Car Rental Insurance

When you rent a car, it’s best to get car rental insurance. This guide covers where to buy insurance from, what type of coverage to get, and what those policies cover.

Do I need car rental insurance?

The short answer is: yes, you definitely need it! The tricky part is knowing what type of insurance you need, where to get it, and what different policies cover.

There are many different types of rental car insurance coverage, deciding which one to take depends on the level of protection you would like to obtain; some cover only the vehicle you rented, others also cover injuries or damage caused to others or to yourself and your passengers.

The car rental company you select will clearly mention in their terms and conditions which type of insurance is mandatory according to their own policy and local legislation. Keep in mind that car rental companies tend to recommend additional coverage, so determining what’s necessary and what’s extra in advance can help you choose what’s best for you.

If you’re looking for budget-friendly options, make sure to verify the coverage of the insurance policies you already have to potentially save money. For example, go through your own car insurance, your personal insurance or the car rental insurance benefits included in your credit card, and check if any of those are compatible with the requirements of the car rental company you selected.

Where can I get rental car insurance?

Different companies sell car rental insurance. Your options include the following:

  • The car rental company’s insurance
  • An independent car rental insurance broker
  • Travel insurance
  • Your car insurance
  • Your credit card

All of these options have different ranges of price, coverage, and convenience. For example, while it may be easier to get the car rental insurance directly at the counter when you arrive to pick up your vehicle, it’s unlikely that it will be your most budget-friendly option.

Independent car rental insurance is an option that can be just as convenient without the hefty cost. Insurance companies have analyzed the requirements of car rental agencies and created coverage services for the vast majority of rental car scenarios.

When looking at car rental options on KAYAK, you may see the option to add insurance from an independent insurance broker to your booking; that way you know what your coverage looks like before even arriving at the car rental counter to pick up your vehicle.

If you already have car insurance, it’s worth looking into what you’re already paying for in your policy, and comparing it to the car rental agency’s requirements and coverage recommendations. Chances are that some of the services that you’re already paying for can also apply to car rentals. Same goes for your travel insurance – it may cover some instances required by the car rental company.

Insurance coverage tends to have a location and circumstance limitation. Make sure you check the regions where your coverage applies and what specific circumstances are or aren’t covered. The insurance you have could only cover you if you’re driving in your country of residence; also, most insurance companies won’t cover accidents where the driver has consumed alcohol above the local limit.

Car rental insurance coverage

Car rental insurance typically covers three basic things – damage, theft, and third party liability. Damage to the rental car includes damage to the bodywork, which is most of the car’s exterior including the bumpers, fenders, doors, etc. That doesn’t include the windows, wheels, or the interior. The most you’d have to pay for damages is called the deductible. Theft cover means you won’t have to pay for a new car if the rental car gets stolen, or gets damaged if someone tries to steal it. Again, the most you’d have to pay is the deductible of the theft protection policy. Third party liability is if you hurt anyone or damage anything in your rental car. There’s usually a maximum amount that this policy would pay out to the third party.

Those are the three basic types of coverage, but there are several things that additional policies would also cover. What happens if you get injured in a rental car? What happens if your stuff gets stolen in a rental car? What happens if you get into an accident with someone who’s not insured themselves? Well, there are policies that cover each of these situations too.

What car rental insurance should I get?

Now that we know what car rental insurance can cover, it’s important to know what type of insurance applies to each type of coverage. When it comes to car rental insurance options, there are a bunch of confusing acronyms, scenarios, and regulations that change from city to city.

There are basically six types of car rental insurance coverage depending on their function. You’ll find insurance that protects the rental car, other people and their property, personal accidents, and roadside assistance. Here’s a simple break-down of your options:


Collision Damage Waiver (CDW)

A Collision Damage Waiver, often shortened to CDW, is an optional insurance policy that provides coverage in case your vehicle is damaged during the period of your rental. In many countries, a CDW is packaged together with an LDW (Loss Damage Waiver), which also provides theft protection in case your rental car is stolen during the period of your rental. However, in the USA and Canada, these policies are often purchased separately.


Supplemental Liability Protection (SLP)

Liability Insurance can have many names, Extended Protection (EP), Supplemental Liability Insurance (SLI), or Third Party Liability (TPL); it is an optional insurance policy you can add which covers you in case you damage other people’s property as well as medical costs for other people’s injuries in an accident you’re legally responsible for. In many countries outside of the US and Canada, this “third party” insurance is required to be provided by the rental company. In the US, it’s generally not included, but if you’re an auto-owner you may already have liability coverage through your personal auto insurance.


Personal Accident Insurance (PAI)

Personal Insurance covers the driver or the policy holder. It can cover expenses in the event of an accident, like ambulance transportation and similar costs that stem from medical assistance. Likewise, the driver’s belongings can be covered using a Personal Effects insurance in the case of theft or loss.


