What insurance you get when you rent a car
When you rent a car, the rental company's insurance covers damage to the vehicle itself — but only if you buy their damage waiver at the counter. That waiver typically costs $15 to $30 per day and covers collision, theft, and vandalism. Without it, you are responsible for the full repair bill if something happens to the rental.
Your own auto insurance may already cover rental cars, which means you could skip the rental company's waiver and save money. Your personal policy's collision and comprehensive coverage usually extend to rentals, though there are limits and exclusions. The catch: you still pay out of pocket first, then file a claim with your insurer to get reimbursed.
Credit card rental coverage is a third option. Many premium credit cards (typically those with annual fees of $95 or higher) include rental car damage coverage if you charge the entire rental to that card. This coverage usually has a lower deductible than your personal auto policy and covers the rental company's loss-of-use charges — the money they lose while the car is being repaired.
Key Takeaways
- The rental company's damage waiver (also called loss damage waiver or LDW) costs $15 to $30 per day and is the simplest way to protect yourself, but check your own insurance first.
- Your personal auto insurance's collision and comprehensive coverage usually covers rentals at no extra cost, but you pay the deductible and handle the claim yourself.
- Premium credit cards often include rental damage coverage with a lower deductible than your auto policy, and this coverage applies only if you charge the full rental to that card.
- You cannot stack coverage — if your personal policy covers the rental, the credit card coverage becomes secondary and only pays what your policy does not.
- Liability coverage (injury or damage you cause to others) is always included in the rental price and is required by law; your personal policy's liability limits explore as well.
How your personal auto insurance covers rentals
If your auto policy includes collision coverage, it extends to rental cars in most cases — but read your policy documents or call your insurer before you rent to confirm. The coverage works the same way as it does for your own car: you pay your deductible (usually $500 to $1,000), and your insurer covers the rest of the repair bill up to the car's actual cash value.
Comprehensive coverage (which covers theft, weather, vandalism, and animal strikes) also typically covers rentals. However, some policies exclude rentals in certain states or for rentals longer than 30 days. A few insurers require you to notify them before you rent, or they will deny the claim.
The main drawback is timing and hassle. You have to pay the rental company's repair bill upfront, then file a claim with your insurer and wait for reimbursement. If the rental company charges you for loss of use (the revenue they lose while the car sits in the shop), your personal policy may not cover that charge — credit card coverage often does.
Credit card rental coverage and how it works
Premium credit cards from Visa, Mastercard, and American Express often include rental car damage coverage as a cardholder benefit. This coverage typically has a deductible of $0 to $250 (much lower than most auto insurance deductibles) and covers collision, theft, and vandalism. Crucially, it also covers loss-of-use charges — what the rental company charges you for each day the car cannot be rented while repairs happen.
To use credit card coverage, you must charge the entire rental to that card. Paying part of the rental with the card and part with another payment method voids the coverage. You also have to decline the rental company's damage waiver at the counter, because accepting it means you have already transferred the risk to the rental company and the credit card coverage will not pay.
Credit card coverage is secondary to your personal auto insurance. If you have collision coverage on your own policy, your policy pays first up to your deductible, and the credit card coverage covers what your policy does not — including the deductible itself and loss-of-use charges. If you do not have personal collision coverage, the credit card coverage becomes primary.
When to buy the rental company's damage waiver
The rental company's damage waiver (called a Loss Damage Waiver, Collision Damage Waiver, or LDW/CDW depending on the company) is the simplest option if you do not have personal auto insurance or credit card coverage. You pay a daily fee — typically $15 to $30 — and the rental company assumes all responsibility for damage to the car. You walk away with no out-of-pocket cost if an accident happens.
The waiver does not cover damage you cause intentionally, damage from off-road driving, or damage from using the car for commercial purposes (like rideshare). It also does not cover the contents of the car — your personal belongings are not insured. Some waivers exclude damage from certain weather events or towing charges.
