What insurance do i need for a rental car

Do I need to buy rental car insurance?

Short answer: In 90% of cases, no, especially if, like many in the military, you’re a USAA member.

Long answer: It depends on what country you’re in, your auto insurance coverage, what credit card you use, and how much hassle you want to deal with in the event a claim is made.

Renting Outside the United States

If you’re planning on renting a car outside the US, the quickest way to determine if you’ll be covered is to contact your auto insurance company or credit card company. Most credit card companies and insurance companies extend coverage to most of the world, but it doesn’t hurt to check. Personally, I always pay extra for rental car insurance outside the US. It’s just not worth the hassle dealing with foreign laws and rental car companies when they find the slightest ding on your car. The rest of the information in this article assumes you’re renting in the US.

Many military members insure themselves and their automobile through USAA. If you have USAA auto insurance, the coverage you have on your vehicles extends to your rental car. You can see this for yourself in your USAA auto insurance by going to the FAQ section.

For other companies, I recommend calling them or checking their respective website to see if they extend the same coverage to rental cars. Usually, they do.

Do credit cards cover car rental insurance?

What insurance do i need for a rental carAll of the four major credit cards (Visa, MasterCard, American Express, and Discover) offer some sort of car rental insurance. All of these programs require the following two steps:

  1. Pay for the rental using an eligible card
  2. Decline the collision damage waiver offered by the rental car company

That second step can throw people for a loop. “You mean I’m supposed to say no to extra insurance?” Well, yes. It can be counter-intuitive, but if you want to save money, declining the rental insurance offered by the rental company can save you 30-50% of the cost of renting.

Most of the credit card insurance programs offer “secondary coverage.” That means that your auto insurance is on the hook first for any damage and then your credit card will cover the remainder. If your auto insurance doesn’t cover collision or some other category, then the credit card company would become your primary coverage provider and would cover the damage, usually up to a pre-determined amount.

VISA – Auto Rental Collision Damage Waiver

If you have any of the following:

  • Visa Standard Credit
  • Visa Rewards Credit
  • Visa Premium Rewards

Then you have a collision damage waiver from Visa. That list covers pretty much every card Visa issues, other than Student cards, debit cards, and prepaid cards. Visa “covers up to the actual cash value of the vehicle as it was originally manufactured.” Be sure to file any claim within 45 days. This does not appear to cover liability or medical expenses, so ensure that your regular auto insurance covers you for these contingencies.

MASTERCARD – Car Rental Collision Damage Waiver Insurance

MasterCard is not as forthcoming on their website as to what cards are eligible or what their coverage limits may be. However, they do offer car rental collision damage waiver for some of their eligible cards. The USAA Cash Rewards® World MasterCard® is one of the MasterCards that offers auto rental insurance.

AMERICAN EXPRESS – Car Rental Insurance

AMEX offers up to $50,000 coverage on most of their cards. Like most the credit card auto insurance products, their coverage is secondary (meaning your regular auto insurance covers what they will first). Some of the AMEX Platinum cards offer up to $75,000 in coverage.

DISCOVER – Car Rental Insurance Plan

Discover only offers $25,000 in secondary coverage. This should be sufficient provided you have additional coverage through your auto insurance company. If not, you may want to consider purchasing collision coverage from the auto rental company or using a different card that offers better protection.

The Best Credit Card Auto Insurance Policy

Of the course major credit card companies, Visa seems to offer the most protection, on the most number of cards, for the lowest cost (FREE!). Visa is also the most transparent of the four companies when it comes to describing their policy and coverage.

My experience with Chase car rental insurance

When I was TDY to Oklahoma for 3 months, I rented cars nearly every weekend. It was cheap (usually only $70 for Friday morning to Monday morning) and of course I didn’t have to worry about maintenance or other annoying costs of ownership.

During this time, I never once paid for the Enterprise car rental insurance. Because I was using the Chase Freedom Card and the Chase Sapphire Preferred to rent these cars, I never paid a dime for rental car insurance from the rental car company. This saved me over 50% of the cost of renting, and I was still covered by my USAA auto insurance and the supplemental coverage of the credit cards.

While I never had to make a claim, Chase’s customer support has always been helpful and relatively painless. I’m sure they would handle the claims process quickly and professionally. The Chase car rental insurance covered me for nearly a dozen car rentals and I never once had a problem with it.

