Rental Car Insurance: Do You Need the Counter Coverage?

In this guide

You may not need the rental counter's coverage if your personal auto policy includes collision and comprehensive and your liability limits are solid, but that depends on your policy, the rental, and your state. The rental company's loss damage waiver (LDW) isn't technically insurance. It's an agreement that releases you from responsibility if the car is damaged or stolen. Check your policy and credit card terms before you travel so you're not deciding under pressure at the counter.

What the rental counter sells

Rental companies usually offer several add-ons. Names differ, but these are the common ones:

• Loss damage waiver (LDW) or collision damage waiver (CDW). Triple-I says an LDW is not technically an insurance product. It relieves you of financial responsibility if the rental car is damaged or stolen, and it may also cover loss of use, towing, and administrative fees.
• Supplemental liability. Extra liability coverage for injuries or damage you cause to others. Triple-I notes rental companies must provide the state minimum liability, which often isn't enough.
• Personal accident insurance. Medical or accidental death benefits for you and your passengers.
• Personal effects coverage. Protection for belongings in the car.

The waiver can be void in certain situations. Triple-I says an LDW may become void if the accident involved speeding, driving on unpaved roads, or drunk driving. Read the agreement.

Where you may already have coverage

Your personal auto policy

According to Triple-I, if you carry comprehensive and collision coverage, you may already be covered for damage to a rental car, and your own coverage and deductible generally apply when it's used for recreation rather than business. Your liability coverage may also extend. But there are gaps:

• If you dropped collision or comprehensive on your own car, you may have nothing for the rental. See collision coverage explained.
• Your policy may not pay rental company fees, such as loss of use or administrative charges. Triple-I suggests asking your insurer, and whether a rider is available.
• Business rentals, long-term rentals, and rentals abroad often work differently.

Your credit card

Triple-I notes that credit card benefits vary by issuer and card level, may be limited (for example, paying only your deductible), and are usually secondary. Some cards require you to decline the counter waiver and pay with that card to qualify. Ask the issuer for the terms in writing, and check which vehicles and rental lengths are excluded.

Other sources

• Homeowners or renters insurance. Triple-I says belongings stolen from a car are generally covered by homeowners or renters insurance, not auto insurance, so personal effects coverage at the counter may be duplicate. See renters insurance.
• Umbrella insurance. This can add liability protection above your auto limits. See umbrella insurance explained.
• Employer coverage. If you rent for work, your employer's policy may apply.

A quick checklist before you rent

1. Call your auto insurer. Ask whether collision, comprehensive, and liability extend to rentals, and whether fees such as loss of use are covered.
2. Ask about deductibles. You'd pay your own deductible if you use your policy.
3. Call your credit card issuer. Ask if rental coverage is primary or secondary, what's excluded, and what you must do to activate it.
4. Check your liability limits. If they're low, consider how a serious accident would affect you.
5. Photograph the car before you drive off and note existing damage on the contract.

Situations where counter coverage may be worth a look

These are general scenarios, not personal advice:

• You don't own a car. Triple-I says frequent renters without their own car can buy a non-owner liability policy. See non-owner car insurance explained.
• You have only liability on your own car. You may have no coverage for damage to the rental.
• Your credit card gives no or limited benefits. Triple-I notes it may be wise to buy liability and a waiver at the counter if your card doesn't provide benefits.
• You're renting for business or in another country. Personal policies often don't extend there.
• You want to avoid claim hassles. Using the waiver may keep a claim off your own policy. That's a trade-off you can weigh against the cost.

Car sharing and peer-to-peer rentals

Triple-I points out that car sharing insurance isn't standardized, so coverage must be checked for each service. Renters may be billed a set dollar amount after a collision or theft unless they buy a waiver, and many programs limit young drivers to state minimum liability. Peer-to-peer coverage varies widely by location and service. Read the terms before you book.

Cost vs. risk: how to think about it

The question is really about who pays if something goes wrong. If the car is wrecked, you could be responsible for repair costs, the rental company's lost income while the car is out of service, and fees. Triple-I describes some of these as loss of use, towing, and administrative fees. Whether your policy or card pays them is the thing to confirm.

If you rent often, it may help to compare quotes from several insurers about rental endorsements, since some offer them and others don't. For basics of how liability limits work, see how much liability car insurance do you need?

Frequently asked questions

Is the loss damage waiver the same as insurance?

No. Triple-I says it isn't technically an insurance product. It is a contract term in which the rental company agrees not to hold you responsible for certain damage, subject to conditions.

Does my own policy cover a rental in another state?

Coverage typically follows you within the US, but terms vary by policy and state. Confirm with your insurer before you travel, especially for international trips.

Will a claim on a rental affect my premium?

If you use your own collision coverage, the claim may be treated like any other at-fault claim. Ask your insurer how it would be handled.

Does the rental company have to provide liability coverage?

Triple-I says rental companies must provide the state minimum liability, which often isn't enough. Rules differ by state.

Who can answer my questions?

CoverMoose can't give personal advice. Your insurer, a licensed agent, or your state insurance department can explain how your policy applies.

Sources

• Insurance Information Institute – Rental car insurance
• NAIC – Auto Insurance consumer page
• NAIC – What Does Auto Insurance Cover?
• Insurance Information Institute – What is covered by collision and comprehensive auto insurance?