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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Here's what you need to know...

  • Physical damage consists of both comprehensive and collision coverage
  • If you are traveling out of the country, your personal insurance will only cover cars that are driven in the United States
  • If you do not own a car, you should buy coverage through an agency

Renting a car is expensive enough, but when you add in the cost of insurance and damage waivers, your bill will shoot through the roof.

If you are planning a vacation, or you have a need for a replacement vehicle while your car is being repaired, you may be automatically assuming that you are required to pay for car rental insurance.

The car rental agencies actually bank on the fact that a majority of their clients will elect to purchase rental car coverage just because they do not really know how their coverage works.

If you are looking for coverage, start comparing rates now by using our FREE tool above! Enter your zip code to get started now!

How Personal Auto Insurance can Cover a Rental Car


As you are standing at the rental counter and the agent asks you if you would like to purchase collision damage waivers or personal liability insurance, tons of thoughts will run through your mind.

You are having an internal debate where you are asking yourself just how much more this will cost you and what it could cost you if you elect to drive unprotected.

A personal car insurance policy is designed to protect a specific vehicle that is listed on the policy.

What you might not know is that the policy explains that there are other scenarios where your policy will extend to a replacement vehicle that you do not own or have regular access to. If you rent a vehicle, this is

If you rent a vehicle, this is a non-owned car that will be covered by your liability and physical damage limits. Read on and learn how each coverage extends.

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How does liability insurance extend to a rental?

If you are renting in the United States, your liability insurance will be valid while you are operating the rented vehicle.

One thing many people do not know is that their Bodily Injury and Property Damage Liability coverage follows the drivers on the policy.

This means that whenever you are in another vehicle and you cause damages to another party, you have the protection that will pay for your negligence to help prevent a lawsuit and financial damage.

Many people wonder how liability insurance works when you carry state minimum limits. Every state has their own requirements, and getting stuck out-of-state with minimal coverage can be scary.

If you currently have low limits and you are driving through other states, it can help to know that your liability insurance will go up to the state minimums for the state that you are in.

You will never be without at least the requirements as long as you have personal auto insurance.

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How does physical damage coverage extend to a rental car?

Physical damage consists of both comprehensive and collision coverage. Comprehensive pays for damage to your vehicle that is caused by fires or vandals.

It also pays for other non-moving claims like riot, hail, glass breakage and more. Collision will pay to repair the vehicle when it is damaged when you collide with a car or another object.

Whatever deductible that you carry for comprehensive and collision coverage is the amount that you will have to pay out-of-pocket towards the collision repairs of the rental.

Physical damage will cover a rental if you carry it. One thing that many do not consider is that a rental will not have damage cover if you have an older car or you carry only liability on your policy.

The only time damage is covered in a rental is if it is covered when you are in an accident in your own car. You should also check to see if there are limits to how much per hour your company pays for collision repairs.

When You Need to Consider Rental Car Insurance


Your car insurance may not always be ideal when you are in specific territories. It is always important to know how your insurance works and when it might not work before you decide how much car rental insurance you need.

If you are traveling out of the country, your personal insurance will only cover cars that are rented and driven in the United States. Some policies will cover you only 10 miles beyond the Mexico border.

If you are traveling abroad, you need to buy a special policy that covers you with your license in that country. The rental agency should be able to help you select the right coverage limits for damage and liability.

– You Carry High Deductibles

If you have high deductibles to keep your premiums for damage coverage down, you may be interested in buying damage coverage for the rental.

The last thing that you want to do is get stuck paying for a $900 repair bill because you have a $1000 deductible.

When you buy a waiver, it typically waives all damage so that you do not lose any money when you get into an accident with the car that you rented.

– You Do Not Have Your Own Car

If you do not own a car, you should buy coverage through the agency. This is because you are required by law to have liability insurance when you are driving in virtually any US state.

When drivers often rent but do not own their own car, they may be better off with a specialty policy calls a named non-owner plan.

This is a plan that offers liability coverage for vehicles that the named insured does not own. It will provide you with a blanket of liability coverage and will not cost you a daily rate each time you rent.

– You Do Not have Coverage for Your Property

Many people overlook how important it is to have coverage for their personal belongings when they are traveling. I

When traveling, you need peace of mind in knowing that these items will be covered.

If you have a renter’s or a home insurance policy, the coverage will extend while the belongings are away from the home.

If you do not, you may need to buy personal effects coverage through the agency.

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What happens if you are in an accident and you use your own insurance?

Just because your auto insurance extends to a rental car does not mean it is always the best way to cover the vehicle. The added rate can add up and having an at-fault accident in the rental can raise your car insurance rates for 3 years.

The reason for this is because your insurer knows about the loss and pays for the loss.

If you were to file the claim through the rental car company, you do not have to worry about a rate increase because it will not be reported through the same claims reporting system.

Loss of use to the rental car agency is when the car is being repaired and is not available for rental.

Another factor you must consider is that your car insurance provider will not pay for the loss of use.  If your insurer will not pay this expense, you have to be ready to pay this hefty charge.

As you can see, rental car insurance can be helpful to the right person. If you own a car, be sure that insurance that you have extends to provide the right type of cover.

If you are not happy with your rates now, you should comparison shop to find lower premiums.

Start comparing car insurance rates now by entering your zip code in our FREE tool below!


  1. http://money.howstuffworks.com/personal-finance/auto-insurance/liability-insurance1.htm
  2. https://www.iii.org/article/what-covered-basic-auto-insurance-policy
  3. https://www.thebalance.com/what-is-non-owners-insurance-527421
  4. https://www.insureuonline.org/consumer_auto_car_rental_insurance.htm
  5. https://www.progressive.com/lifelanes/rental-car-insurance-facts/