Car Rental Insurance: Save on Your Rent-a-Car Insurance

July 28, 2025/,

Renting a car opens a world of convenience, especially when you’re traveling or your personal vehicle is unavailable. However, one of the most overlooked—and potentially expensive—parts of this process is insurance for car rentals. Many renters are unsure if they need rental car insurance, what their options are, or how to find the best coverage for peace of mind.

This guide will break down everything you need to know about rental car insurance, helping you understand when you’re already covered, what types of protection are available, and how to save money without sacrificing security.

What is car rental insurance?

Rental car insurance is a type of insurance coverage that protects renters against financial liability in case of damage, theft, or accidents involving a rental vehicle. It can be purchased from the rental agency, a third-party provider, or through your personal auto insurance policy or credit card company.

While your personal auto insurance might extend to rental vehicles, it’s essential to understand the exclusions in your auto policy. Similarly, credit cards may offer primary coverage, but only under specific conditions and usually for domestic rentals.

Types of rental car insurance coverage

Before you get a rental, knowing your insurance plan options will help you avoid overpaying or leaving yourself vulnerable to liability.

1. Collision Damage Waiver (CDW) / Loss Damage Waiver (LDW)

This waiver covers the damage to your rental car, including vandalism and theft, but it isn’t technically “insurance.” It simply waives your financial responsibility for physical damage or loss. While many rental car companies offer this, you may already be covered by your credit card or auto insurance.

2. Liability Coverage

This type of insurance covers injuries or damage to third parties and their property if you’re at fault. If your personal car insurance includes liability insurance, it may extend to your rental. For international rentals, you might need supplemental liability insurance.

3. Personal Accident Insurance

This coverage pays for injury expenses to you or your passenger in the event of an accident. It’s often redundant if you have good health insurance or auto insurance that includes injury protection.

4. Personal Effects Coverage

This protects your belongings if they are stolen from a rental car. Items like laptops, luggage, and cameras are typically covered, although only up to a specific limit. This coverage can be valuable if you travel with high-value items.

Do you need rental car insurance?

Whether you need rental car insurance depends on several factors, including your current insurance policies, how you pay, and where you’re driving.

When your personal auto insurance covers rentals

If you own a car and have auto insurance, your policy may automatically cover damage and liability for rental cars within the U.S. Check the terms and conditions of your auto insurance policy for details, especially any limitations on the type of vehicle or usage.

Credit card benefits and limitations

Many credit cards offer rental insurance as a perk. However, coverage often requires that you decline the rental agency’s CDW/LDW and pay for the rental with the same credit card. Always confirm with your credit card company, as benefits vary significantly.

International travel considerations

Your personal auto insurance or credit card coverage may not be available when renting internationally. In such cases, purchasing insurance from the rental company or a reputable third-party insurance provider is recommended.

When extra coverage makes sense

There are situations when buying extra rental car insurance coverage makes sense, such as:

  • You don’t have a personal vehicle or auto policy
  • You’re traveling internationally
  • You’re renting a luxury or exotic car
  • You want full protection against theft, loss, or high deductibles

How much does rental car insurance cost?

The cost of rental car insurance varies based on the type of coverage, location, rental duration, and vehicle.

Typical daily rates

  • CDW/LDW: $10–$30 per day
  • Liability coverage: $7–$15 per day
  • Personal accident insurance: $3–$7 per day
  • Personal effects coverage: $1–$5 per day

This can significantly increase your rental expenses. For a more detailed understanding of overall pricing and fees, check this guide on how much does it cost to rent a luxury car and the breakdown of common rent a car fees.

What affects the cost?

  • Location (airport vs city)
  • Rental duration (daily vs weekly)
  • Type of vehicle (economy vs luxury)
  • Insurance company or third-party provider

Best rental car insurance providers

Choosing a reliable insurance provider can make a big difference in coverage and claim experiences. Here are some of the top options:

1. State Farm

  • Strong for customers who already have personal auto insurance
  • Often extends coverage to rental vehicles
  • Limited international protection

2. Geico

  • Affordable add-ons for rental coverage
  • Works well if bundled with existing auto insurance

3. Allianz Travel Insurance

  • Great for international rentals
  • Offers 24-hour emergency support and assistance services

4. Progressive

  • Flexible rental insurance options
  • Easy to customize insurance coverage levels

When selecting a provider, consider your travel insurance, existing policies, and type of vehicle. For example, if you plan to rent a luxury car, make sure your insurance covers damage or theft of high-value cars.

Tips to save money on rental car insurance

Cutting costs on rental insurance doesn’t mean skimping on protection. Use these strategies to spend less and protect more.

1. Check existing coverage

Before you buy extra insurance, check if your auto policy or credit card already provides insurance coverage for rentals.

2. Use the right credit card

Some credit cards come with primary coverage, which means you won’t need to file a claim with your personal auto insurance first.

3. Consider third-party insurance

Companies like Bonzah and RentalCover offer insurance plans that are often cheaper than what rental car companies charge—and may offer broader coverage.

4. Avoid unnecessary add-ons

Decline options like roadside assistance, lost keys, or authorized drivers if your travel plan doesn’t justify them.

5. Choose the right vehicle

The type of vehicle impacts your insurance rates. If you’re aiming for style, comfort, and safety, review guides like what cars are considered luxury, the best luxury SUV, or even how to rent a sports car to ensure your insurance plan matches the vehicle’s value.

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