How to Buy Auto Insurance from Rental Car Companies

Rental car insurance protects you if you're involved in an accident while driving a rental vehicle. Car rental firms will urge you to purchase their insurance coverage and waivers when you pay for your rental car. But you may already be covered by your personal auto insurance policy or credit card.

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Types of car insurance offered by rental companies

Rental companies, such as Avis, Enterprise and Hertz, offer several types of insurance coverage that you can purchase at the rental desk when you pick up your vehicle. Generally, this coverage falls into four categories, which coincide with the types of coverage you would normally have through your auto and homeowners insurance policies.

Do I already have rental car insurance through my insurer?

If you own a car or drive regularly, you probably already carry an automobile insurance policy. In that case, you may be able to decline some or all of the coverages offered by car rental companies. However, the types of protection you should decline vary based on the value of your rental car and your own policy's coverage, deductibles and limits.

Should I buy a loss damage waiver (LDW)?

Despite providing protection similar to comprehensive and collision coverage, an LDW is not insurance. Rather, it is a contractual agreement that waives the renter's financial liability if their rental car is vandalized, stolen or damaged in an accident. An LDW may also be called a collision damage waiver (CDW) or an excess damage waiver (EDW).

You should purchase an LDW/CDW/EDW if:

You should decline an LDW if you already have collision and comprehensive coverage on a car of similar value to your rental vehicle or the credit card you're using to pay for your rental vehicle already offers an LDW. However, if you've filed a claim in the past year, a second claim may cause your insurance rates to increase significantly. In this case, it may be worth paying the small fee for an LDW before driving a rental car in an unfamiliar area.

Should I buy supplemental liability coverage (SLC)?

By law, every car must meet a minimum amount of financial responsibility before the car can be driven on the road. Your rental agency is required to provide this coverage by law, but it is secondary to your own policy, if you have it.

State minimum liability coverage tends to be just that: the minimum. If you're going to drive your rental a long distance or you're going to be driving at night, it may be worth adding supplemental protection.

It's worth considering SLC if:

Should I buy personal accident insurance (PAI)?

Personal accident insurance covers your or your passengers’ medical costs if you cause an accident. If you carry an auto insurance policy, you may already have personal injury protection (PIP) or MedPay insurance. You likely have health insurance also.

Each of these will provide coverage similar to what you would get under your car rental company's PAI. However, some health insurance policies exclude vehicle-related accidents, so you should verify your coverage under your health insurance policy if you don't have PIP or MedPay insurance.

You may need to purchase PAI if:

Should I buy personal effects coverage (PEC)?

Personal effects coverage insures luggage and other personal belongings that you and your immediate family have brought on your trip. If you carry homeowners or renters insurance, though, your belongings are likely already covered, even in your rental vehicle. Because of this, most renters should decline PEC.

You should purchase PEC if:

It should be noted that some items are typically excluded from PEC. These may include:

Rental car insurance through your credit card

Certain credit cards issued by American Express, Visa or Mastercard offer free LDW coverage when you rent a vehicle. In order to qualify for the coverage, you must be the named cardmember, and you must pay for the entire rental using that card. Additionally, you must decline the LDW/CDW offered by the car rental company. Here are the limits and stipulations each card declares:

Note that the credit cards that offer rental car benefits only provide collision coverage. You'll still need to purchase liability insurance, as well as any additional desired coverage, separately. Also, some cards exclude coverage if your rental car is a commercial vehicle, such as a U-Haul, or if your rental is for a business trip.

Rental car insurance through an independent insurer

If your car rental company's insurance prices are too high, you may purchase rental insurance through a third-party insurer. Companies such as Bonzah or Allianz Global Assistance offer competitively priced stand-alone rental car insurance policies online that might be cheaper for long-term car rentals. Some services also bundle rental car insurance with full travel insurance packages that might be suitable if you're traveling outside of the United States.

Rental car insurance vs. rental car reimbursement insurance

Rental car insurance covers a driver while they're operating a rental vehicle. Rental car reimbursement insurance helps pay for, or subsidize, the expense of a temporary car while your vehicle is being repaired after a covered accident. It's an optional coverage on top of your existing car insurance policy.

If you use rental car reimbursement insurance to rent a vehicle while yours is in the shop, it does not guarantee that the rental car is insured. Whether you use a rental car company that partners with your insurer to pay for the rental car directly — such as Enterprise Rent-A-Car and Geico — or you choose your own car rental company, refer to the guide above to decide which coverages to purchase.