If you’re in an accident, your liability insurance will only pay up to your policy limits for the damages to other cars or property. Collision coverage on your regular policy would pay for accident-related costs to a rental car. Your comprehensive coverage would cover damages to the rental vehicle not related to a traffic accident, such as theft or vandalism.
Most policies have some exclusions; such as, not covering cars rented outside your country, covering vehicles only for leisure (not business), offering only secondary coverage (not primary), and not covering luxury vehicles. So be aware of all exclusions and applicable deductibles so you can get additional insurance if needed to cover those gaps.
Credit cards give some form of rental car insurance coverage. But they don’t cover personal injury or personal liability, although you may have that coverage through your auto insurance and health insurance. But they do typically cover collision damage and theft protection. Credit card coverage is secondary, which means they’ll cover whatever your car insurance doesn’t cover. Possibly including paying for your deductible, towing charges, and other fees. Credit card companies also have restrictions and exclusions. They may not include some fees or offer coverage in certain countries.
Once you figure out what limitations your insurance policy and your credit card have, you’ll decide whether or not to buy more coverage to cover the gaps. You can either buy it from the car rental company or decline it and buy your own separate rental car insurance policy, called a standalone policy. The three most commonly used options are popular Allianz, Bonzah, and Insure My Rental Car.
Buying car insurance through the rental car company is the most convenient option, but also the most expensive and costs up to $40 per day for coverage. If you don’t have another option, it’s best to buy rental car insurance through your rental car company, rather than going without insurance.
Different types of rental car insurance coverage.
| Collision Damage Waiver (CDW) or Loss Damage Waiver (LDW) | The CDW is a damage waiver that will pay for all of the repairs to a rental car if it is damaged or stolen. The loss must happen when an authorized driver is operating the vehicle and during the period when the waiver is valid. It usually requires a deductible payment. |
| Personal Accident Insurance | Covers emergency medical transport and medical benefits of the renter or their passengers if injured in an accident. |
| Supplemental Liability Protection | Car insurers are required to provide a limited amount of liability coverage, but you can buy a supplemental amount of liability protection to protect you from lawsuits. Liability coverage in your policy is meant to cover the rental agency and not necessarily you. |
| Personal Effects Coverage | Personal Effects Coverage will pay to replace up to $500 off your valuables per person. Make sure you know how your property insurance works first. |