Planning a trip should be exciting: choosing where to stay, what to do, and where to eat. The last thing you want is the stress of dealing with an accident in a rental vehicle.
That’s why rental car companies are quick to offer “peace of mind” at the counter. For a daily fee, they’ll add rental car insurance coverage to your contract so you don’t have to think twice. But is coverage from the rental company really necessary?
What Is Rental Car Insurance?
Despite the name, rental car insurance isn’t a true insurance policy. Instead, it’s a set of protection plans sold by the rental company to minimize their risk if something happens to the car.
In simple terms: Rental car insurance coverage is optional protection you can purchase from rental car companies when you rent a vehicle. It may include coverage for property damage, liability, medical bills, or even your own belongings.
Coverage from the rental company can give you peace of mind, but it can sometimes overlap the auto insurance coverage you already carry. That’s why it’s important to understand how these plans work before deciding whether you really need them.
Types of Rental Car Insurance
When you rent a vehicle, the rental company may offer several different coverage options. Here are the most common types of rental car insurance coverage you’ll see at the counter:
- Collision Damage Waiver (CDW) / Loss Damage Waiver (LDW): About $9–$12 per day. This waiver means the rental company won’t hold you responsible if the rental car is damaged or stolen.
- Supplemental Liability Protection (SLP): Around $11 per day. Provides liability coverage if you cause damage to another person’s car or property.
- Personal Accident Insurance (PAI): Roughly $3 per day. Pays medical costs for you and your passengers if you’re injured in an accident.
- Personal Effects Coverage (PEC): About $2 per day. Covers your belongings inside the rental car, though your homeowners or renters insurance may already provide this protection.
These coverage options may sound affordable on a daily basis, but they can add up quickly. For example, a week-long trip with multiple add-ons could cost more than $200 in extra fees.
Do I Need Rental Car Insurance?
Yes. You always need some form of coverage when you drive a vehicle (even if it’s a rental). Driving without it can leave you exposed to serious costs if something goes wrong.
Without rental car insurance coverage (or another policy’s protection), you could be responsible for:
- Repair bills for damage to the rental car
- Loss of use fees while the car is out of service—often at inflated daily rates
- Towing and administrative charges added by the rental company
- Depreciation costs if the car loses value after being repaired
- Liability expenses if you cause injury or damage to others
In other words, skipping coverage means you’re taking on 100% of the financial risk. That’s why it’s essential to confirm how you’re protected before you drive away—whether through your insurance company, your credit card coverage, or coverage from the rental counter.
Are You Already Covered?
Whether you need insurance when renting a car depends on the coverage you already have. If you carry collision and liability on your personal auto insurance, that auto insurance coverage usually extends to a rental vehicle within the United States. In that case, buying extra coverage from the rental company may simply duplicate what you already have.
Don’t forget about your other policies, either. Homeowners and renter’s insurance often provide off-premises coverage for theft of personal belongings—even if those items are stolen from a rental car. That means you may already have protection for things like luggage or electronics without needing the rental company’s Personal Effects Coverage.
Filing a claim through your insurance company could land in the CLUE database for up to five years, which may raise your premiums. While using the rental company’s coverage can sometimes prevent that, it isn’t guaranteed. How the claim is reported ultimately depends on the rental company and insurer.
Another option to check before you pay for a rental car: your credit card company. Many major cards provide some level of credit card coverage when you rent a car, though the protection is often secondary and may not cover every fee.
Bottom line? If you already have personal auto insurance, you may not need rental car insurance coverage—but it can sometimes save you money and headaches in the long run.
Not Every Rental Vehicle Is Covered the Same Way
Not every rental vehicle is treated the same way by insurance companies. Here’s what you need to know if you’re renting something other than a standard car.
Rental Trucks and Trailers
Your personal auto insurance coverage usually extends only to private passenger cars. It does not cover moving trucks, cargo vans, or trailers. The same goes for most credit card coverage.
If you get into an accident with a rented truck or trailer, you could be on the hook for all damages, plus loss of use while the vehicle is being repaired. That’s why it’s almost always worth buying the protection plan directly from the rental company in these cases.
Rental E-Bikes and E-Scooters
While an accident on a scooter or e-bike might not cause as much damage as a car crash, you can still be responsible for injuries or property damage. Rental companies generally do not provide any protection for scooters or bikes.
The good news? Your insurance may step in. Homeowners or renter’s insurance can provide personal liability coverage if you injure someone or damage property, and your health insurance covers your medical expenses if you get hurt. If a car hits you, your auto insurance’s PIP (in no-fault states) may also apply.
Bottom line: check your policies before you ride, because the rental company’s coverage options likely won’t cover scooters or bikes at all.
FAQs About Rental Car Insurance
Does my personal auto insurance cover a rental car?
In most cases, yes. If you carry collision and liability on your personal auto insurance, that auto insurance coverage usually extends to a rental vehicle in the U.S. Always double-check with your insurance company to confirm the details.
What if I don’t own a car but rented a car for a trip?
If you don’t have a personal auto insurance policy, you likely won’t have any protection when you rent. In that case, it’s a good idea to purchase rental car insurance coverage from the rental company so you’re not left unprotected.
Will my credit card company cover rental car insurance?
Many major credit cards offer some level of credit card coverage when you pay for a rental car with their card. However, this protection is usually secondary, meaning it only kicks in after your personal insurance, and it may not cover every fee the rental company charges. Check with your credit card company before relying on it.
What happens if I file a claim with my insurance company for damage to a rental?
Filing a claim for a rental car accident goes through your personal insurance company just like any other accident. The claim may show up in the CLUE database for several years, which could affect your rates. Using coverage from the rental company instead can sometimes prevent this.
Do I need rental car insurance coverage outside the United States?
If you’re traveling internationally, your personal auto insurance coverage usually will not apply to a rental vehicle abroad. In those cases, purchasing coverage from the rental company is typically the safest option.
Travel Smarter: Talk with Your Insurance Agent
Insurance decisions can feel overwhelming, especially when you’re standing at the rental counter with a line behind you. The good news? You don’t have to figure it out on the spot.
The smartest move is to review your coverage before you rent a car. Talk with your insurance agent about what protection you already have, what gaps might exist, and whether it makes sense to add the rental company’s plan.
And remember—never drive away without some form of coverage. Whether it comes from your personal auto policy, your credit card company, or the rental company itself, having protection in place is the only way to truly enjoy your trip with peace of mind.
At Harry Levine Insurance, we can help you sort through your options so you know exactly what’s covered before you get behind the wheel. Call us today for clear answers and confident coverage.
