Do I Need Extra Rental Car Insurance?

Young man sitting in a car with one hand on the wheel wearing a protective face mask

Young man sitting in a car with one hand on the wheel wearing a protective face mask

With COVID-19 restrictions affecting travel, Canadians may be spending their vacation time closer to home. As regions across the country reopen, many will be taking advantage of local businesses and attractions. If your plans include a rental car, the agent will likely offer you insurance coverage at the rental counter.

So, do you need insurance to rent a rental car?

With car rental insurance, you want the right coverage in the event of a collision but no one likes to find out they’ve paid for something they already have. If you’re not already covered by your existing car insurance policy, or even through your credit card, rental car insurance may be your best option. However, it’s best to know how much coverage you need before signing the rental agreement.

All it takes is a little research.

Are rental cars covered by my auto insurance policy?

While standard auto insurance policies might not cover rental cars, Allstate can provide endorsements to extend your coverage to include short term rental vehicles. Endorsements are add-ons to an insurance policy that provide benefits for specific needs — often at a low annual cost. If you add a rental car endorsement to your existing auto insurance policy, your coverage extends to rental cars.

Make sure you understand your policy as coverage under endorsements may vary, and there may be limitations on the type of rentals. For example, your policy may not cover commercial vehicles if you need to rent a truck or if you’re renting any vehicle for use outside Canada or the United States. 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.

Will my credit card cover car rental insurance?

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

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

Where can I buy rental car insurance?

The car rental agency will likely offer extra insurance at the counter that will add to the daily cost of the rental. The coverage by a third party rental car insurance provider is typically broken down into sections:

  • “Collision/loss damage waiver” — This may help cover the cost of repairing the vehicle if it gets damaged, but does not offer coverage for injury, death, or loss of property. This may duplicate your existing coverage if you have collision and comprehensive coverage on your own car and have a rental car endorsement. 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.
  • “Personal effects” — This coverage option may 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 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.