Rental car insurance: what to buy at the counter and what you already have
Holiday trips often end at a rental counter, where the agent asks whether you want “full protection.” The extras are optional, and the Minnesota Attorney General’s Office notes they can add $30 or more per day to the bill. Many drivers already carry most of this cover through policies they pay for anyway. A short check before you leave home tells you which extras, if any, are worth buying.
The four products sold at the counter
Rental companies usually offer some mix of these. The price ranges below are the typical daily costs quoted by the Utah Insurance Department.
- Collision damage waiver or loss damage waiver (CDW or LDW), about $10 to $20 a day. If you accept it, the rental company agrees not to charge you for damage to or theft of its car. Wisconsin’s consumer protection agency points out that a waiver is not insurance; it is the company giving up its right to bill you. It does not pay for injuries or for your belongings.
- Supplemental liability, about $7 to $14 a day. Pays for damage and injuries you cause to other people, above what the rental company or your own policy provides.
- Personal accident insurance, about $1 to $5 a day. Pays medical and accidental death benefits for you and your passengers.
- Personal effects coverage, about $2 to $5 a day. Pays if belongings are stolen from the car.
Check 1: your own auto policy
If you own a car and carry liability, collision and comprehensive, that cover often extends to a rental car you drive for personal use in the US. Utah’s regulator says drivers with collision and comprehensive on their own car will likely not need the damage waiver. Wisconsin’s guidance adds the flip side: if your policy has only liability, there is nothing to cover damage to the rental car itself.
Call your insurer or read the policy and ask:
- Does my collision and comprehensive cover apply to rental cars, and with what deductible?
- Is there a limit on how long the rental can be, such as a week or a month?
- Does it cover loss of use, administrative fees, towing and diminished value?
- Does it apply to business travel, or only personal trips?
- Does it apply in Canada, Mexico or elsewhere abroad?
The fees in the third question matter. After a crash, rental companies can charge for the days the car is out of service and for paperwork, and several state regulators warn that personal policies do not always pay those charges. If yours does not, a card benefit or the waiver may fill that gap.
Some states set their own rules. Minnesota, for example, requires auto policies to cover damage to a rental car and loss of use, and bars rental companies in the state from selling a damage waiver unless the renter first signs an acknowledgment that their personal policy must cover the rental.
If you do not own a car, a non-owner auto policy can give you liability cover when you rent or borrow cars, as the Utah department notes.
Check 2: your credit card
Many credit cards include rental car damage and theft cover when you pay for the whole rental with that card. The details vary a lot, so ask the issuer for the written benefit terms. Points to confirm:
- Primary or secondary. Utah’s regulator says card benefits are usually secondary, which means they only pay after your auto insurance. You may still have to file with your own insurer first and pay your deductible.
- Whether you must decline the waiver. Card benefits often apply only if you pay with that card and turn down the rental company’s CDW or LDW.
- Excluded vehicles and places. Wisconsin’s guidance lists common exclusions such as some pickups, large SUVs and exotic cars, and rentals in some countries.
Card benefits typically cover damage to the rental car only, not liability for injuring someone else. Bring the written terms with you, since Wisconsin’s agency warns the counter may insist you buy the waiver if you cannot show proof of other cover.
Check 3: health, homeowners and renters policies
Personal accident insurance largely overlaps with health insurance, disability cover and any personal injury protection (PIP) on your auto policy. Personal effects coverage overlaps with a homeowners or renters policy, which usually covers theft of your belongings away from home, subject to your deductible. Our home insurance guide explains how that works.
When buying at the counter makes sense
The state guidance points to a few situations where the extras can be worth paying for:
- You have no auto policy and no card benefit. Utah’s regulator suggests buying both the damage waiver and liability cover in that case.
- You carry only liability on your own car. Without collision and comprehensive, the waiver is the main protection for the rental.
- Your deductible is high. Wisconsin’s agency notes some deductibles reach $1,000, so a waiver can cost less than a claim.
- You are driving abroad. Personal policies and many card benefits may not apply outside the US and Canada, and Wisconsin recommends taking the waiver in a foreign country.
- It is a business trip that your personal policy excludes and your employer does not cover.
- You want higher liability limits than your own policy provides.
At the counter and on the lot
- Read the agreement before you sign. Minnesota’s Attorney General warns that some agents add optional products automatically or describe them as required.
- List every driver. An unlisted driver behind the wheel can void the rental company’s protection and many card benefits.
- Photograph the car inside and out before you leave and again at return, and make sure existing damage is written on the agreement.
- Refuel yourself. Rental companies usually charge above-market prices to refill the tank.
- Keep receipts and the agreement until any damage questions are settled.
If something happens
Report a crash or theft to the police where required, then to the rental company and your insurer or card issuer straight away. Ask the rental company for an itemized bill, repair estimates and photos. In Wisconsin, for example, rental companies must offer two repair estimates and let you inspect the car within two days of the accident. If a charge looks wrong, your state insurance department or attorney general’s consumer office can help.
If the rental check turns up gaps in your own policy, it may be time to compare car insurance quotes or browse cheap car insurance options.
Common questions
Is rental car insurance required by law?
No. The Minnesota Attorney General’s Office describes all four counter products as optional. You still need to meet your state’s insurance rules when you drive, and that liability cover can come from your own policy.
Does my deductible apply to a rental car?
Usually yes. If your own collision cover pays for damage to a rental, expect your normal deductible to apply. Ask your insurer to confirm.