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If you’ve ever rented a car at the airport or another location, you know that the rental agent will ask if you want to purchase rental car liability insurance. While covering your rental car makes sense, you may not need to purchase additional coverage if your personal policy provides enough protection.
The same goes for supplemental insurance options available from rental car companies. Understanding your existing auto insurance policy can help you determine whether you can waive insurance coverage on your next car rental.
Here’s what you need to know about rental car liability insurance:
- What is rental car liability insurance?
- Types of rental car insurance
- When do I need rental car liability insurance?
- How much does rental car liability insurance cost?
- Frequently asked questions about rental car liability insurance
What is rental car liability insurance?
Rental car liability insurance helps pay for injuries or damage to another person’s property if you cause an accident while driving a rental car. Auto rental companies offer insurance coverage to renters to protect themselves from liability.
Rental car companies must offer at least the minimum amount of liability coverage the state requires. However, if you only opt for minimum liability insurance, it may not be enough. It also won’t cover collision damage to your rental vehicle, your own injuries, or loss of your personal property. For that protection, you’d need to add additional rental car coverages, like personal accident insurance.
When you rent a car, the rental agent will ask if you want to add insurance coverage or waive it. Depending on your personal car insurance policy, you may already have rental car coverage and can waive coverage through the rental agency. Some credit cards also come with auto rental coverage benefits.
Learn More: What Happens If You Get Into an Accident Without Car Insurance?
Does my personal auto insurance cover rental cars?
The last thing you want is to pay for rental insurance if you don’t have to. Generally, your personal auto insurance applies to rental cars, so opting for rental car coverage through a rental agency could be a redundant expense.
Refer to your auto insurance policy to determine your available coverage and deductibles. If you’re unsure, contact your insurance carrier or agent to see if you need to opt into rental car insurance before renting a vehicle. If you rent a car using your credit card, contact the card issuer to see what, if any, coverage they provide.
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Types of rental car insurance
Rental companies typically have several insurance options available for renters. The right coverage for you depends on your needs and personal auto insurance coverage.
Rental car liability coverage
Liability coverage pays for other drivers’ injuries or damages to their personal property caused by an accident with a rental vehicle.
How it works: Rental companies are required by law to provide at least the state minimum for liability coverage. You can also purchase supplemental liability insurance to extend your coverage beyond the state minimums.
Pros:
- Non-car owners who don’t have their own auto insurance are covered against liability
- Ensures you’re covered at least to the minimum state requirement
Cons:
- Liability insurance through rental companies may not provide enough coverage
- If you have your own auto insurance, you already have liability coverage and buying the rental company’s coverage could be a waste of money
Should I buy it? Maybe. It depends on whether you already have coverage under your personal auto insurance policy.
Rental car collision damage waiver
Also called a Loss Damage Waiver (LDW), a collision damage waiver isn’t actually insurance coverage. Instead, it waives you from financial responsibility if someone damages or steals your rental car.
How it works: The waiver only protects you from out-of-pocket expenses if your rental car is damaged or stolen. It doesn’t protect you if you speed or use the car irresponsibly and cause damage.
Pros:
- Releases you from financial responsibility in most cases
- Provides coverage if the rental company charges you for lost income while the car is out of service and being repaired
Cons:
- Not technically insurance coverage
- You may already have collision and comprehensive coverage that protects your rental car in these situations
Should I buy it? Yes, if you don’t have coverage already through your personal auto insurance policy or the credit card used to rent the vehicle.
Personal accident insurance for rentals
Personal accident insurance pays for medical bills if you or your passengers are injured in a rental car accident.
How it works: Coverage includes medical, hospital, death, and dismemberment benefits for injuries sustained from an accident with your rental car. In some cases, rental companies combine personal injury and personal effects coverage (more on this shortly) into one policy.
Pros:
- Provides financial coverage if you or passengers in your rental car are injured during an accident
Cons:
- Your health or auto insurance probably already provides coverage.
