Rental car insurance: is your own coverage enough?

Should I buy the rental company’s coverage?

We’ve all been there… you’re standing at the rental car counter, and the rental agent offers you the supplemental rental car insurance from the rental car company.

The counter where it happens. Don’t be put on the spot the next time you get the supplemental insurance pitch.

But you’re not worried, because, after all, you’re a licensed driver and you have car insurance. And it covers everything… right? And as an extra level of protection, your credit card has protection for this kind of thing. Doesn’t it? (Do any of us really know what our credit card covers with these sorts of things?) The answer to all of those questions is yes… and, no. Most of the time, we don’t want to pay extra for something we might not need. And usually, nothing happens, so we never have to find out.

It’s basically Schrödinger’s rental car insurance—you’re both covered and not covered by your own insurance and/or credit card car insurance policy. You won’t know which until your rental car is damaged and you’re forced to find out.

Now that we’re starting to return to traveling again—many of us for the first time since the pandemic started—it’s time to revisit this age-old dilemma. Should we buy the coverage, or shouldn’t we? Here are some things to know.

Loss of use

If we’re driving our own car and we get into an accident, most of our insurance policies cover the cost of—ironically—a rental car. So you’d think the rental car company could get a rental car. But that’s not actually how most insurance coverage works.

When it’s the rental car company’s car that’s damaged, many of them have this sneaky little clause that puts you on the hook for the money they would have made from renting out that car. For the whole time it’s out of commission. Consider that, even for relatively minor damage—if a body panel needs to be repainted, for example—it could be weeks that the car is out of service. And most regular car insurance policies don’t cover that. Same with credit card rental car insurance. Which means you could be stuck paying thousands out of pocket.

Make sure your own policy or credit card cover you for “loss of use.” Otherwise,
you could be paying for that car’s lost wages while it’s in the shop.

So when you buy the rental car company’s supplemental insurance, you’re partially paying them to protect you from their own policies. (It’s a little like paying the mob to “protect” your business!)

What does your insurance cover?

Liability insurance

If you’re driving a rental car, and you get into an accident where you’re at fault, your regular car insurance’s liability coverage will apply. So the costs associated with damage to other cars and injury to other people are covered—as long as your policy’s limits are sufficient. So you probably don’t need to worry about buying the rental company’s liability insurance. (Pretty much every state requires liability coverage, so you probably have this.)

Collision insurance

If you hit a car—or anything else—collision insurance will pay for the damage to the car you’re driving. If that happens to be a rental car, you may or may not be covered; it depends entirely upon your insurance company and your policy. You’ll want to read the fine print to see what your policy does or doesn’t cover with regard to rental cars.

Comprehensive insurance

Comprehensive is the coverage for things that happen when the car isn’t being driven. So if someone breaks into the car while it’s parked, and shatters a window and steals the stereo, those things are covered (up to whatever your limit is.) Or, if someone steals the whole car, comprehensive will pay for that. But again, rental cars are a different story for a lot of carriers. So you’ll also want to check your policy to see whether it covers you for this type of loss on a rental car.

One additional thing to consider is that even if your policy does cover all or most of the above, the rental car company might make you pay the total sum of the damage up front, and then get reimbursed by your insurance company.

Credit cards that cover rental car insurance

Some credit cards offer a degree of coverage toward rental car insurance. Here are a few of the major cards that do. (Please note that these terms can and do change frequently, so it’s important to verify what’s current and true for your exact card. Most companies offer lots of different cards and they usually each have different coverage.) Also remember that for coverage to apply, you have to pay for the rental car with that card.

Some cards offer all the protection you need, when you rent a car. Be sure to read
your card’s CDW terms thoroughly, do know what is and isn’t covered.

Visa rental car insurance

Visa’s site explains describes their coverage at a high level:

‘The Auto Rental Collision Damage Waiver (“Auto Rental CDW”) benefit offers insurance coverage for automobile rentals made with your Visa card. The benefit provides reimbursement (subject to the terms and conditions) for damage due to collision or theft up to the actual cash value of most rental vehicles.’

Pay particular attention to that ‘subject to the terms and conditions’ part—you’ll definitely want to check that out. There are also numerous exclusions, so be sure to read those, too.

Chase rental car insurance

Chase has a lot of cards that offer rental car coverage, and they’re each a little different (even though their names are pretty similar!) It’s worth noting that Chase is one of the few companies that does tend to cover loss of use charges.

The top three cards Chase offers, in terms of rental car coverage, are Freedom, Sapphire Reserve, and Sapphire Preferred. Preferred, as its name suggests, really does seem to be one of the top choices—many reviewers refer to it as the best all-around card for rental car protection. Here are the Chase card coverage pages for you to compare terms for yourself:

Chase freedom rental car insurance

Chase Sapphire Reserve rental car insurance

Chase Sapphire Preferred rental car insurance

Other, extra measures to protect yourself

  • Take pictures with your phone of any visible damage before you even get into the car. (Some rental car companies will have you do a walkaround of the car with an agent, to spot and note any damage together, but sometimes they just give you the key and you go get into the car and drive away. So it’s very important to document damage on your own. Sometimes they won’t have noted minor dings and scrapes, and might say those don’t count, but just to be safe, best to get a pic!
  • Pay attention to unexpected areas of the car… I’ve had situations where the pre-rental inspection didn’t include inspection of the underside of the car’s front spoiler, or the car’s lower corner of the windshield. (The part that’s down by where it meets the hood, and has black coating on it.) But then, in both of those cases, the person who inspected it upon return did inspect those areas, and found damage. Because those parts hadn’t been checked before I took the car out, there was no way for me to prove that the damage was already there, and it led to some hassle… so I always check those things carefully now.
  • Be careful if you’re renting internationally. Even though there are often companies with the same big names as we have in the US, they’re actually often not closely affiliated with the US company, and sometimes have their own terms that are very different from their US counterpart. In Iceland, for example. I’ve read accounts of people getting really worked over with regard to damage policies. So be sure to do some research and read carefully read the terms before you agree to rent from a given company.

The next time you rent a car, make sure you’ve checked out what your own insurance—and your credit card, if it offers coverage—will and won’t cover. The rental company’s coverage often isn’t necessary, but it can be totally worth it if there are gaps in your own policy where rental cars are concerned.

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