You step up to the rental counter. The person helping you types away furiously and asks you a whole bunch of questions. One of which is… do you want to add their damage waiver on to your rental? Basically car insurance for your rental car.

Especially with as much as car rentals cost these days, you don’t want to pay even more for the rental if you don’t have to. I mean, if your policy covers you, why pay for insurance twice?!

So, if you have insurance for your own car, are you good? Or does that not extend to cars other than your own?

Below we look at that question and answer “does car insurance cover rental cars?”

Does Car Insurance Cover Rental Cars?

The short answer is that, in most cases, yes your policy will cover you. But it depends. There is no blanket answer here that applies to every person in every situation. But to help you better understand whether your insurance covers you or not, here’s what to look out for.

Does Your Personal Auto Insurance Policy Cover a Rental?

Let’s look at this question first. Whether your are covered or not depends on the type of insurance you have. However, in most cases, you will have coverage for your rental through your personal policy. However, in order for this to be true there are three types of coverage you’ll need on your policy. They are liability, collision and comprehensive.

Liability basically covers damage to other people and property. Collision covers damage to your car (the rental in this case). Comprehensive takes care of non-accident related issues/damages such as theft or vandalism.

While liability is mandatory, collision and comprehensive coverage are not necessarily a requirement. So make sure you have them both before you rent a car.

Even if you have all three types of coverage, there may be some limits here.

Let’s say you drive a late model, beat up clunker but you rent a shiny new BMW. In this case, your insurance company may not pick up the whole tab if something happens to that BMW. The rest of the costs are on you.

Also, if the accident or theft of the rental is due to your negligence, your insurance company may not help you.

Other Coverage Options For Rental Cars

If you’re not sure about your insurance covering your rental, there are some other options out there. One is coverage through your credit card. A lot of credit card companies include coverage for rental cars to their customers. Though just be sure to book and pay for your rental with a card that has this type of coverage.

There are also third party options for covering your rental. For example, many of the main travel websites will offer you coverage through them if you reserve your rental car through their website. This option may be cheaper than going through the car rental company itself.

Getting “Insurance Coverage” Through the Car Rental Company

No, it’s not cheap. But you can get coverage through the rental company if you’re unsure about other options. They don’t call it insurance though. Because it technically isn’t insurance.

It’s called the Collision Damage Waiver (CDW). It’s basically a waiver that you pay for and sign off on. Basically it means that the car rental company loses its rights to come after you for charges related to damage to your rental car. (Though there are some exceptions in rare situations.)

This option basically takes any issues of dealing with an accident or theft of a rental off of your shoulders. If something happens, you just give the rental car company the keys back (assuming you still have them) and walk away.

If you use your own insurance or credit card, that’s not the case. You’ll likely have to pay some money up front (ie. your deductible or the cost of the damage) and try to get reimbursed for what you can through the insurance of credit card company later.

So the $10 to $50 that rental companies typically charge for CDW may be worth it even if you have insurance coverage.

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