Should I buy it? No, you likely already have coverage through your health insurance or personal auto insurance policy.
Personal effects coverage
Personal effects coverage protects you against theft of personal property from a rental car.
How it works: Personal items, such as clothes or electronics stolen from a rental car during your rental period, are covered up to a specific limit.
Pros:
- If you don’t have homeowner’s or tenant’s insurance, protects valuable personal property like laptops, camera gear, cell phones, and more
- If your limits are low under your personal coverage, may provide extra protection for valuables
Cons:
- You may already have coverage under your homeowners or renters policy.
- Your loss may exceed the maximum coverage limits.
Should I buy it? No, especially if your homeowners insurance or another policy extends to property kept in a rental car.
Check out: How Long Do Car Accidents Stay on Your Record?
When do I need rental car liability insurance?
You may already have liability coverage that extends to car rentals. If so, there’s no need to pay for duplicate coverage. But there are some situations where you might need to buy rental car insurance, including:
- You don’t own a car. You don’t need your own car insurance to rent a car, but if you don’t own a car or don’t have a personal auto insurance policy, you should opt in for at least the minimum coverage available through the rental company. If you rent vehicles frequently, you may want to consider non-owner car insurance.
- Your personal policy doesn’t extend to rental vehicles. You may have auto insurance coverage, but depending on your policy, it may not cover rental cars. In this case, buying rental car insurance is imperative.
- You’re renting a luxury vehicle. Personal auto insurance policies typically cover rental cars up to the same amount as your personal vehicle. You may want to get additional coverage if you’re renting a car that’s significantly more expensive.
How much does rental car liability insurance cost?
The cost of rental car insurance depends on several factors, including:
- Rental company
- Vehicle type
- Insurance coverage type
- Location
- Your age
- Driving record
Rental companies typically charge a daily rate for rental car insurance. Costs will increase the longer you rent a vehicle. Most rental companies allow you to view insurance options and costs during the rental process online.
Here are some average rental car insurance prices for various coverages, according to Washington, D.C.’s Department of Insurance, Securities and Banking:
- Liability insurance: $7 to $14/day
- Collision damage waiver: $10 to $20/day
- Personal accident insurance: $1 to $5/day
- Personal effects coverage: $2 to $5/day
Read More: How to Get Car Insurance Without a License
Frequently asked questions about rental car liability insurance
Read on for the answers to some of the most commonly asked questions about rental car liability insurance.
Does homeowners or renters insurance cover rental cars?
In many cases, your homeowners or renters insurance provides coverage if your personal property is stolen or damaged while in a rental car. However, those policies won’t cover bodily injuries or damages to your rented vehicle or those of other drivers.
If my credit card benefits cover rental cars, do I need insurance?
Most credit cards that come with auto rental benefits only offer secondary coverage. So, you won’t be able to use that insurance until after going through your personal or rental company insurance.
Do I need rental car insurance if I have health insurance?
Your health insurance may provide coverage similar to that of personal accident insurance for rental cars (it’ll help cover your medical bills or those of your passengers in an accident while in a rental car). However, your health insurance won’t cover damage to the rental vehicle or personal property.
Can I rent a car without personal car insurance?
Yes, you can rent a vehicle without having personal auto coverage. Rental cars are already insured, but you’re responsible for vehicle damage if anything happens to the car while you’re renting it. It’s a good idea to get at least the minimum rental car insurance if you don’t have a personal car insurance policy.
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Disclaimer: All insurance-related services are offered through Young Alfred.
About the author 
Kevin Payne
Kevin Payne is a family travel and finance expert. He writes about credit cards, travel, student loans, saving money, homeownership, and career and entrepreneurship. His work has been featured in Forbes Advisor, The Ascent, FinanceBuzz, Slickdeals, Student Loan Planner, and more. He is in the process of becoming an Accredited Financial Counselor (AFC).
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