The Bottom Line on Rental Car Insurance

So before you rent, ask yourself these questions:

  • Am I renting in the United States?
  • Does my regular auto insurance extend to rental cars?
  • Am I using a credit card that includes a auto rental collision damage waiver?

If you answered “yes” to all of these questions, you do not need to purchase rental car insurance from the rental car company. If you answered “no” to one or more of the questions, you’re going to want to double check your coverage and make sure that you’ll be covered in some form.

Insurance is an important part of protecting your financial assets and moving towards financial independence. However, saving money is also one of the quickest ways to becoming financially independent. By using your regular auto insurance and credit cards, you can insure yourself while saving over 50% of the cost of renting automobiles.

Have you ever had an accident while driving a rental car? I’d love to hear about your insurance experience in the comments, especially if you went through your credit card company!

The #1 Website I Use to Achieve Financial Independence Faster

I have investment accounts all over the place. To keep track of all of them in one place I use Personal Capital. It combines all of my accounts, shows me where I may be overpaying in fees, and provides beautiful charts showing my overall asset allocation and performance.

I use Personal Capital to track my Roth and Traditional TSP, Vanguard IRAs, banking accounts, SDP, and my Betterment taxable account, all in one place. It's free, secure and presents me with a one-stop dashboard so I can see all my money on one site.

Read my full review of Personal Capital and see how easy it can be to manage your investments in one place. Trust me, once you try it, you'll love it.

P.S. - If you have over $100,000 of assets and a 401k, you really need to run the Personal Capital 401k Fee Analyzer.

3 thoughts on “ Do I need to buy rental car insurance? ”

There is some very useful info here. So many people spend money on rental car insurance when they really don’t have to. It’s good to know when you should add extra and when it’s not necessary.

USAA badly misled me!

A few days prior to going on a trip to Scotland, I rented an Avis Rent-a-Car through a travel agent, and paid for the entire rental with my USAA World Master Card. Since it had been seven years since I had rented a car in Europe, I felt I needed to check carefully about whether my USAA Auto Policy would cover me in case of an accident. So I phoned USAA Insurance and spoke to a lady who worked in the auto insurance department. I asked her to check for me to see if I would be covered in the rental car while in Scotland by my USAA Auto Insurance. After carefully checking my specific auto policy, she assured me it would cover me in case I had an accident over there. I further asked her if I should decline all the insurance offered by Avis Rent-a Car. She said that was correct, I should decline all the coverages offered by them since I was already covered by my USAA Auto Insurance Policy. Unfortunately, I had a collision over in Scotland on the first day of my arrival within hours of picking up the Avis car. I exchanged all the information with the other owner and called Avis to pick up the car, since it was not driveable. I spoke to the manager of the Glasgow Avis Airport location where I picked up the car. I gave everyone concerned my USAA information for Auto Insurance. Avis said they always charge me what their mechanics believe the repairs to cost and charged my USAA World MasterCard for that amount (telling me to file the paperwork they gave me to my insurance company for the claim to reimburse me). I e-mailed the claim information to USAA as their website said to do to file a new claim. When I returned to the USA, I called the USAA Auto Claims Department to ensure they had the information they needed. They assigned a claim number but told me that my USAA Insurance WOULD NOT Cover me in the UK. I was SHOCKED after having gotten the information prior to the trip that I had specifically asked and been told I would be covered by USAA. They said they were sorry that I had been told that, but that there was no coverage under my Auto Policy. As a retired active duty officer who had all my various policies with USAA for over forty-seven years, I was NOT HAPPY! They said I could check with Master Card to see if they had any coverage on me. I apparently have some coverage under my USAA World Master Card, but it is a long and difficult claims process with an uncertain outcome (and would not cover the damage to the other car). I am fit to be tied with this whole matter with USAA. If their agents don’t know the facts, and give false information to the USAA member, they don’t deserve my (or anyone else’s) loyalty or business. It is now apparent that I was definitely mislead, and as a result will probably cost me thousands of dollars. I now have a new statement from Avis, in the United Kingdom which is more than twice the amount they already charged me on my credit card.


Do I need insurance to rent a car?

When renting a car, you need insurance. If you have adequate insurance on your own car, including collision and comprehensive, this may be enough.

Before you rent a car:

Find out how much coverage you have on your own car. In most cases, the coverage and deductibles you have on your personal auto policy would apply to a rental car, providing it's used for pleasure and not business. If you don't have comprehensive and collision coverage on your own car, you will not be covered if your rental car is stolen or if it is damaged in an accident.

  • Call your credit card company

    Find out what insurance your card provides. Levels of coverage vary.

