When you rent a car, it’s important to know whether you need car rental excess insurance. Of course you need to be protected in case of an accident. But do you really need the extra car rental insurance options you’ll inevitably be offered when paying for your rental? The short answer is not always. Here’s everything you need to know about car hire excess insurance.
In this article
Car rental excess insurance at a glance.
Do you need car rental excess insurance? A quick decision guide.
How much does car rental excess insurance cost?
What does car rental excess insurance cover?
Coverage and exclusions explained.
How does it work?
How to make a claim.
Do I need extra insurance when renting a car?
Rental company waiver vs. third-party excess insurance.
Single-trip, annual, and multi-trip policies.
What is the best way to get rental car excess insurance?
About this guide.
FAQs
Car rental excess insurance at a glance.
Car rental excess insurance is optional coverage that protects you from paying the excess fee (also called a deductible) if your rental car is damaged or stolen. It covers the out-of-pocket amount you’d otherwise owe the rental company when making a claim.
At a high level, this insurance typically covers:
- Collision damage excess fees
- Theft-related excess charges
- Some policies also cover items excluded from basic waivers, like windshield damage, tires, and towing fees
There are two main ways to buy car rental excess insurance:
- From the rental company at the counter or during booking (usually as a Loss Damage Waiver or Collision Damage Waiver)
- From a third-party insurance provider as a standalone policy
Do you need car rental excess insurance? A quick decision guide.
You may not need excess insurance if:
- Your personal auto insurance includes rental car coverage with collision and liability
- Your credit card offers zero-deductible collision coverage for rental cars (check the terms carefully)
- You already have travel insurance that includes rental car excess protection
You should consider buying excess insurance if:
- You don’t own a car or have personal auto insurance
- You’re renting abroad where your personal policy won’t apply
- Your credit card coverage has exclusions that don’t fit your trip (certain countries, vehicle types, or rental durations)
- You want to avoid paying upfront and claiming back later
How much does car rental excess insurance cost?
Vehicle rental excess and excess cover insurance charges vary wildly. Influencing factors include the rental company, type of rental car, rental duration, location and rental agreement terms. You’ll find exact details on the excess amounts for your specific rental in the rental agreement.
Below is an example of costs and charges for some of the major rental companies based on a series of set criteria.
- Online booking
- Pick up and drop off: New York JFK Airport
- Rental period: One week
- Car type: Standard sedan
In this table:
- Default excess amount refers to the amount you’re liable for if the rental car is damaged or stolen and you haven’t bought optional insurance. In the US, if you don’t buy damage waiver insurance, you may be responsible for the full value of the car. It’s important to remember though, that this is worst case scenario and claims of this size are rare.
- Excess insurance refers to the cost of car rental excess insurance to reduce your liability to zero. This is usually called Loss Damage Waiver (LDW), Collision Damage Waiver (CDW) or Damage Waiver (DW).
| Rental company | Default excess amount | Excess insurance |
|---|---|---|
| Avis | Varies by location but typically the full value of the rental car + fees | As low as $9 /day Loss Damage Waiver (LDW) |
| Budget | Varies by location but typically the full value of the rental car + fees | As low as $9 /day Loss Damage Waiver (LDW) |
| Enterprise | Varies by location but typically the full value of the rental car + fees | Varies by location and vehicle type Damage Waiver (DW) |
| Hertz | Varies by location but typically the full value of the rental car + fees | $45/day Loss Damage Waiver (LDW) |
| SIXT | Varies by location but typically the full value of the rental car + fees | Varies by rate and location Loss Damage Waiver (LDW) |
Comparing typical costs by purchase method.
The price you pay for car rental excess insurance depends largely on where you buy it and what format you choose.
- Rental desk waivers (LDW/CDW): Typically $9–$45 per day depending on the rental company, location, and vehicle type. A week-long rental could cost $63–$315 just for the waiver.
- Third-party single-trip excess insurance: Usually $5–$15 per day, or a flat fee of $30–$80 for a week-long trip. Significantly cheaper than rental desk options.
- Annual excess insurance policies: Typically $99–$200 per year for unlimited rentals. Best value if you rent cars more than two or three times a year.
Main variables that affect price:
- Rental location (US vs. international)
- Vehicle type (economy vs. luxury or SUV)
- Your age (drivers under 25 often pay more)
- Policy coverage limits and exclusions
What does car rental excess insurance cover?
