Everything You Need to Know About Rental Car Insurance Coverage

What Rental Car Insurance Coverage Actually Covers

Four products are typically offered at the rental counter, and each duplicates something you may already own (National Association of Insurance Commissioners, undated):

• Collision Damage Waiver (CDW), also called Loss Damage Waiver (LDW). Not technically insurance — the rental company waives its right to collect from you for damage to or loss of its vehicle. The NAIC notes that if you already have comprehensive and collision coverage on your own car, you will likely not need it. Collision coverage pays the cost of repairs or the actual cash value of the vehicle after a crash or rollover (National Association of Insurance Commissioners, undated).
• Supplemental liability insurance. Covers medical expenses and damage to another person's property caused by the renter's negligence. If you are adequately insured on your own car, the NAIC says you may consider forgoing it.
• Personal Accident Insurance (PAI). Covers medical bills for you and your passengers after a crash. The NAIC describes it as not needed if you have adequate health or disability coverage, or personal injury protection on your own policy — and whether you have PIP at all turns on whether your state is a no-fault or an at-fault tort state.
• Personal Effects Coverage. Covers theft of personal items from inside the rental. Generally already covered by a homeowners or renters policy (National Association of Insurance Commissioners, undated), subject to that policy's deductible and off-premises limit.

What none of this covers. A CDW is not liability coverage — it does nothing for the other driver's bumper or broken wrist. Your own liability limits do nothing for damage to the rental itself. And "rental coverage" on your own policy means two separate things:

1. Whether your comprehensive and collision extend to a rented vehicle. If your policy doesn't, the NAIC notes a rider can sometimes be added for a small fee — ask for it by name before you travel.
2. Rental reimbursement, which pays for a car while your own is being repaired. Your insurer pays this only if you paid a premium to include it, and most policies set a dollar limit on rental payments (National Association of Insurance Commissioners, undated). That limit sits on your declarations page as a per-day figure and a per-claim cap.

Two other gaps catch people. Rental companies commonly bill loss of use — revenue lost while their car is in the shop — and the Insurance Information Institute advises finding out whether your personal auto policy already includes Loss of Use coverage before you rent (Insurance Information Institute, undated). And credit card protection, which many cards include for collision and theft, is in most cases secondary to your personal auto insurance or the rental company's coverage, meaning the issuer pays only after other coverage is exhausted (National Association of Insurance Commissioners, undated).

Extension to rentals, loss of use and administrative fees are written differently by each insurer and each underwriting company within it, and filed state by state. Read your own form, or make the insurer point to the clause.

Who Needs This Coverage

Check these against your declarations page, your card's benefits guide and the rental agreement — not against a general sense of how carefully you drive:

• Your declarations page shows liability limits only, with no "Comprehensive" or "Collision" line and no deductible. If your credit card provides no rental benefits either, the NAIC's guidance points toward buying liability insurance and the collision damage waiver at the counter.
• You don't own a car. The NAIC notes someone without a car who needs a rental might consider a non-owner auto policy, because it provides benefits in addition to rental coverage.
• Your card issuer told you the benefit is secondary and you have no personal auto policy for it to sit behind.
• Your rental agreement has a loss-of-use or administrative fee clause and your own policy has no Loss of Use coverage — the item the Insurance Information Institute says to check before renting.
• Your own car is in the shop after a comprehensive or collision claim and your declarations page has no rental reimbursement line (National Association of Insurance Commissioners, undated).
• You have no health insurance or a high-deductible plan, and you carry no personal injury protection — the gap Personal Accident Insurance is sold to fill.
• You carry high-value equipment and have no homeowners or renters policy, which is otherwise where personal items in a rental are generally covered.

What It Costs

Counter products are priced per day by each rental company, by location and vehicle class, and are not filed with state insurance regulators the way auto premiums are. Rental reimbursement and rider pricing is filed, but varies by state, limit, insurer and underwriting company — so the only figures you can rely on are the ones on your own paperwork. Use this to find them:

How to Get or File It

1. Pull your declarations page and find three lines: "Comprehensive" and "Collision" with their deductibles, and any "Rental Reimbursement" or "Transportation Expense" line with its per-day and per-claim limits. If that line is absent, your insurer owes you nothing for a rental while your own car is repaired (National Association of Insurance Commissioners, undated).
2. Call your insurer and ask four named questions: does my physical damage coverage extend to the vehicle class I'm renting; does my policy include Loss of Use coverage, which the Insurance Information Institute says to check before renting; does it pay the rental company's administrative fees; and can a rider be added, which the NAIC notes is sometimes available for a small fee. Get answers in writing.
3. Call the credit card issuer's benefits administrator — the NAIC specifically recommends asking about its benefits before declining counter coverage. Ask whether the benefit is primary or secondary, which vehicle types and countries are excluded, whether you must decline the CDW and pay with that card, and how many days are covered.
4. If you don't own a car, get non-owner policy quotes from insurers licensed in your state before the trip rather than relying on the counter.
5. At the counter, read the damage, loss-of-use and administrative fee clauses, mark accept or decline on each product deliberately, and keep the signed copy plus photographs of the vehicle condition report.
6. After a crash, report it to the rental company and ask for the itemized repair estimate and any loss-of-use statement. File with your own auto insurer first; submit to the card issuer after, since card benefits usually pay only once other coverage is exhausted.
7. If another driver hit you, open the claim with their liability insurer and get rental authorization in writing. Their insurer should cover a reasonable length of repair time, but if your car is declared a total loss the right to a rental ends once a settlement has been offered (National Association of Insurance Commissioners, undated).

No claim is guaranteed to be paid, paid in full, or paid on any schedule; each is adjudicated on its own facts and on the filed policy language in your state.