Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in...

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Reviewed by Jeffrey Johnson
Insurance Lawyer

UPDATED: Jul 14, 2021

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In a nutshell...

  • With the exception of New Hampshire, every state in the U.S. requires some minimum level of car insurance for you to own a car
  • If you own your own car, it is likely that you already have an auto insurance policy
  • Auto insurance coverage is likely not covered by the rate you pay to rent the car

Almost every state requires some minimum level of auto insurance coverage to own a car.

If you are in the position where you will be renting a car and do not otherwise own a car or carry auto insurance, then you will need to purchase car insurance to drive the rental car.

Before purchasing insurance through the car rental agency, it is important to understand your options and find out if you are already covered through your existing car insurance policy.

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What You Need to Find Out Before Renting a Car


Before you even sign the papers to rent a car, you need to find out how much existing insurance coverage you already have through your own auto insurance policy.

If you are renting a car for personal use rather than business, then whatever coverage you have under your existing insurance policy will carry over to the rental car you are driving.

The easiest way to find out what is covered for a rental car that you drive under your existing insurance policy is to call your insurance company.

If you only carry the state minimum amount of insurance, then any damage you cause may be well over your policy limits.

However, if you carry collision or comprehensive supplemental insurance, then you may have coverage in the event that the rental car is stolen, vandalized, or damaged.

When you are considering different coverage options for your auto insurance, rental car coverage is a good thing to ask an agent about at the time you request a quote.

Consulting an agent is especially helpful in making insurance decisions if you are a frequent traveler and can give you peace of mind from having to deal with the car rental company for additional insurance coverage.

There is also the possibility that your existing homeowner’s insurance policy covers car rental insurance.

Keep in mind that if the purpose of your rental car is for business, then you may not be covered under your homeowner’s insurance policy as you would typically be for personal use.

The best way to find out what is covered under your homeowner’s insurance policy is to speak with your agent directly.

If the purpose of your travel is business, then your employer may have an existing policy that would cover you in the event of an accident in a rental car on your trip.

Speak with your company ahead of time so that you are fully aware of how you would be covered in the event of an accident on your business trip.

You might not expect that your credit card company could be an additional source of existing coverage for your rental car.

If you call the number on the back of your credit card, you can find out what coverage applies to your account.

Depending on the type of account you have, the credit card company may cover at least the deductible for an accident claim with a rental car.

Bear in mind that for the credit card insurance to apply to your rental car, you would have to charge the rental of the car on that credit card directly.

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Car Rental Insurance Options from the Rental Company

If you do not have insurance coverage because you do not own a car, you have the options of purchasing rental car insurance directly from the company that you rent the car from.

Before you are talked into any additional coverage from the car rental company, you can save considerable money by exhausting your existing sources of insurance coverage.

Be prepared to be asked by the sales agent at the car rental company whether you are interested in purchasing any rental car insurance.

The most common form of insurance purchased from a rental car company is referred to as loss damage waiver (LDW) or collision damage waiver (CDW).

One of the considerations to keep in mind about this coverage from a car rental company is that it can be relatively expensive, and there are many things that may not be covered under this policy.

Also, keep in mind that loss damage waiver is different from a typical auto insurance policy. It is intended to take care of the rental car driver’s financial responsibility if the rental car is damaged or stolen while in their possession.

However, this coverage would not extend to any accidents caused by your speeding, driving on unsafe roads and other forms of negligence.

Purchasing a Non-Owner Liability Policy

For non-car owners, there is an option of purchasing a non-owner liability policy, which would extend to cover accidents when you are also borrowing someone else’s car with permission.

The only reason to purchase this policy would be if you frequently rented cars and do not plan on buying a car of your own.

Car Rental Agreements Outside the U.S.

It is important to communicate with your existing insurance company before you agree to rent a car in a foreign country.

There may be exemptions from your existing auto insurance policy if you are driving a rental car in another country. The more information you have before you leave the country for your trip the better.

It is never a good idea to attempt to drive without auto insurance. If you do not have an auto insurance policy because you do not own a car, then there are options for you to get coverage for a rental car.

If you do have auto insurance, be sure to check with your agent before renting a car to see what is covered in the event of an accident or damage to the rental car.

It is likely that you have coverage from other sources without buying supplemental coverage from the car rental company directly.

Start comparison shopping today to get instant quotes on competitive policies and rates!