You may not need a car for everyday life, but when jetting off to Maui or Milwaukee, a rental car might be essential. But can you rent a car if you don't have auto insurance? And if you already have insurance, will that policy cover rental car damages and accidents, or do you need to purchase the insurance offered at the counter?
The answers to these questions can be complicated by differences in state laws, rental companies, and coverage policies. Plus, some types of damage may also be covered by other types of insurance, such as health insurance or a homeowners policy.
Learn the basics to get a sense of whether you need to purchase insurance, and so you know which questions to ask before renting.
- You can rent a car without insurance.
- Coverage for rental car claims may be provided through your existing insurance policies, including credit card insurance coverage, health insurance, an umbrella policy, and homeowners or renters insurance.
- Available types of rental insurance vary and include coverages for liability, damage to the vehicle, personal property, and accidents.
- Even if you have insurance that covers a rental car, you may want or need to purchase more.
- Ask the rental agency and your insurance company what is covered before you get behind the wheel of a rental.
Insurance Requirements for Renting a Car
Rental agencies insure their own cars, but this doesn't leave you off the hook—you’re still responsible for damages while renting. So even if the rental agency doesn't require auto insurance, it’s still a good idea to make sure you have sufficient coverage.
Here’s an overview of available insurance coverages and potential alternatives:
|Rental Agency Term||Covers||Potential Alternatives||Information|
|Liability insurance||Damage and injuries you cause to others in an accident or while driving the car. Does not cover damage to the rental car, your injuries, or your passengers’ injuries.||Liability insurance from your personal auto insurance policy.||Liability insurance for autos is typically required by state law. State law and rental agencies determine whether liability insurance is included in the rental price, for how much, and for whom.|
|Supplemental liability insurance||Damage and injuries you cause to others beyond the state minimums.||Higher minimums on your personal policy; an umbrella policy extending your liability insurance coverage.||Also called additional liability insurance, this may cover up to $2 million in damages in some states.|
|Loss damage waiver (LDW) or collision damage waiver (CDW)||Damage to the rental car, no matter who is at fault; theft of the rental car; any associated claims such as loss of use.||Personal auto insurance for collision and comprehensive coverages. Your credit card may also provide coverage for some damage to the rental car. Travel insurance products.||This isn’t technically considered “insurance” but absolves you for damage you do to the car, although it may come with exclusions.|
|Limited or partial loss damage waiver||Damage to the rental car, no matter who is at fault up to a certain amount.||Your credit card; personal auto insurance.||Covers damages up to a maximum, such as $1,000. You are responsible after that.|
|Personal effects protection or coverage||Items stolen from the car.||Your homeowners, condo or renters insurance, and some credit cards.||Usually capped at a maximum amount such as $600 per passenger, or $1,500 in total, depending on the company. The rental agency’s coverage may only pay for what your primary policy doesn’t cover.|
|Personal accident insurance||Medical bills, death-related costs, and other expenses such as ambulance services for yourself and your passengers in the rental car.||Personal injury protection through your auto policy or adequate health insurance; travel insurance; some credit cards; life insurance in the event of death.||Maximum limits may apply, such as $175,000 for accidental death.|
|Roadside assistance||Roadside help such as a flat tire or getting towed.||AAA or roadside assistance from your insurer or credit card company.||Some emergency help could possibly be included in the base rental rate.|
Before renting a car, ask the agency the following questions:
- Is liability insurance is included with the rental?
- What coverage is included in the basic rental price?
Note that a CDW/LDW policy you purchase through the rental agency may not cover car damage if you violate the agency’s terms, such as racing, driving while drunk, or allowing someone other than the authorized renter to drive the car. Review these terms carefully.
What Your Auto Policy Covers for Rental Cars
Various coverages may be offered by your personal auto policy in addition to coverage provided by policies for renters or homeowners insurance, health insurance, or your employer’s insurance (if you’re traveling on business).
Your auto policy will typically cover your rental car like it covers your own car or truck. However, this also means that if you don’t have collision or comprehensive coverage on your own vehicle, you won’t have it for the rental car, either. You’ll be responsible for any deductibles, just like you would with damage to your own car.
Many personal auto policies offer rental car coverage, often up to a certain dollar amount per day. However, this coverage does not apply when you rent a car on vacation, for instance, but only kicks in when your car is out of service due to an accident.
Rental agencies may point out that their damage and theft waivers help you avoid making a claim against your own insurance, which could possibly increase your insurance rates.
