental cars. This means that if you have comprehensive and collision coverage, you may not need to purchase additional insurance from the rental car company. Your personal policy’s liability, collision, and comprehensive coverages usually apply to rental vehicles under certain conditions.

Types of Coverage That Typically Extend to Rental Cars:

• Liability Coverage: If you have liability coverage, it will likely cover damages to other vehicles or property if you’re at fault in an accident while driving the rental car. It also covers medical expenses if others are injured in the accident.
• Collision Coverage: If your policy includes collision coverage, it should cover damage to the rental car if you’re in an accident, up to your policy’s limit. However, keep in mind that you’ll still be responsible for any deductible.
• Comprehensive Coverage: Comprehensive coverage protects against non-collision-related damage, such as theft, vandalism, or natural disasters. If you have comprehensive coverage on your personal policy, it may extend to the rental vehicle as well.

Before relying on your existing car insurance, it’s essential to review your policy or speak with your insurance provider to confirm the extent of your coverage.

2. What About Coverage Limits?

The limits of your existing car insurance policy apply to the rental car just as they would for your personal vehicle. For instance, if you have $50,000 in liability coverage, that’s the maximum amount your insurer would pay for damages to another car or property if you cause an accident in the rental car. Similarly, any deductibles you have on your policy will also apply.

It’s also important to note that if your personal policy has limited or no collision and comprehensive coverage, you may want to consider additional insurance options from the rental company or your credit card.

3. What Insurance Options Does the Rental Car Company Offer?

When you pick up a rental car, you’ll likely be presented with several optional insurance coverages, each with its own benefits. Understanding these options can help you make an informed decision about whether you need the extra coverage.

Rental Car Insurance Options:

1. Loss Damage Waiver (LDW) or Collision Damage Waiver (CDW)
   The LDW or CDW covers costs associated with damage or theft of the rental vehicle. It’s not technically insurance but rather a waiver that absolves you from financial responsibility for damage or theft. An LDW is useful if your personal insurance policy doesn’t include collision or comprehensive coverage, or if you want to avoid a deductible in case of an accident. It can also cover certain “loss of use” fees the rental company may charge if the car is out of service due to repairs.
2. Liability Insurance Supplement (LIS)
   This provides additional liability coverage in case you cause an accident that results in injuries or property damage. If you have limited liability coverage on your personal policy, the LIS can be helpful, especially if you’re traveling to a state with higher minimum liability requirements or if you’re worried about hitting high-value property.
3. Personal Accident Insurance (PAI)
   This coverage pays for medical expenses for you and your passengers if you’re injured in an accident while driving the rental car. If you already have health insurance and personal injury protection (PIP) on your auto policy, you may not need PAI.
4. Personal Effects Coverage (PEC)
   PEC covers the theft or damage of your personal belongings while in the rental car. If you have homeowners’ or renters’ insurance, these policies may already cover personal belongings, so check your policy before purchasing PEC.

4. Does My Credit Card Cover Rental Cars?

Many major credit card companies offer rental car insurance as a cardholder benefit. If you use your credit card to pay for the rental, you may receive secondary coverage that kicks in after your personal insurance, or primary coverage that covers damage to the rental car without involving your personal insurance. This benefit is often included with travel credit cards, so check your card’s benefits guide or contact your card issuer to confirm.

Credit Card Coverage Limitations:

• Coverage Type: Most credit cards only cover collision and theft, not liability. If you injure someone or damage property, you’d need liability coverage from your personal insurance policy or the rental company.
• Vehicle Type: Coverage may not extend to luxury cars, trucks, motorcycles, or SUVs. Some cards restrict coverage to standard passenger vehicles.
• Rental Duration: Credit card rental coverage typically has a limit, usually up to 15-30 days.

If your credit card offers primary coverage, it could save you from filing a claim on your personal insurance, which can help avoid premium increases.

5. When Should You Consider Additional Coverage?

There are certain situations where purchasing rental car insurance may be beneficial, even if you have car insurance or credit card coverage. Consider extra coverage if:

• You Don’t Have Collision or Comprehensive Coverage: If your policy only includes liability, adding a CDW or LDW from the rental company can provide protection against vehicle damage or theft.
• You’re Concerned About High Deductibles: If you have a high deductible on your personal insurance, rental insurance can help avoid out-of-pocket expenses in case of damage to the rental car.
• You’re Traveling Abroad: Your car insurance policy likely won’t cover rental cars outside the United States, though some insurers may extend limited coverage to Canada. In these cases, consider purchasing insurance directly from the rental agency or exploring options with international rental car insurance providers.
• You’re Renting a High-Value or Specialty Vehicle: If you’re renting a luxury car, your insurance or credit card may not extend coverage. In this case, additional coverage from the rental company is advisable.

Final Thoughts: Confirming Your Coverage Before You Rent

Before renting a car, it’s always best to verify your existing insurance coverage, including the types and limits, and check if your credit card offers additional rental protection. Understanding what’s covered under your current policies can help you decide whether you need extra coverage from the rental company.

If you’re unsure, contact your insurance provider to clarify your coverage. Having the right protection in place will give you peace of mind while you’re on the road, whether it’s for a short trip or an extended rental.

At John J. Malm & Associates, our top-rated Illinois car accident lawyers help clients navigate all aspects of auto accident claims. If you or a loved one has been in a car accident and has questions about rental car coverage after an accident, contact our offices in Naperville and St. Charles. Our team of Naperville car accident attorneys is here to assist you with personalized legal guidance and support.