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...

  • When you rent a car, the rental agency will offer you the option to buy insurance. All states prohibit rental car companies from requiring their clients to buy the insurance offered at the counter as a condition to renting the car
  • To decline the insurance that’s offered, the agent will probably ask you to initial a section of the contract
  • If you damage a car or cause damage to another party, you’ll still be held liable for the damage
  • Companies can bill you for the cost of repairs and lost income when you damage a rental car and it’s out of commission
  • If you own a car or you have a nonowner’s policy, the coverage that you carry on your insurance will protect you in a rental; any deductibles that you carry will apply

When you rent a car, the rental agency will have you look over a long contract full of terms and conditions.

Since most renters don’t take a seat in the lobby to peruse over the fine print, not everyone knows what their responsibilities are when they are entering into a rental agreement. This is why so many people are scared into buying rental car insurance.

When you’re at the counter, the agent who’s helping process everything will ask if you’d like insurance. What many of the agents fail to mention is that this insurance is supplemental.

Compare car insurance quotes today! Make sure you’re covered when you rent a car.

Before you let the fear of the unknown fuel you, you need to know how your existing auto insurance policies cover rental cars. Here’s a guide to help dictate whether or not you need to buy the insurance that rental agencies promote:

Can the insurance company make rental car insurance mandatory?

As hard as rental agencies push insurance, you’d think that the coverage is mandatory. Don’t let the wording that the rental agent is taught deceive you.

Rental agencies earn huge profits selling coverage to renters because the premiums are inflated and a majority of clients don’t have to file claims. This explains why there’s a huge focus on insurance.

Even though some agencies make it sound as if adding insurance is mandatory, you have the option to reject coverage without even having to prove that you have your own coverage.

States prohibit rental agencies from turning customers away from choosing not to pay for supplemental insurance.

If you feel like you’ve been pressured into buying insurance or denies a rental for refusing coverage, you should file a complaint with the state.

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What type of insurance will you be offered?

Insurance might not be mandatory on rental cars but sometimes, it’s necessary. Before you automatically reject coverage to avoid extra charges, you need to know how each form of coverage works to protect you.

Most of the reputable agencies let renters choose from four different forms of protection. These forms of supplemental coverage include:

  • Supplemental Liability Insurance (SPI) – will pay for damages to third parties when you’re in an accident and deemed negligent for the damages or injuries
  • Loss Damage Waiver (LDW) – will pay to repair or replace the rental car so that you’re not responsible to pay for the repairs out of pocket
  • Personal Accident Insurance – covers your treatment expenses if you or passengers in your rental are injured in a car accident
  • Personal Effects Insurance – pays to replace or fix your property if it’s stolen or damaged while being transported in the rental

Agencies aren’t allowed to deny a renter a car just because they don’t have insurance. That’s because it’s the agency’s duty to insure the car and any extra coverage is optional.

Companies buy commercial insurance for all cars on the lot and also general liability coverage to protect the business if they’re sued after the accident.

Know How Your Existing Auto Insurance Does and Doesn’t Protect You


If you own a car, insuring a rental is much easier and affordable.

Standard insurance coverage will extend to rental cars even though you don’t own them. Not only will you have liability coverage, if you currently have physical damage coverage it will pay for damage claims to the car.

There are limitations under your policy. The policyholder must be a renter on the contract and not just an added driver.

If you file a claim, you have to pay your deductible and the claim can have an effect on future insurance premiums.

Claims made against rental car insurance won’t go on your record.

If you don’t currently have full coverage on your policy, get quotes for comprehensive and collision to see how much it will cost you. You can easily get quotes online by using a brokerage-style tool.

After you compare rates, activate coverage that will protect you as an owner and renter. Compare rates now by entering your zip code below!