January 7, 2022

Guide to Rental Car Insurance Coverage

If you already have car insurance, should you buy more insurance for a rental car?

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If you’ve ever rented a car, you know the experience of being offered many different insurance services at the rental counter. You may wonder what these coverages entail and whether your current auto insurance covers rental cars already? We’ll guide you through both rental car reimbursement coverage on your regular auto insurance and the add-ons from the rental company. But bottom line, if you already have comprehensive and collision coverage, buying extra coverage for a rental car isn’t necessary.

Insurance for a Rental Car vs. Rental Car Coverage

First, let’s differentiate between insurance for a rental car (rental car insurance) and rental car coverage. While these terms sound similar, they’re actually very different.

What Is Rental Car Coverage?

Rental car coverage is optional coverage from your personal auto insurance policy that covers the cost of renting a car while your car is being repaired under a covered claim. This is different from the coverage for a car that you are renting and driving in a non-repair situation. Car insurance covers rental car reimbursement only if you add this supplemental coverage; minimum coverage doesn’t include rental car reimbursement in any state.

Rental car coverage is part of your regular insurance policy, if you opted into this supplemental coverage. It means that, if your car is being repaired under a covered claim, your insurer will pay for the cost of a rental car so you can still drive around. In other words, you won’t have to pay a company like Enterprise out of pocket in order to rent a car.

The other term is insurance for a rental car; i.e., what that Enterprise employee offers you when you rent a car. This is optional, separate insurance solely for your rental car, and it’s what this article is about, largely.

Rental Car Insurance

When it comes to rental cars, there are two types of insurance that can apply. One is your existing personal auto insurance, which may include rental car reimbursement, and the other is insurance from the rental company. But you should know that you are not obligated to purchase any additional rental car coverage from the rental company, no matter how many scare tactics the company uses.

Do You Already Have Rental Car Insurance?

If you have collision or comprehensive coverage, that applies to a rental car as well as your own vehicle. Additionally, some credit cards offer rental car insurance. Check out these options from Chase.

Bank Name of card Points Who’s covered What’s covered Coverage amount maximum Coverage period maximum in days
Chase Sapphire Preferred N/A Cardholder and additional drivers listed in the rental agreement Physical damage and/or theft of the covered rental car, reasonable/customary towing charges related to a covered loss, valid loss-of-use charges from the rental agency Actual cash value of the rental car 31 (must be consecutive)
Chase Sapphire Reserve 10x points when you travel through Chase Ultimate Rewards after $300 is spent on travel purchases annually N/A N/A N/A N/A
Chase Ink Business Preferred N/A N/A Completely covered when renting for business purposes Up to actual cash value of the vehicle for theft/collision damage for most cars in the U.S. N/A
Chase Ink Business Cash N/A N/A Completely covered when renting for business purposes Up to actual cash value of the vehicle for theft/collision damage for most cars in the U.S. N/A
Chase Ink Business Unlimited N/A N/A Completely covered when renting for business purposes Up to actual cash value of the vehicle for theft/collision damage for most cars in the U.S. N/A
Chase United Explorer N/A Name on the card and anyone else listed in the rental car agreement Completely covered when renting for business purposes; covers theft, damage, valid loss-of-usage charges from the auto rental company, administrative fees, reasonable/customary towing charges due to covered theft or damage Up to actual cash value of the vehicle for theft/collision damage for most cars in the U.S. 31

TIP

Find out if your credit card offers primary or secondary coverage. With primary coverage, your credit card policy will pay out before your auto insurance company, and vice versa with secondary coverage.

Do You Need Rental Car Insurance?

You’ll need rental car insurance:

  • When your car is being repaired and you can’t get around any other way
  • If your current policy lacks comprehensive and collision coverage
  • If you’re insured under a commercial policy only
  • If you want to avoid paying a high deductible
  • If you’re driving abroad, apart from Canada

However, if you already have comprehensive coverage, there’s no point in getting upsold at the rental counter, as it’ll only duplicate your existing coverage.

What Rental Car Insurance Covers

Depending on how many add-ons you end up buying, rental car insurance from the rental company can cover:

If you add additional drivers to the rental agreement, then your rental car insurance will cover them as well.

Types of Rental Car Insurance Coverage Options

It can feel stressful to make financial decisions on the spot, so before you rent your car, familiarize yourself with what the person behind the counter is going to offer you in terms of the type of coverage. Here are the different types of insurance from the rental car company:

  • Liability coverage: Liability coverage includes bodily injury and property damage liability insurance.
  • Collision/loss damage waiver/damage waiver (LDW, CDW, or DW): The DW isn’t technically insurance; it’s a waiver that states that if you damage the rental car, it could help cover the cost of the repairs.

If you don’t have a DW or collision/comprehensive coverage and you damage the rental car, you’ll have to pay for repairs out of pocket. Additionally, the rental company could charge you for loss of use, meaning the revenue it lost while the car was being repaired.

NOTE

A damage waiver won’t cover damage from speeding or driving on unpaved roads.

  • Personal effects coverage (PEC): PEC covers any personal belongings that were stolen from the rental car, like a laptop or clothing. But note that if you have homeowners or renters insurance, the personal property coverage will cover these thefts under “off-premises coverage” up to a certain percentage.
  • Personal accident insurance (PAI): PAI will cover you and your passengers’ medical bills from a rental car accident, but similarly, your health insurance, medical payments coverage, or personal injury protection may already cover medical expenses.1
  • Supplemental liability protection (SLP): SLP is an optional daily charge that provides the renter and authorized drivers with a combined single limit of $300,000 for any third-party liability claims, or claims from another driver after an at-fault incident.
  • Roadside assistance protection (RAP): Last but not least, rental companies offer roadside assistance, which eliminates your financial responsibility for events like locksouts or fuel outages.