Depending on the policy’s terms and conditions, the insurance can cover some or all the costs should you get in an accident. You may also find your excess insurance policy covers things often excluded from basic waivers. This can include damage to the undercarriage or roof, towing charges, and rental company admin and loss of use fees.
I once turned down excess insurance at the counter renting an SUV, as I had third-party insurance. I ended up paying $500 for a chipped windshield because my existing insurance didn’t cover the Dominican Republic, where I was renting. Golden rule: read the insurance terms and make sure you’re covered!
Duncan Madden, travel writer
Here are some real-world examples to give you an idea of what excess insurance might cover. But always remember to check the terms to be sure.
| Incident | How excess insurance can help |
|---|---|
| A stone chips your windshield | Covers the repair or replacement charges |
| You scratch your bumper when parking | Covers minor bodywork repairs that could trigger a claim with a high excess charge |
| You hit a pothole and damage a tire | overs tire repair or replacement, which many standard rental waivers exclude |
| You lose your keys (or lock them in the car!) | Pays to reimburse locksmith fees or a replacement key |
| Someone smashes a window and breaks in | Helps with the glass replacement cost and any fees the rental company charges |
| Someone steals your rental car | Covers the rental company’s excess fee for theft, which can run into several thousand dollars |
Coverage and exclusions explained.
Not all excess insurance policies cover the same things. Here’s a breakdown of what’s typically included, what varies by policy, and what’s almost always excluded.
Usually covered.
- Collision damage excess fees
- Theft excess charges
- Windshield and glass damage
- Tire and wheel damage
- Undercarriage and roof damage
- Towing and recovery charges
Sometimes covered (check your policy).
- Loss of use fees (what the rental company charges while the car is being repaired)
- Admin fees charged by the rental company
- Key replacement and locksmith fees
- Personal belongings stolen from the vehicle
- Third-party liability (more common in comprehensive travel insurance)
Common exclusions.
- Interior damage (burns, stains, tears)
- Damage from driving on unpaved roads (unless specifically permitted)
- Damage to certain vehicle types (luxury cars, motorcycles, camper vans)
- Rentals exceeding a maximum duration (often 30–60 days)
- Rentals in excluded countries or regions
Void-if conditions (your policy won’t pay if…).
- You were driving under the influence of alcohol or drugs
- You were speeding or driving recklessly
- You violated the rental agreement terms (unauthorized drivers, off-road use, crossing borders without permission)
- You failed to report the incident to police or the rental company within the required timeframe
- You didn’t have a valid driver’s license
How does it work?
In the US, car rental companies will typically offer four types of coverage:
- Liability coverage: This can vary from state to state but is meant to protect you if you hurt someone or damage property during an accident.
- Collision Damage Waiver or Loss Damage Waiver: CDW or LDW helps cover the cost if you damage your rental car.
- Personal effects coverage: This covers personal belongings if they are stolen from a vehicle (though it’s worth noting if you have renters’ or homeowners’ insurance, this will typically be covered).
- Personal accident coverage: This covers medical bills if you or your passengers are injured in a car rental accident.
In Europe, rentals nearly always include liability coverage, but con’t cover theft or damage to the vehicle. Since your personal American auto insurance won’t apply in Europe, you have have three main options:
- Buy a Collision Damage Waiver from the car rental company
- Use the zero-deductible collision coverage that comes with some credit cards
- Take out excess insurance with collision coverage from a travel insurance provider
How to make a claim.
If your rental car is damaged or stolen, here’s the typical process for claiming on your excess insurance. The exact steps vary by provider, so always check your policy documents.
Step 1: Report the incident immediately.
Contact the rental company as soon as possible. For accidents involving other vehicles or injuries, also file a police report. Many policies require a police report number to process your claim.
Step 2: Document everything.
Take photos of all damage before the car is moved or repaired. Get a copy of the rental company’s incident report and any repair estimates or invoices they provide.
Step 3: Pay the rental company.
With third-party excess insurance, you typically pay the excess charge to the rental company first. They’ll deduct it from your deposit or charge your card. Keep all receipts.
Step 4: Gather your claim documents.
You’ll usually need:
- Your excess insurance policy number
- The rental agreement
- The incident or damage report from the rental company
- Police report (if applicable)
- Invoices or receipts showing what you paid
- Photos of the damage
Step 5: Submit your claim.