Before renting, call your auto insurer and ask:
- What type of coverage is provided for rental vehicles by my auto insurance policy?
- Does my policy cover damage to the rental car?
- Is there a limit to my coverage for rental vehicles? What is the maximum dollar amount of coverage?
- Are there geographic limits for coverage; for example, does my coverage only work in the U.S. and Canada?
Your personal auto insurance may not cover your rental if you’re in Europe or another foreign country, or if you’re traveling for business. Your insurance policy may also not pay for costs associated with a rental auto’s damage, such as loss of income for the rental agency if the car’s in the shop.
Credit Card Coverage
Some credit cards cover damages to your rental car if you use the card to rent the car. But before assuming you can rely on your card, read the fine print—the terms and conditions are usually spelled out in your card’s documentation or online.
While coverage varies by card, the credit card may only reimburse you for damage to the rental car—but not for liability claims made against you by others. Some American Express cards, for example, assist with coverage of your personal property inside the rental car, and for any accidental death or accident-related claims. Other cards specifically exclude coverage of your personal property and any injuries.
To qualify for credit card coverage, the cardholder must use the card to pay for the rental and may also need to decline the rental agency’s coverage, including the collision damage waiver (CDW), personal accident, and property coverage.
Credit card coverage is usually secondary, which means it only covers costs after your other coverages have been exhausted—including your auto policy, health insurance policy, or renters insurance. Credit card coverage may pay your deductible, however.
Credit cards typically set limits for auto rental coverage. For example, up to $1,000 for property stolen from the rental car, $5,000 for injury claims, and $75,000 for rental car damage or theft. If costs are higher than this limit, you’re responsible for the difference.
Some cards exclude certain types of vehicles from coverage, including expensive and exotic cars, full-size SUVs, and trucks. Most credit cards have a list (that may not be all-inclusive) in the card agreement, excluding coverage under certain circumstances, including:
- You rent a car in certain countries, such as Italy.
- You engage in illegal activity during the rental.
- The car has any manufacturing defects that led to the claim.
- Tire damage occurs.
- You leave the car running and unattended.
- You don’t file the claim within the time frame specified.
Personal property coverage might exclude items such as:
- Credit cards and passports
- Some medical devices
Ask your credit card company if the following limitations apply:
- How does this card’s coverage work if I’m in an accident? What does it cover or not cover?
- How does this insurance work with my existing auto insurance? Do you reimburse me for my deductible?
- Are there any rental qualifications, such as rental length, type of vehicle, location, or whether it’s for personal or business use?
What If You Don’t Have Auto Insurance?
If you don’t have auto insurance, you can still rent a car, but you should decide which coverages to accept or decline at the rental desk. Rental agents should relay that coverage is optional and not a requirement for renting. But here are some coverages to consider:
Liability Coverage and Supplemental Liability Coverage
Liability insurance may be capped at a certain amount, depending on the state and the agency. For example, if you cause $100,000 of injuries to another driver but are only covered for $25,000, you could be financially responsible for the difference. If you don’t have sufficient coverage through a personal auto policy or an umbrella policy, consider purchasing this coverage for your rental.
Damage and Theft Coverage
If you don’t have auto insurance, consider a collision damage waiver or a loss damage waiver from the rental agency. Otherwise, if you’re in an accident or the car is stolen, you carry the full financial responsibility for repairing or replacing the rental car. But check if your credit card provides this coverage first.
Other Insurance Coverage
Check with your homeowners/renters insurance and health care coverage to find out what, if any, coverage you have while traveling or driving a rented car. If you’ve purchased travel insurance, it might also cover some situations while you’re on the road.
If you rent a car in Mexico or plan to drive there, you will likely need to purchase a special, separate Mexico insurance policy, which covers liability if you cause damage to others or property, and any theft or damage to the rental car.
If you rent frequently, you could investigate non-owner insurance, which can offer coverage when you drive vehicles you don’t own.
Some travel insurance companies offer car rental protection, which may include damage to the car, trip interruption, baggage loss, or theft. However, liability claims may not be covered.
The Bottom Line
Call your credit card company to find out what coverage is provided if you rent a car using that card and the conditions of receiving coverage. Also speak with your auto insurance company to make sure your existing coverage will extend to a rental car. In this way, you can be sure of your existing coverage and better know what insurance to decline and possibly accept at the rental counter.