Rental Car Insurance Cost

Most rental car companies don’t list the costs of these add-ons, and prices differ by location and vehicle type, as you can see in the chart below.

Rental car company Damage waiver daily price range Personal accident insurance daily price range Personal effects coverage daily price range Supplemental liability protection daily price range Roadside assistance protection daily price range
Alamo $10.99-$500 for rentals originating in California, but depends on the type of vehicle and location Not listed Not listed Not listed Not listed
Avis Not listed Not listed Not listed Not listed Not listed
Budget Not listed Not listed Not listed Not listed Not listed
Dollar Not listed Not listed Not listed Not listed Not listed
Enterprise Varies by location and vehicle type $5.13-$13 $5.13-$13 $8-$17 Not listed
Hertz Not listed Not listed Not listed Not listed Not listed
National $10.99-$500 per day for rentals originating in California, depending on the type of vehicle Not listed Not listed Not listed Not listed
Thrifty Not listed Not listed Not listed Not listed Not listed

In New York, where we’re based, the combined cost of these add-ons is around $30 per day, which breaks down into:

  • Collision damage waiver: $9 to $12 per day
  • Supplemental liability protection: Around $10.95 per day
  • Personal accident insurance: $3 per day
  • Personal affect coverage: $2 per day

Who Can Rent a Car?

While young drivers can rent cars, after certain ages, all rental companies charge them additional daily fees ranging from $19 to $84 a day, with an average of about $36 per day.

Rental car company Minimum age to rent a car Young driver fees
Alamo 21 in every state except Michigan and New York, where the minimum age is 18 Around $25 a day, depends on location
Avis 21 in every state except Michigan and New York, where the minimum age is 18 Depends on age and other factors except in Michigan and New York

Michigan: Drivers 18-20 will pay $41 per day; drivers 21-24 will pay $28 per day

New York: Drivers 18-20 will pay $84 a day; drivers 21-24 will pay $35 a day

Budget 21 in every state except Michigan and New York, where the minimum age is 18 Depends on location
Dollar 20 in every state except Michigan and New York, where the minimum age is 18 Varies based on car class and location
Enterprise 21 in every state except Michigan and New York, where the minimum age is 18 Michigan: Drivers 18-20 will pay $40 per day; drivers 21-24 will pay $19 a day

New York: Drivers 18-20 will pay $64.50 per day; drivers 21-24 will pay $24.50 a day

All other states: Drivers under 25 will pay about $25 a day; varies based on location

Hertz 20 in every state except Michigan and New York, where the minimum age is 18, as well as Alabama and Nebraska, where the minimum age is 19 For renters under 25, a $19-per-day fee
National 21 in every state except Michigan and New York, where the minimum age is 18 For drivers ages 21-24, the fee is about $25 per day; varies by location
Thrifty 20 in every state except Michigan and New York, where the minimum age is 18 Drivers under 25 will pay a fee based on renting location and car class

The most expensive place for drivers 18 to 20 years old to rent cars is New York, with an $84 daily addition.

FYI

The legal minimum age for car rental is 21 in every state except New York and Michigan, where the minimum age is 18. Learn how to get cheap car insurance in New York and cheap car insurance in Michigan.

Although car rental companies can discriminate by age, in New York, they’re not allowed to discriminate by race, religion, disability status, ethnicity, color, or sex.2 Check your state laws to make sure car rental companies are treating you fairly and legally.

Recap

Don’t feel pressured by pushy rental car workers; if you already have collision and comprehensive coverage, then buying add-ons is unnecessary, not to mention expensive. However, if you lack auto insurance or other types of duplicate insurance, the add-ons could be worth it, especially if you damage your rental car.

To give yourself peace of mind, check with your current insurance policies and credit card terms to see if you’re already covered (note that not all travel insurance covers car rentals). Finally, be sure to check out the best auto insurance for rentals to see our top picks.

Frequently Asked Questions

You’ve asked even more questions about rental car coverage, and we’ve answered.

Does GEICO cover rental cars?

GEICO covers rental cars if you have collision/comprehensive insurance. If you have rental car reimbursement, you can rent a car for free if your car is being repaired under a covered claim.

How long will insurance pay for my rental car?

How long your insurance will pay for your rental car depends on your policy, but the period is typically around 30 days. Check your policy or ask your agent to find out the time limit.

Does auto insurance cover rental cars?

Auto insurance covers a rental car if you have collision and comprehensive coverage, meaning you can get bodily injury and property damage liability for your rental car. You can get auto insurance to pay for the cost of a rental car if your car is being repaired for a covered claim and you have rental reimbursement coverage.

Do you need insurance to rent a car from Enterprise?

You do not need insurance to rent a car from Enterprise, as Enterprise legally has to insure all of its cars. However, if you do not have personal car insurance from your policy or credit card and you damage your rental vehicle, you’ll be responsible for all property damage, bodily injury payments, medical bills, and loss of use costs.

Citations

  1. Should You Buy Extra Rental Car Insurance At The Counter? Allstate. (2020, May).
    https://www.allstate.com/tr/car-insurance/rental-car-insurance.aspx

  2. Car Rental Tip Sheet. NY Attorney General. (2022).
    https://ag.ny.gov/consumer-frauds/car-rental-tip-sheet