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Auto Insurance That Covers Rental Cars – How To Avoid a CDW

Last updated 03/21/2022 by

Marcie Geffner
If you’re planning to rent a car, you might be wondering whether you need rental car insurance. The answer is yes.
“You are required to have insurance when you rent a vehicle,” says Kevin Patrick, owner and founder of Kevin Patrick Law, a law firm in Atlanta that handles car accidents and other personal injury cases.
The more complicated question is not whether you need to have rental car insurance, but whether you need to buy rental car insurance.

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Is a rental car covered by my insurance?

If you own a car and have car insurance, your policy might already include rental car insurance for you as the driver and any car that you rent.
“A lot of times, your own insurance will cover a rental car,” Patrick says. “It’s part of the collision coverage. You may have to pay a bit extra, but it’s well worth it.”
To find out if rental coverage is included with your own auto insurance, read your policy or contact your insurance agent or carrier. Ask how much coverage you have and what the exclusions and limitations are.
In some situations, your own insurance might not cover a rental car or might not be adequate.
For example, you are probably not covered if you’re renting a:
  • super-luxury car
  • rare high-performance vehicle
  • commercial vehicle, like a moving truck
  • car for business purposes
  • car in a foreign country
In any of these situations, you’ll have to contact your insurance company to find out whether you’ll be covered or need additional insurance.

Do credit cards cover rental insurance?

Most credit cards with a Visa, MasterCard, American Express, or Discover logo include some type of benefit for car rental coverage.
The specifics vary, however, so you should read your card agreement or call your card company for details. Ask what’s covered and what’s not, and what the rules are.
Examples of questions you might want to ask include:
  • Do I have to use this card to pay for the car rental?
  • Does the car rental have to be in my name?
  • Is a second (or any other) driver covered?
  • What’s the maximum rental term?
  • Is the coverage primary or supplemental?
If the card coverage is supplemental and you have a claim, you’ll have to file it with your own insurance company (if you have one) before you tap the card benefit.

Why you should consider a collision damage waiver

Paying for a collision damage waiver can be convenient when you rent a car.
If you don’t have car insurance or a credit card that includes rental car coverage, you typically can purchase a collision damage waiver (CDW) from the rental car company. A CDW usually costs from $15 to $30 per day.
A CDW isn’t technically insurance. It means that, if you’re involved in a collision, the car rental company will be financially responsible for any damage to the car.
“You can buy coverage through the rental car company, but it’s more common to just use your own auto insurance,” Patrick says.
However, you might want to pay for a CDW even if you have coverage through your own insurance or a credit card because it could be more convenient than involving your insurer or card company if you have a claim.
Online rental car insurance may be cheaper than a CDW
You can also buy rental car coverage online from a third-party company. This coverage may be less expensive than a rental car company’s CDW.
If you buy coverage online, read the small print so you’ll know what the rules, exclusions, and limitations are.

Auto insurance that covers rental cars – Final thought

Rental car insurance is complicated and there are no easy answers as to what’s covered and what’s not. It’s smart to research your other options before you decide whether to accept or decline the CDW.
To help you being your research, here are some top auto insurance companies to consider:
To find your best option, head over to SuperMoney’s auto insurance review page to see how the top insurance companies stack up against each other.

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Marcie Geffner

Marcie Geffner is an award-winning freelance reporter, editor, writer and book critic. Her work has been featured online and in print by The Washington Post, Los Angeles Times, Chicago Sun-Times, Urban Land, Business Start-Ups and Fox Business Network Online, among many other newspapers, magazines, and websites. With a bachelor’s degree in English from UCLA and MBA from Pepperdine University in Malibu, Geffner has impressive credentials in both story-telling and business management. A second-generation native of Los Angeles, Geffner now lives in Ventura, California, a surf city northwest of her hometown.

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