Last Updated on December 27, 2025

Rental car insurance is one of the most confusing parts of renting a vehicle—mostly because the “insurance” at the counter is really a menu of different coverages, some of which you may already have through your personal auto policy, your credit card, or your health/home coverage.

This guide breaks down what rental companies sell, what your existing policies may already cover, and the situations where buying coverage at the counter can actually be the smart move.

Key Takeaways

• Rental “insurance” at the counter is usually a bundle of separate coverages (damage waiver, liability, medical, and personal items), so you should only buy what you actually need.
• If you already have a strong personal auto policy, you may be covered for liability and (if you carry comp/collision) damage to the rental car—making the rental company’s add-ons potentially redundant.
• Credit card rental coverage often focuses on damage/theft to the rental car and typically does not replace liability coverage—so don’t rely on it as your only protection.
• Buying coverage at the counter can make sense if you don’t have an auto policy, you have liability-only insurance, you’re renting internationally, or your rental/vehicle type creates a coverage gap.

What Coverage Do Rental Car Companies Offer?

Rental companies may use slightly different names, but most “coverage” options fall into the categories below. The important thing is to match each add-on to the exact risk it’s designed to cover.

• Collision Damage Waiver (CDW) / Loss Damage Waiver (LDW): This is the big one. It typically reduces (or eliminates) what you owe if the rental car is damaged or stolen. It’s usually a waiver, not a traditional insurance policy. If you already carry collision and comprehensive coverage on your personal auto policy, you may already have similar protection for a rental car—but you still need to confirm details like deductible, excluded vehicle types, and any fees the rental company may charge (loss of use, administrative fees, etc.).
• Supplemental Liability Coverage (SLI / SLP): This increases liability protection if you cause an accident that injures someone or damages their property. Many drivers already have liability coverage on their personal auto policy that extends to rental cars, but SLI can be helpful if your limits are low, you don’t have an auto policy, or you’re unsure what applies in your situation.
• Personal Accident Coverage (PAC / PAI): Pays medical-related costs for you and your passengers after an accident. This often overlaps with health insurance (and the “who pays first” question can get complicated—see health insurance vs. car insurance after an accident). It may also overlap with personal injury protection or medical payments coverage on your auto policy.
• Personal Effects Coverage (PEC): Covers theft of certain personal belongings from the rental car. If you already have homeowners or renters insurance, you may already have coverage for personal property—so you might not need PEC. If you want the details, see personal effects coverage and how items stolen from inside a car are commonly handled.

Rental Car Insurance vs. Rental Reimbursement: Don’t Mix These Up

“Rental car insurance” at the counter protects the rental vehicle and/or your liability while you’re driving it. Rental reimbursement (sometimes called “rental coverage” on an auto policy) is different—it helps pay the cost of renting a car while your own vehicle is being repaired after a covered claim. They solve two different problems.

When You Can Often Decline Rental Coverage

In many U.S. rentals, drivers can decline most add-ons if they already have a strong personal insurance setup. You may be able to skip the rental company’s coverage if:

• You have a personal auto policy that extends to rentals (especially for liability), and you’re comfortable with your limits and deductible.
• You have comprehensive and collision on your personal auto policy or a credit card benefit that covers physical damage/theft to the rental car—and you are following the card’s rules (usually paying for the entire rental with the card and declining the rental company’s waiver).
• You’re renting a normal passenger vehicle (not a moving truck, large van, exotic/luxury vehicle, or anything your policy/card excludes).

Important: Credit card rental coverage commonly focuses on damage to the rental car itself (collision/theft) and typically does not replace liability coverage. Always confirm what’s covered and what isn’t before you rely on it.

When You Should Consider Buying Rental Car Insurance

There are real situations where buying coverage at the counter can be a good decision. Consider adding coverage (or at least pricing it) if any of the following are true:

• You don’t have a personal auto policy right now. If you’re between vehicles or don’t own a car, you may have a liability gap. In that case, SLI/SLP can be important.
• You have liability-only car insurance. Liability-only coverage can leave you exposed for damage to the rental vehicle. A CDW/LDW (or a qualifying credit card benefit) may be necessary if you want protection for the rental car itself.
• You’re renting internationally. Your U.S. policy and your credit card benefit may not apply—or may apply with major limitations—outside the U.S. and Canada.
• You’re renting through a peer-to-peer platform. Some personal auto policies and many credit cards treat peer-to-peer rentals differently than traditional rental agencies, which can create coverage gaps.
• You can’t comfortably absorb a big out-of-pocket hit. Even if you’re “covered,” you may still be on the hook temporarily for deductibles or fees while claims are being handled. If that would strain your finances, the waiver may buy peace of mind.

Check Your Coverage Before You Rent

A five-minute check before your trip can save you money and stress at the counter. Here’s what to verify:

1. Ask your auto insurer: Does my policy extend to a rental car as a temporary substitute vehicle? What deductible applies? Are there exclusions based on vehicle type, business use, or location?
2. Ask about rental-company fees: If the rental car is damaged or stolen, does my policy address “loss of use,” towing, storage, administrative fees, or diminished value?
3. Read your credit card benefit guide: Is coverage primary or secondary? Are there country exclusions? Is there a rental-length limit? Are additional drivers covered only if they’re on the rental agreement?
4. If it’s a work trip: Ask your employer what the company policy covers and what they expect you to decline or accept.

Renting a Car Abroad

International rentals are where “normally, you don’t need it” can flip quickly. If you’re planning to rent outside the U.S., start by reviewing what car insurance you need while traveling abroad and confirm details with both your insurer and your card issuer.

Mexico deserves special attention: many U.S. policies don’t satisfy Mexico’s requirements, and you may need Mexican liability coverage even if you’re only crossing briefly. If you’re headed south of the border, read if I drive into Mexico, does my insurance cover me? before you rent or drive across.

Before You Drive Off the Lot: A Simple Rental Checklist

1. Inspect the car (inside and out) and take timestamped photos/video of existing damage.
2. Confirm who is allowed to drive and add any drivers to the rental agreement (don’t assume your card/insurance covers unlisted drivers).
3. Know what you’re declining: If you skip the waiver, understand your deductible and what fees you could still owe.
4. Keep your paperwork (rental agreement, inspection form, receipts) until you’re sure everything has closed out cleanly.

If You Damage the Rental Car: What to Do Next

If an accident, theft, or vandalism happens, don’t wait—claims are document-heavy and deadlines matter.

• Report the incident to the rental company and follow their steps (and file a police report when appropriate).
• Notify your insurer (and your credit card benefit administrator, if you’re relying on card coverage) as soon as possible.
• Save photos, receipts, repair estimates, and any correspondence.
• If you’re unsure whether to file through your own insurance, review whether you should make a claim after a car accident and weigh cost vs. risk.

FAQs on Rental Car Insurance

Related Rental Car Insurance Guides

If you want carrier- or company-specific details, these guides can help:

Rental Company Coverage Options

• Alamo
• Avis
• Budget
• Dollar
• Enterprise
• Hertz
• Sixt
• Thrifty

How Major Auto Insurers Handle Rental Cars

• GEICO
• Allstate
• State Farm
• Farmers
• Nationwide
• Liberty Mutual
• USAA
• Progressive