  • If you don't have auto insurance, you have two choices: you can buy coverage at the car rental counter, or you can purchase a non-owner auto liability insurance policy.

    Rental car counter insurance can provide the following coverage:

    Sometimes called a loss damage waiver (LDW), this coverage relieves you of financial responsibility if your rental car is damaged or stolen. The CDW may be void, however, if you cause an accident by speeding, driving on unpaved roads, or driving while intoxicated. This coverage generally costs between $9 and $19 a day. If you have comprehensive and collision on your own car, you may not need to purchase this coverage.

  • Liability insurance

    This provides excess liability coverage of up to $1 million for the time you rent a car. Rental companies are required by law to provide the minimum level of liability insurance required by your state. Generally, this does not offer enough protection in a serious accident. If you have adequate liability coverage on your car or an umbrella policy on your home/auto, you may consider forgoing this additional insurance. It generally costs about $9 to $14 a day. If you don't own a car, and rent cars often, consider purchasing a non-owner liability policy. This costs approximately $200&8211;$300 per year. Frequent car renters sometimes find this more cost-effective than constantly paying for the extra liability coverage.

  • Personal accident insurance

    This provides coverage to you and your passengers for medical/ambulance bills. This type of insurance usually costs about $1 to $5 per day, but may be unnecessary if you are covered by health insurance or have adequate medical coverage under your auto policy.

  • Personal effects coverage

    This provides coverage for the theft of personal items in your car. However, if you have homeowners or renters insurance, you may be covered for items stolen from the car, minus your deductible. You need to have receipts or other proof of ownership. This type of insurance usually costs about $1 to $4 per day.

  • Some rental car companies combine personal accident and personal effects coverage together as one type of insurance, while others sell it individually.

    The cost of insurance at the rental car counter will vary depending on the rental car company, state, and location of the dealer and the type of car you rent.

    Some rental car companies may check your credit and driving history and may deny coverage. Check with the rental car company to find out its policy.

    Non-owned auto liability insurance

    Instead of buying liability coverage from the car rental company each time you rent a car, you can purchase a non-owner auto liability insurance policy from an insurance company for about $300 a year which might be cheaper if you rent frequently.

    In addition, if you're thinking of buying an umbrella liability policy, a non-owner auto policy may meet the underlying auto insurance policy requirements. Umbrella liability insurance provides high limits of liability coverage above basic policies. Most insurers will not issue an umbrella liability policy unless the basic policies meet certain dollar limits of coverage.

    A non-owned auto insurance policy covers you for damage you may cause to someone else's car and liability for injuries to its occupants, or to pedestrian, in the event of an accident. The policy will also provide medical payments coverage for you and your passengers, and underinsured and uninsured coverage. This pays for the cost of an accident involving a hit-and-run driver or a driver who has little or no insurance.

    However, non-owned auto insurance does not provide collision coverage. Collision coverage pays for damage to the car you're driving if you crash into another car or object or the car rolls over. You have to buy this from the car rental company. However, some credit cards provide collision coverage if the rental car is paid for with the card or check with your credit card company first.

    Note: If you're renting a car abroad, you may need an international drivers license.


    Do I need insurance to rent a car?

    When renting a car, you need insurance. If you have adequate insurance on your own car, including collision and comprehensive, this may be enough.

    Before you rent a car:

    Find out how much coverage you have on your own car. In most cases, the coverage and deductibles you have on your personal auto policy would apply to a rental car, providing it's used for pleasure and not business. If you don't have comprehensive and collision coverage on your own car, you will not be covered if your rental car is stolen or if it is damaged in an accident.

  • Call your credit card company

    Find out what insurance your card provides. Levels of coverage vary.

  • If you don't have auto insurance, you have two choices: you can buy coverage at the car rental counter, or you can purchase a non-owner auto liability insurance policy.

    Rental car counter insurance can provide the following coverage:

    Sometimes called a loss damage waiver (LDW), this coverage relieves you of financial responsibility if your rental car is damaged or stolen. The CDW may be void, however, if you cause an accident by speeding, driving on unpaved roads, or driving while intoxicated. This coverage generally costs between $9 and $19 a day. If you have comprehensive and collision on your own car, you may not need to purchase this coverage.