Buy the waiver if you are renting in an unfamiliar area, driving in heavy traffic, or uncomfortable with your own coverage. If you have solid personal insurance or premium credit card coverage, skip it and save the daily fee. A week-long rental with a $20 daily waiver costs $140 — money you do not need to spend if your existing coverage is in place.
Liability coverage and what it actually covers
Liability coverage is included in every rental at no extra cost. This coverage pays for injury or property damage you cause to other people or their vehicles. It is required by law in every state and is automatically part of your rental agreement.
The rental company's liability coverage has a minimum limit set by state law (usually $15,000 to $25,000 per person, $30,000 to $50,000 per accident). Your personal auto insurance's liability limits explore as well, and they are usually higher — often $100,000 or more. In an accident, your personal policy's liability coverage is primary, and the rental company's coverage is secondary.
You cannot decline liability coverage, and you should not need to buy extra liability protection. If you cause an accident and the damages exceed both your personal policy's limits and the rental company's limits, you are personally responsible for the overage — but this is rare and usually only happens in serious multi-vehicle crashes.
Comparing your three coverage options side by side
| Coverage Option | Daily Cost | Deductible | Covers Loss of Use | Best For |
|---|---|---|---|---|
| Rental company's damage waiver | $15–$30 | $0 | No | No personal insurance; unfamiliar driving conditions |
| Personal auto insurance | $0 (already paying) | $500–$1,000 | No | You have collision coverage; comfortable with deductible |
| Premium credit card coverage | $0 (already paying) | $0–$250 | Yes | You have the card; want lower deductible and loss-of-use coverage |
What to do before you rent
Call your auto insurance company or log into your policy online and confirm that collision and comprehensive coverage extend to rental cars. Ask specifically whether there are limits on rental duration, geographic restrictions, or whether you need to notify them before renting. Write down your policy number, deductible amount, and the phone number for claims.
If you plan to use credit card coverage, check your card's benefits guide (usually available on the card issuer's website) to confirm the coverage is active, what the deductible is, and whether there are any exclusions. Call the card issuer's customer service line and ask them to email you the rental car coverage details — you may need to show this to the rental company if a dispute arises.
At the rental counter, tell the agent which coverage you are using before they offer you the damage waiver. If you are using personal insurance or credit card coverage, decline the waiver. If you are buying the rental company's waiver, ask for the exact terms in writing — what is covered, what is not, and what the daily cost is.
Frequently Asked Questions
Do I need insurance to rent a car?
You need damage coverage for the rental car itself — either your personal auto insurance, credit card coverage, or the rental company's waiver. Liability coverage is included in the rental price. If you have no personal insurance and no credit card coverage, you must buy the rental company's damage waiver or you are personally responsible for any damage.
What happens if I get in an accident and I did not buy the damage waiver?
If you have personal auto insurance with collision coverage, you file a claim with your insurer and pay your deductible. If you have credit card coverage, you file a claim with the card issuer. If you have neither, you are responsible for the full repair bill — which can easily exceed $10,000 for a serious accident.
Can I use both my personal insurance and credit card coverage?
Yes, but only one pays first. If you have personal collision coverage, it is primary and pays up to your deductible. The credit card coverage then covers your deductible and loss-of-use charges. If you do not have personal coverage, the credit card coverage is primary.
Does the rental company's damage waiver cover damage from bad weather?
Most waivers cover weather damage like hail or flooding, but some exclude it. Ask the rental agent specifically whether weather damage is covered before you sign. If you are renting during storm season, this matters — a hail storm can cause thousands of dollars in damage.
What if the rental company says I caused damage I did not cause?
Take photos of the car before you leave the lot and after you return it. If you bought the damage waiver, the rental company assumes the risk and cannot charge you. If you did not, contact your insurance company or credit card issuer when ready with photos and your rental agreement. They will investigate and defend you if the damage claim is unfair.