Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health insuran...

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Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager Chris Harrigan

UPDATED: Apr 13, 2022

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Key takeaways...

  • Little do these renters know, the standard car insurance plan often transfers to a replacement vehicle as detailed in a car insurance policy handbook
  • If you rent a car regularly, or you only rent every time that you take a cross-country trip, you need to know how your personal policy works so that you save a pretty penny by avoiding double coverage
  • Make sure to review your policy to see what is already covered by your policy

Many people rent a car when they travel to another city or when their vehicle is in the shop for repairs. If you have a need to rent a car, it is about time that you learn about all of the myths and truths surrounding car rental coverage.

All too often, when renters walk up to the rental counter they are bombarded by a long list of questions concerning insurance and intimidated into buying expensive car rental coverage.

Little do these renters know, the standard car insurance plan often transfers to a replacement vehicle as detailed in a car insurance policy handbook. If you are in the market for a policy, start comparing car insurance rates now by using our FREE quote tool above!

If you are not sure how to decipher the meaning of “insured vehicle” in your policy, it is time to read up on car rental insurance and how it works.

By reading a straightforward guide that is easy to understand, you can feel confident that you have elected to carry only coverages that you need as you sign the rental contract at the desk.

Read on, and get answers to the most common questions surrounding insurance and how it covers all types of vehicle rentals.

How does the standard auto insurance policy extend to rental cars?

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Many people have heard that buying car rental insurance at the rental counter is a waste of money for vehicle owners, but these same people are scared to decline the coverage because they do not understand how their insurance works.

Considering the fact that insurance and waivers can cost up to $40 per day, you can see why it is important to bite the bullet and really get familiar with the product that you pay for monthly.

If you rent a car regularly, or you only rent every time that you take a cross-country trip, you need to know how your personal policy works so that you save a pretty penny by avoiding double coverage.

One of the most common questions posed by people who are not insurance experts is: Do you need the supplemental car rental coverage? The answer to this question is “it depends.”

Whether you need it depends on a few things:

  • Whether or not you have a personal policy
  • What type of coverage you have
  • Where you will drive
  • What type of vehicle you are renting

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Do standard policies cover rentals?

When you own a vehicle in your name, you must have standard personal car insurance. This personal car insurance will cover the “insured vehicle,” but many do not know it also provides coverage to temporary replacements.

If you read through the policy booklet and find the definition of insured vehicle, it will state what a temporary replacement is.

Typically, it is any vehicle that you do not own that you do not have regular access to.

Rental cars are defined as temporary replacements and will be covered as if it were the insured vehicle when you sign a rental contract.

How does the coverage extend to a rental car?


In most cases, whatever coverage you carry on your personal vehicle is the coverage that will extend to the rented vehicle. Your liability will follow you no matter what borrowed vehicle you drive.

So if you are carrying high limits of liability on your vehicle, you have peace of mind in knowing these high limits will follow you when you stay domestic in a rental car.

It gets a little bit more complicated when it comes to physical damage coverage on the rental.

Most agencies will try and push a damage waiver because they profit significantly from selling these waivers.

In fact, some experts say that companies profit more from the sales of waivers than they do from the daily rental rates.

What you might not know is that your physical damage coverage will pay for the repairs of a rental car if you carry the coverage on your policy.

This means that you must have both comprehensive and collision coverage for unoccupied and occupied damage claims to be covered.

Whatever deductible that you have on each will still be collected if a rental claim is filed.

With this being said, you can avoid the expensive daily fee charged by the rental agency as long as you have full coverage on one of the cars on your policy.

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What types of rental cars are covered?

If you are renting a standard private passenger vehicle, your own car insurance will typically cover the rental for up to 30 days.

The complications come when you are renting a luxury car that has a value that dramatically exceeds the value of your car.

It can also get complicated if you are renting a moving vehicle, a commercial vehicle, or a recreational vehicle.

You need to check with your agent to discuss how the coverage will extend and whether or not it is best to buy supplemental waivers.

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Where can you drive a rental and still be covered?


You need to skim through your policy to see how far past the border you are covered if you plan on traveling to Mexico or Canada. Most policies will only cover you about 10 miles past the international border if you are going to either country.

It is important to recognize that when you have the state minimums, your insurance will bump up to higher limits when you cross state lines if they are required by law.

Your personal car insurance will only cover you for the same territories and regions that you are covered driving to in your own car.

If you are going overseas, your personal car insurance will not cover you at all. This is because a standard car insurance plan only provides coverage in the US and its territories.

You may need to look into the coverage extensions if you are in Hawaii or Puerto Rico, because they vary from company to company due to different state law.

What are the alternatives to personal car insurance?

Personal car insurance is always a great way to keep rental rates down, but if you do not rent a car there is not policy to extend unless you buy a specialized plan.

You can carry insurance to protect your assets in accidents where you are negligent even if you do not own a car. This is called a named non-owners policy. It will cover you when you are driving non-owned cars like rentals.

This is a good option for constant liability protection when you rent cars on a regular basis and you do not want to pay for the inflated liability premiums charged by the rental car company.

You can see what your credit card company covers. Often, credit card issuers offer their cardholders incentives if they rent a car with their card.

The company may pay for the damage you cause to the rental or your policy deductible if you have coverage elsewhere.

The only drawback is that you generally must pay for the repairs first. There may also be stipulations that state what types of vehicles will be eligible for benefits.

This is definitely something you should research before you trust that your credit card provider is going to eliminate your need for other damage insurance.

When is buying the car rental coverage advised?

The last alternative would be to buy the car insurance being offered to you by the rental agent. While it does not sound ideal to pay $10, $20, $30 or $40 extra each day to insure the car, it can eliminate any confusion and give you the peace of mind that you need to enjoy your excursion.

There will be times where buying the supplemental coverage is a must.

If you do not have damage coverage, your credit card has too many restrictions, and you do not have liability coverage in your own name, add the waivers and liability coverage. This could be a saving grace if you do happen to get into an accident.

You should also consider adding the damage waiver if you have high deductibles and you do not have the money to pay for these if you turn the car in damaged.

What many do not realize is that their personal insurer may pay for the repairs, but many times they exclude coverage for loss of use.

This means that each day the car is in the shop you could be charged as if you were still renting it. When you buy the agency’s insurance, you are not charged for this period of time.

As you can see, there are a lot of ‘what ifs’ surrounding car rental insurance. You need to review your policy, check out which options you have, and then be sure that all listed drivers are on your policy.

If you do not have coverage and you need to buy a plan start comparing rates by using our FREE quote tool below and price the cost of standard coverage that will cover a rental.