  • Liability insurance

    This provides excess liability coverage of up to $1 million for the time you rent a car. Rental companies are required by law to provide the minimum level of liability insurance required by your state. Generally, this does not offer enough protection in a serious accident. If you have adequate liability coverage on your car or an umbrella policy on your home/auto, you may consider forgoing this additional insurance. It generally costs about $9 to $14 a day. If you don't own a car, and rent cars often, consider purchasing a non-owner liability policy. This costs approximately $200&8211;$300 per year. Frequent car renters sometimes find this more cost-effective than constantly paying for the extra liability coverage.

  • Personal accident insurance

    This provides coverage to you and your passengers for medical/ambulance bills. This type of insurance usually costs about $1 to $5 per day, but may be unnecessary if you are covered by health insurance or have adequate medical coverage under your auto policy.

  • Personal effects coverage

    This provides coverage for the theft of personal items in your car. However, if you have homeowners or renters insurance, you may be covered for items stolen from the car, minus your deductible. You need to have receipts or other proof of ownership. This type of insurance usually costs about $1 to $4 per day.

  • Some rental car companies combine personal accident and personal effects coverage together as one type of insurance, while others sell it individually.

    The cost of insurance at the rental car counter will vary depending on the rental car company, state, and location of the dealer and the type of car you rent.

    Some rental car companies may check your credit and driving history and may deny coverage. Check with the rental car company to find out its policy.

    Non-owned auto liability insurance

    Instead of buying liability coverage from the car rental company each time you rent a car, you can purchase a non-owner auto liability insurance policy from an insurance company for about $300 a year which might be cheaper if you rent frequently.

    In addition, if you're thinking of buying an umbrella liability policy, a non-owner auto policy may meet the underlying auto insurance policy requirements. Umbrella liability insurance provides high limits of liability coverage above basic policies. Most insurers will not issue an umbrella liability policy unless the basic policies meet certain dollar limits of coverage.

    A non-owned auto insurance policy covers you for damage you may cause to someone else's car and liability for injuries to its occupants, or to pedestrian, in the event of an accident. The policy will also provide medical payments coverage for you and your passengers, and underinsured and uninsured coverage. This pays for the cost of an accident involving a hit-and-run driver or a driver who has little or no insurance.

    However, non-owned auto insurance does not provide collision coverage. Collision coverage pays for damage to the car you're driving if you crash into another car or object or the car rolls over. You have to buy this from the car rental company. However, some credit cards provide collision coverage if the rental car is paid for with the card or check with your credit card company first.

    Note: If you're renting a car abroad, you may need an international drivers license.


    Do I need a separate insurance card to rent my car out?

    Liability insurance (provided by Intact in Canada, and Liberty Mutual in the U.S.) are active during each trip where the owner is not a commercial rental car company who has declined a Turo protection package and is offering liability insurance directly to their renters. Please make sure your registration, your personal insurance card, and the relevant Turo insurance card are in the car, accessible to your traveler during the trip. If there is an incident during a trip, the traveler and any third parties should refer to the Turo insurance ID card; the number for claims reporting is located on the back (where you have not chosen to offer your own rental liability insurance directly to travelers).

    If you have chosen to offer your owner commercial rental insurance to your travelers, ensure your commercial rental insurance card is in the vehicle and your renters know where it is located. Claims for these trips should be processed exclusively through you own commercial rental insurance provider, not Turo.

    The Turo insurance card does not satisfy state or provincial "Financial Responsibility" requirements, and cannot be used to register your car. Furthermore, none of these cards may be used for New York vehicles (vehicles that are registered to or whose home location is New York state). Cars on Turo cannot be rented out in New York or delivered to New York State.

    State laws vary; in California, Oregon, and Washington, personal car sharing legislation requires that your Turo insurance ID card be included in the vehicle.

    Please note that there are different insurance cards — one for our 49 states (excluding New York), and others for the relevant Canadian province. Please ensure that you have the correct insurance card for your location, and that in Canada, you also print and include the Canada Accident Advice Card.


    How much car rental insurance will I need?

    Renting a car is expensive enough, but when you add in the cost of insurance and damage waivers, your bill will shoot through the roof.

    If you are planning a vacation, or you have a need for a replacement vehicle while your car is being repaired, you may be automatically assuming that you are required to pay for car rental insurance.

    The car rental agencies actually bank on the fact that a majority of their clients will elect to purchase rental car coverage just because they do not really know how their coverage works.

    If you are looking for coverage, start comparing rates now by using our FREE tool above! Enter your zip code to get started now!

    How Personal Auto Insurance can Cover a Rental Car

    As you are standing at the rental counter and the agent asks you if you would like to purchase collision damage waivers or personal liability insurance, tons of thoughts will run through your mind.