Roadside Assistance

Accidents happen… flat tires, mechanical or electrical malfunctions, etc. If you’re not sure how to get your rental car back on the road, you may want to look into getting this type of insurance.


Loss Damage Waiver (LDW)

A Loss Damage Waiver, often shortened to LDW, is an optional insurance policy that provides coverage in case your vehicle is damaged or stolen during the period of your rental.


Personal Effects Coverage (PEC)

This is for theft of personal items in a rental car up to $1,500.

In the end, “how much is car rental insurance” depends on a lot of factors that come down to your desired level of protection. Insurance policies typically cover expenses up to a certain amount and payment is either covered by the insurance company on the spot or refunded to the policyholder after an investigation.

Reading the terms and conditions of your rental agreement carefully and comparing your insurance options is the best way to save time and money, so that you can enjoy a hassle-free trip feeling safe and protected.

How does my destination impact my car rental insurance needs?

While all car rental insurance policies are important, some are truly indispensable and will save you a lot of trouble in the event of an incident. A must-have is Third Party Liability Insurance, which covers damage done to other people or their properties. Another policy that you are strongly advised to add is the Collision Damage Waiver, which covers you in case of damages to the car. Make sure you ask about the Excess involved when adding a policy, and if the amount is particularly high, you can get Car Rental Excess Insurance to cover that. Additional insurance worth considering is Roadside Assistance, especially if you are in a foreign country, and Personal Accident Insurance, which covers your personal expenses in the case of an accident. When choosing which policies to add, take into consideration the roads you’ll be driving on as well as the climate, as rough terrain might require a higher level of insurance coverage.

Car rental insurance in the US

When traveling to the US, each state might have a different law as to which insurance is required and which is not, but overall, the three main types of insurance that you should have in all cases are Third Party Liability Insurance, which is a requirement, Collision Damage Waiver (CDW) or a Loss Damage Waiver (LDW). Note that the latter comprises both CDW and Theft Protection, which means you are covered if the vehicle is stolen and for damages sustained during your rental period as a result of theft.

Car rental insurance in the UK

When renting a car in the UK, the insurance policies you will be offered are similar to those in the rest of Europe or the US. The main thing to note is that Liability Insurance is the only policy that is legally mandatory to have. Collision Damage Waiver is not a legal requirement but is often included and highly advisable.

Car rental insurance in Europe

When renting a car and traveling throughout Europe, you will find that some insurance policies might already be included in your contract such as Collision Damage Waiver, Third Party Liability and Theft Protection. Some of these will include an excess, and if you want to reduce it to zero, consider taking out an Excess Waiver policy. However, make sure you read the fine print in regards to what it does and does not cover. If you are planning to travel around Europe and cross borders with your car, it is important to double-check the car rental policy and ensure that you have coverage in all the countries you will be visiting.

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Rental car insurance FAQ

The short answer is: yes, you definitely need it! There are many different types of rental car insurance coverage, deciding which one to take depends on the level of protection you would like to obtain; some cover only the vehicle you rented, others also cover injuries or damage caused to others or to yourself and your passengers. The car rental company you select will clearly mention in their terms and conditions which type of insurance is mandatory according to their own policy and local legislation. Keep in mind that car rental companies tend to recommend additional coverage, so determining what’s necessary and what’s extra in advance can help you choose what’s best for you.

Different companies sell car rental insurance. Your options include the following:

  • The car rental company’s insurance
  • An independent car rental insurance broker
  • Travel insurance
  • Your car insurance
  • Your credit card

All of these options have different ranges of price, coverage, and convenience. For example, while it may be easier to get the car rental insurance directly at the counter when you arrive to pick up your vehicle, it’s unlikely that it will be your most budget-friendly option.

Car rental insurance typically covers three basic things – damage, theft, and third party liability. Damage to the rental car includes damage to the bodywork, which is most of the car’s exterior including the bumpers, fenders, doors, etc. That doesn’t include the windows, wheels, or the interior. The most you’d have to pay for damages is called the deductible. Theft cover means you won’t have to pay for a new car if the rental car gets stolen, or gets damaged if someone tries to steal it. Again, the most you’d have to pay is the deductible of the theft protection policy. Third party liability is if you hurt anyone or damage anything in your rental car. There’s usually a maximum amount that this policy would pay out to the third party.

There are basically six types of car rental insurance coverage depending on their function. You’ll find insurance that protects the rental car, other people and their property, personal accidents, and roadside assistance. The 6 popular insurance types are:

  • Collision Damage Waiver (CDW)
  • Supplemental Liability Protection (SLP)
  • Personal Accident Insurance (PAI)
  • Roadside Assistance
  • Loss Damage Waiver (LDW)
  • Personal Effects Coverage (PEC).

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