Guide to Rental Car Insurance Coverage

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.

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:

• Bodily injury liability
• Property damage liability
• Collision coverage
• Comprehensive coverage
• Medical bills coverage
• Roadside assistance
• Loss of use of the car (reimbursing the rental company for the revenue lost while the car was being repaired)
• Personal items stolen from the car in an auto burglary

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.

• 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.

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.

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

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.