File your claim through your insurer’s website or app. Most providers have a deadline (often 30–60 days from the incident), so don’t delay.
Step 6: Receive reimbursement.
Once approved, your insurer reimburses the excess amount you paid. Processing times vary but typically take 1–4 weeks.
Do I need extra insurance when renting a car?
That depends on a few different factors. If you have liability and comprehensive insurance for your own vehicle, it may cover you for driving a rental car in the US for personal reasons. If you’re driving for business purposes, are renting abroad or simply want more coverage, you might want to consider extra rental car insurance.
In Mexico, for example, mandatory insurance requirements mean you must buy extra coverage from a travel insurance provider or the rental car company.
Rental company waiver vs. third-party excess insurance.
There are two main ways to get car rental excess coverage, and they work quite differently. Here’s how rental company waivers compare to standalone third-party excess insurance policies.
| Feature | Rental company waiver (LDW/CDW) | Third-party excess insurance |
|---|---|---|
| How you pay | Daily charge added to rental cost | Single trip, multi-trip, or annual policy |
| Typical cost | $9–$45 per day | $5–$15 per day or $99–$200 per year |
| Claims process | No claim needed—you walk away | Pay first, then claim reimbursement |
Additional differences to consider:
- Coverage scope: Rental waivers often exclude tires, windshield, roof, and undercarriage. Third-party policies frequently cover these.
- Convenience: Waivers mean no paperwork after an incident. Third-party insurance requires you to submit a claim.
- Flexibility: Third-party policies can cover rentals from any company. Waivers only apply to that specific rental.
- Deposit hold: Even with a waiver, rental companies may still hold a deposit on your card. Third-party insurance doesn’t change this.
Single-trip, annual, and multi-trip policies.
Third-party excess insurance comes in different formats. Choosing the right one depends on how often you rent cars.
Single-trip policies.
Best for occasional renters who only need coverage for one specific rental period.
- Covers one rental from pickup to return
- Typically costs $30–$80 for a week-long rental
- You buy a new policy each time you rent
Annual policies.
Best for frequent renters who hire cars multiple times per year.
- Covers unlimited rentals within a 12-month period
- Usually costs $99–$200 per year
- Most cost-effective if you rent more than two or three times annually
- May have a maximum rental duration per trip (often 30–60 days)
Multi-trip policies.
Best for travelers who take several trips per year but don’t rent cars on every trip.
- Covers a set number of rental periods within a year
- Pricing falls between single-trip and annual options
- Good middle ground if annual coverage feels like overkill
What is the best way to get rental car excess insurance?
If you’re not already covered by a credit card perk or your own insurance, there are two routes to taking out excess insurance.
- Car rental company: You can buy it when booking or over the counter directly from the car rental company. This is charged daily and usually comes in the form of a LDW or CDW. That means you won’t have to pay any excess at all and can just walk away. It is however, expensive and gets more expensive the better the car you rent.
- Third party insurer: You can buy single trip, multi trip or annual policies from dedicated third-party insurers. This is convenient as it reduces time at the rental counter. It’s also always significantly cheaper than buying from the rental company. This kind of excess insurance cover, however, means you have to pay the rental company any costs first and then claim them back from your insurer.
FAQs
It depends on your existing coverage. If your personal auto insurance or credit card already covers rental car damage with no or low deductibles, you may not need it. But if you’re renting abroad, don’t have personal coverage, or want to avoid the hassle of paying upfront and claiming back, excess insurance is often worth the peace of mind, especially given how expensive rental company excess fees can be.
Some travel insurance policies include rental car excess coverage, but many don’t. Check your policy documents carefully. If it’s included, verify the coverage limits, excluded countries, and whether it covers the full excess amount. If your travel insurance doesn’t include it, you can buy standalone excess insurance separately.
CDW (Collision Damage Waiver) and LDW (Loss Damage Waiver) are products sold by rental companies that waive your liability: you don’t pay anything if the car is damaged. Excess insurance from a third party works differently: you pay the excess to the rental company first, then claim it back from your insurer. CDW/LDW is more convenient but typically more expensive.
Different policies have different standard excesses or deductibles. These amounts vary widely depending on the policy and provider, and age-related additional amounts may also apply for the driver.
