Rental Cars: How does the insurance work?



Should I buy the extra insurance from the rental company?

It’s a tough call, considering the fact that you may already have the coverage through your Personal Auto Policy.

With most insurance companies, damages to rental cars are covered under Comprehensive & Collision (assuming you have “full coverage.”)  In most states, Cincinnati Insurance Co. goes one step further by covering damages to a rental car under Property Damage Liability. This provides the additional benefits of 1. No Deductibles and 2. Even if you have “Liability Only” coverage, the rental car is protected.

A number of major credit card providers offer rental auto insurance to cardholders, but certain cards only offer it to elite members, so check with your credit card company first. Also, some credit card coverages kick-in only on expenses that are not covered by other insurance. This is known as “excess” insurance.

What are the benefits of buying insurance from the rental company?

  • If you have no Personal Auto insurance, it protects you from significant out-of-pocket expenses associated with loss or damage to the vehicle, including theft.
  • If you do have a Personal Auto policy, purchasing the extra insurance would help protect your rates in the event of a loss while driving the rental car.

What are the costs associated with the insurance offered by the rental company?

  • Rental car insurance can cost roughly $20 to $40 per day, depending on what plan you select.
  • The collision damage waiver, also known as optional vehicle protection or loss damage waiver, can cost as much as $19 per day and shifts liability for collision damage from the person renting the car to the car rental company. (If you multiply the daily amount by 365 days, you’ll see they are assuming that everyone is extremely high risk.)
  • Liability insurance, which provides protection for up to $1 million, costs between $7 and $14 per day. However, your personal auto insurance should already include liability insurance.
  • Personal Accident insurance, for an additional $1 to $5 per day, covers medical and ambulance bills for the driver and passengers in the event of an accident.

The rental companies are required to offer statutory minimum liability coverage, but in a significant event, that’s not going to do much for you. Statutory minimum liability coverage provides some protection to individuals involved in an accident while driving a rental vehicle—the same minimum coverage that would apply to personal coverage.

I’m renting a moving van/truck. Does my policy cover that?

Yes, as long as the van or truck is < 26,000 lbs. GVWR (Gross Vehicle Weight Rating,) your policy will cover it just like a rented car. The same above topics of discussion apply to vans and trucks.

Helpful Hint:

Always take the time to perform your walk-around inspection with the rental agent. Use the video camera on your phone to document the condition of the vehicle, inside & out.  I’ve seen instances when no inspection was performed, and the insured was responsible for pre-existing damage that was not documented. As soon as they turned the car in, the damage was found and assumed to be caused by my insured.

Bortz, D. (2012, June 4). Should you purchase rental car insurance.
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Posts on are written in plain language for informational purposes only. They are not policy forms or parts of an insurance policy. For exact language, see the insurance policy provided by your carrier.

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Cameron A. Shandersky, CPCU
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