    You are having an internal debate where you are asking yourself just how much more this will cost you and what it could cost you if you elect to drive unprotected.

    A personal car insurance policy is designed to protect a specific vehicle that is listed on the policy.

    What you might not know is that the policy explains that there are other scenarios where your policy will extend to a replacement vehicle that you do not own or have regular access to. If you rent a vehicle, this is

    If you rent a vehicle, this is a non-owned car that will be covered with your liability and physical damage limits. Read on and learn how each coverage extends:

    If you are renting in the United States, your liability insurance will be valid while you are operating the rented vehicle.

    One thing many people do not know is that their Bodily Injury and Property Damage Liability coverage follows the drivers on the policy.

    This means that whenever you are in another vehicle and you cause damages to another party, you have the protection that will pay for your negligence to help prevent a lawsuit and financial damage.

    Many people wonder how liability insurance works when you carry state minimum limits. Every state has their own requirements, and getting stuck out-of-state with minimal coverage can be scary.

    If you currently have low limits and you are driving through other states, it can help to know that your liability insurance will go up to the state minimums for the state that you are in.

    You will never be without at least the requirements as long as you have personal auto insurance.

    Compare Quotes From Top Companies and Save

    How does physical damage coverage extend to a rental car?

    Physical damage consists of both comprehensive and collision coverage. Comprehensive pays for damage to your vehicle that is caused by fires or vandals.

    It also pays for other non-moving claims like riot, hail, glass breakage and more. Collision will pay to repair the vehicle when it is damaged when you collide with a car or another object.

    Whatever deductible that you carry for comprehensive and collision coverage is the amount that you will have to pay out-of-pocket towards the collision repairs of the rental.

    Physical damage will cover a rental if you carry it. One thing that many do not consider is that a rental will not have damage cover if you have an older car or you carry only liability on your policy.

    The only time damage is covered in a rental is if it is covered when you are in an accident in your own car. You should also check to see if there are limits to how much per hour your company pays for collision repairs.

    Scenarios when you need to consider rental car insurance

    Your car insurance may not always be ideal when you are in specific territories. It is always important to know how your insurance works and when it might not work before you decide how much car rental insurance you need.

    If you are traveling out of the country, your personal insurance will only cover cars that are rented and driven in the United States. Some policies will cover you only 10 miles beyond the Mexico border.

    If you are traveling abroad, you need to buy a special policy that covers you with your license in that country. The rental agency should be able to help you select the right coverage limits for damage and liability.

    If you have high deductibles to keep your premiums for damage coverage down, you may be interested in buying damage coverage for the rental.

    The last thing that you want to do is get stuck paying for a $900 repair bill because you have a $1000 deductible.

    When you buy a waiver, it typically waives all damage so that you do not lose any money when you get into an accident with the car that you rented.

    If you do not own a car, you should buy coverage through the agency. This is because you are required by law to have liability insurance when you are driving in virtually any US state.

    When drivers often rent but do not own their own car, they may be better off with a specialty policy calls a named non-owner plan.

    This is a plan that offers liability coverage for vehicles that the named insured does not own. It will provide you with a blanket of liability coverage and will not cost you a daily rate each time you rent.

    –You Do Not have Coverage for Your Property

    Many people overlook how important it is to have coverage for their personal belongings when they are traveling. I

    When traveling, you need peace of mind in knowing that these items will be covered.

    If you have a renter’s or a home insurance policy, the coverage will extend while the belongings are away from the home.

    If you do not, you may need to buy personal effects coverage through the agency.

    What happens if you are in an accident and you use your own insurance?

    Just because your auto insurance extends to a rental car does not mean it is always the best way to cover the vehicle. The added rate can add up and having an at-fault accident in the rental can raise your car insurance rates for 3 years.

    The reason for this is because your insurer knows about the loss and pays for the loss.

    If you were to file the claim through the rental car company, you do not have to worry about a rate increase because it will not be reported through the same claims reporting system.

    Loss of use to the rental car agency is when the car is being repaired and is not available for rental.

    Another factor you must consider is that your car insurance provider will not pay for the loss of use. If your insurer will not pay this expense, you have to be ready to pay this hefty charge.

    As you can see, rental car insurance can be helpful to the right person. If you own a car, be sure that insurance that you have extends to provide the right type of cover.

    If you are not happy with your rates now, you should comparison shop to find lower premiums.