Rental car insurance costs between $15 and $30 per day at most U.S. rental counters, though your own auto policy or credit card may already cover you

When you rent a car, the rental company will offer you damage waiver and liability insurance at the counter. Damage waiver (also called collision damage waiver or CDW) typically runs $12 to $25 per day and covers dents, scratches, and theft. Liability insurance, which covers injuries or property damage you cause to others, usually costs $5 to $15 per day. Most renters do not need to buy either one, because personal auto insurance and many credit cards already cover rental cars.

The actual price depends on the rental company, the location, the car type, and your age. A 25-year-old renting a compact car in rural Montana will pay less than a 21-year-old renting an SUV in New York City. Prices also shift by season — summer rates are higher than winter rates at the same location. The only way to know your exact cost is to enter your rental dates and location into the company's website or call their counter directly.

Key Takeaways

  • Damage waiver at the rental counter costs $12 to $25 per day but is often redundant if your personal auto insurance or credit card already covers rental cars.
  • Your own auto insurance typically covers rental cars within the U.S. at the same deductible you pay at home, so buying the rental company's damage waiver is often unnecessary.
  • Premium credit cards (American Express Platinum, Chase Sapphire Reserve, and others) include rental car coverage when you charge the full rental to that card, but you must decline the rental company's insurance to use the card's coverage.
  • Liability insurance sold at the rental counter is rarely worth buying because your personal auto policy almost always covers liability in a rental car.
  • If you have no personal auto insurance and no credit card coverage, buying both damage waiver and liability from the rental company is your only protection against financial loss.

What your personal auto insurance covers in a rental car

If you carry collision and comprehensive coverage on your own vehicle, that coverage extends to rental cars you drive in the United States and Canada. You pay your regular deductible (usually $500 to $1,000) if you damage the rental car, just as you would with your own car. Your liability coverage also travels with you, so you are protected if you injure someone or damage their property while driving the rental.

The catch is that your coverage applies only if you do not buy the rental company's damage waiver. Once you sign up for the rental company's CDW, your personal insurance steps back — the rental company's coverage becomes primary, and you are responsible for the rental company's deductible (often $0 to $2,500). This is why declining the rental counter's offer and using your own insurance is almost always cheaper.

Call your insurance company before you rent if you are unsure whether your policy covers rentals. Some policies exclude rentals, and some cover only rentals within your home state. Knowing this before you arrive at the counter saves you from making an expensive mistake.

How credit card rental coverage works

Many premium credit cards include rental car damage coverage when you charge the full rental to that card. American Express Platinum, Chase Sapphire Reserve, Chase Sapphire Preferred, and Capital One Venture X are common examples, but the benefit varies by card and by issuer. Some cards cover collision and comprehensive damage; others cover only collision. Some cards cover liability; most do not.

To use your credit card's coverage, you must decline the rental company's damage waiver at the counter. If you buy the rental company's CDW, your credit card coverage does not set up. Read your card's rental car benefit section before you rent — it is usually in the benefits guide on the card issuer's website — so you know exactly what is covered and what your deductible is.

Credit card coverage typically has a higher deductible than your personal auto insurance (often $2,500 to $5,000) and may not cover certain car types, such as luxury vehicles or trucks. If the rental company's damage waiver costs $20 per day and you are renting for a week, you pay $140 out of pocket. If you use your credit card's coverage instead and cause $3,000 in damage, you pay your card's deductible (say, $2,500) and the card covers the rest. The math favors the credit card only if you cause significant damage.

When to buy damage waiver at the rental counter

Buy the rental company's damage waiver if you have no personal auto insurance and no credit card coverage. This is your only protection against paying thousands of dollars out of pocket if you damage or total the rental car.

You should also consider buying damage waiver if you are renting in a country outside the U.S. and Canada, because your personal auto insurance almost certainly does not cover you there. International rentals require separate coverage, and the rental company's damage waiver is often the simplest option. Some credit cards do cover international rentals, so check your card's terms before you decline the rental counter's offer.

If you are renting a high-value car (a luxury sedan, sports car, or large SUV) and your credit card's coverage has a high deductible or excludes certain vehicle types, buying damage waiver may be worth the daily cost. A $25-per-day waiver costs $175 for a week; if you cause $5,000 in damage and your credit card deductible is $5,000, you pay nothing with the waiver and $5,000 with the card. In this scenario, the waiver saves you money.

Liability insurance at the rental counter

Liability insurance sold at the rental counter covers injuries and property damage you cause to other people or their vehicles. It typically costs $5 to $15 per day. You almost certainly do not need to buy it, because your personal auto insurance liability coverage applies to rental cars.

The only reason to buy the rental company's liability insurance is if you have no personal auto insurance and no credit card coverage. Even then, your state's minimum liability limits (which vary by state but are often $25,000 to $100,000 per person) may be lower than the rental company's offer. If you cause a serious accident and injure multiple people, you could be personally liable for amounts above your coverage limit. Buying the rental company's liability insurance raises your coverage ceiling, but it is not a substitute for carrying your own auto insurance.

How to avoid overpaying for rental insurance

Before you arrive at the rental counter, know what coverage you already have. Call your auto insurance company and ask whether your collision and comprehensive coverage applies to rentals, what your deductible is, and whether there are any exclusions. Log into your credit card account and read the rental car benefit section. Write down the coverage details and bring them with you.

At the counter, the rental agent will ask whether you want to buy damage waiver and liability insurance. Say no if your personal insurance or credit card covers you. If you decline, the agent may ask you to sign a form confirming that you understand you are liable for any damage to the car. Sign it. This protects you by documenting that you made an informed choice.

If you are unsure about your coverage, ask the rental agent to explain what you are declining and what you would be responsible for if you damage the car. A good agent will walk you through the options. If the agent pressures you or uses confusing language, ask to speak with a manager. You have the right to understand what you are and are not covered for before you sign anything.

Frequently Asked Questions

Does my auto insurance cover rental cars if I have only liability coverage, not collision?

No. Liability coverage protects the other person if you cause an accident; it does not cover damage to the rental car itself. If you have only liability coverage on your own vehicle, you need to buy the rental company's damage waiver or use your credit card's coverage to protect yourself against paying for damage to the rental.

What happens if I decline insurance at the counter and then cause an accident?

If you have personal auto insurance or credit card coverage, you file a claim with your insurance company or credit card issuer, just as you would if you damaged your own car. You pay your deductible, and your coverage pays the rest. If you have no coverage at all, you are responsible for the full cost of repairs or replacement, which can be thousands of dollars.

Do I need to buy extra liability insurance if I am renting a car to drive for a rideshare service?

No. Rideshare services like Uber and Lyft provide their own liability coverage when you are actively driving passengers. However, most personal auto insurance policies exclude rideshare use, and most rental companies prohibit it. Check your rental agreement and your insurance policy before you attempt to use a rental car for rideshare.

Can I buy rental car insurance after I have already rented the car?

No. You must buy damage waiver and liability insurance at the rental counter when you pick up the car. You cannot add it later. This is why it is important to decide before you arrive whether you need to buy coverage.

What if the rental company says my credit card coverage is not valid?

This sometimes happens because the rental agent is unfamiliar with credit card benefits or because the card's coverage has specific exclusions. Ask the agent to show you in writing why your card is not accepted. Then contact your credit card issuer's customer service line and ask them to send a letter to the rental company confirming your coverage. Keep this letter with you in case of a dispute later.