Do I Need Special Insurance for a Rental Car?

On The Road

Do I Need Extra Rental Car Insurance?

When you’re renting a car you never want to worry whether or not you have the right insurance coverage and if you will be properly covered in the event of a collision. But you also don’t want to feel like you are overpaying, or duplicating coverage you already have!

The rental company’s extra coverage might make sense in some cases, however you may be covered by your existing car insurance policy, or even through your credit card — particularly if you will be renting the vehicle in Canada or the United States.

Here are common options when it comes to rental car insurance.

1) You can add (or you may already have) a rental car endorsement on your existing auto insurance policy.

Endorsements are add-ons to an insurance policy that provide additional benefits for specific needs — often at a low annual cost. If you add a rental car endorsement to your existing auto insurance policy for the year, you’ll have additional insurance coverage that extends to rental cars all year long.

You just want to make sure you understand your own policy coverage to ensure you have everything you need each time you rent. The amount you pay and the kind of coverage that is extended under the endorsement may vary, and there may be limitations on the type of rentals you will be covered for. For example, your personal insurance may not cover commercial vehicles so if you need to rent a truck, you probably won’t be adequately covered with a rental car endorsement. If you are renting outside Canada or the United States, you’re looking at completely different situation as well. It is always a good idea to review the coverage on your personal car insurance policy and check in with your agent before you step up to the car rental counter.

2) You can use a credit card that offers extra insurance when you pay for the car rental with that card.

Some credit cards provide a form of rental car insurance. These credit cards often come with an annual fee. To be entitled to the rental car coverage included with the credit card, you’ll need to charge the entire car rental amount to that credit card and you will have to decline any supplemental coverage offered by the rental company. However, other conditions often apply. Some card insurers will specify which rental firms you can use, cap your rental period to a certain number of days, and limit the types of vehicles they will provide coverage for (most will not insure luxury or exotic vehicle rentals).

Check your card holder agreement, or call the toll-free phone number on the back of your credit card to have your options and restrictions explained in detail before you reserve the car.

3) You can purchase extra coverage through the rental car agency.

The car rental agency will offer extra insurance at the counter with various options available — each at a higher price — that will add to the daily cost of the rental. You should check the extent of the coverage before you decide to add it to determine what you may or may not be getting, or what you even need.

Rental car agencies typically break out their extra insurance offerings into sections. Options may include:

  • “Collision/loss damage waiver” — an addition that may help cover the cost of repairing the vehicle if it gets damaged, but does not offer personal coverage for injury, death, or loss of property. This coverage may duplicate your existing coverage if you have collision and comprehensive coverage on your own car. If you’ve dropped collision or comprehensive coverage from your own auto policy, and you don’t purchase this waiver, you would probably have to pay for damage you cause to the rental car.
  • “Liability coverage” — intended to help protect you if you injure someone or damage their property while driving. However, it could be possible that you already have sufficient liability coverage through your own auto insurance policy. If you’ll be renting in Canada or the United States, you may not need to buy this extra coverage from the rental agency.
  • “Personal effects” — this coverage option may be available to help cover any personal belongings (such as a laptop) that could get stolen from the rental car. But if you have homeowners or tenant insurance, the contents coverage on that policy may cover your personal items when you are away from home anyway.

There are also usually exclusions to the coverage offered by the rental company, such as if a collision occurs due to speeding or driving on unpaved roads, or if you take the vehicle to a province or state not specified in the contract.

If you’re not sure whether buying rental car insurance makes sense for you, do your research in advance, so you can make an informed decision to ensure you have the coverage you need.