If you have both collision and comprehensive coverage on your car insurance policy, rental car coverage may be included. But before you skip the rental car insurance at the counter, it’s important to know about potential exclusions, extra considerations, and secondary coverages.
Not sure what situations you’re actually covered for or how to make sure you’re fully protected? Let’s break down when your car insurance covers rental cars—and when it might not.
TL;DR
- Your personal car insurance usually extends to any car, including rental cars, in the U.S. and Canada.
- Collision and comprehensive coverage can help with damage or theft of a rental car.
- If you only have liability coverage on your car insurance policy, you’ll be responsible for repairing any damage you cause to the rental car
- Most rental companies will offer extra coverage options, like a Collision Damage Waiver (CDW), which can help cover situations not included under your personal policy.
- Potential gaps, like loss of use fees or coverage for rentals outside your policy’s geographic area, might require additional protection from the rental company.
When does car insurance cover rental cars?
Car insurance usually covers rental car damages, but it depends on your policy. If your personal car insurance includes the combination of liability, comprehensive, and collision coverage it typically extends to rental cars, and really any cars, within the U.S. and Canada.
However, if your policy only includes liability coverage, you’ll be responsible for any damage to the rental car unless you purchase additional coverage, like a collision damage waiver or loss damage waiver, from the rental car company.
Picture this: You rent a car for a quick weekend getaway in Austin, and accidentally back into a light pole, causing $2,500 in damages to your rental car. If your personal car insurance policy includes collision coverage with a $500 deductible, your insurance company would cover up to $2,000 of the damage after you pay the deductible for eligible claims.
Keep in mind that certain terms typically apply. Some policies exclude rentals used for business purposes or those outside a designated geographic coverage area (like outside the U.S. and Canada).
When you include liability, collision, and comprehensive coverage on a Lemonade car insurance policy (commonly referred to as “full coverage”) you’re covered when renting a car in the U.S. or Canada.
When is a rental car not covered by car insurance?
Car insurance usually extends coverage to rental cars, but there are some potential exclusions to keep in mind, including:
- Moving trucks or specialty vehicles—like a U-Haul
- Vehicles rented outside of a designated coverage area (typically the U.S. and Canada)
- Rental vehicles used for business purposes
Imagine this: You’re vacationing in France and decide to rent a car to explore the stunning landscapes of the countryside, and you didn’t opt for additional rental car insurance from the agency. Unfortunately, you get into a fender bender, causing damage to the rental. Since you’re outside the designated coverage area, your personal car insurance won’t cover the damages. This is where purchasing a collision damage waiver (CDW) or loss damage waiver (LDW) from the rental company come in handy.
What about loss of use fees?
If a rental car gets damaged and needs repairs, the rental company loses money during that time because they can’t rent it out. To make up for that, they might charge you a “loss of use” fee for every day the car isn’t available. Buying a Collision Damage Waiver (CDW) or Loss Damage Waiver (LDW) from the rental company can save you from getting stuck with these fees, while personal car insurance policies won’t help cover those costs.
If your car insurance already covers most rental car damages, but doesn’t include loss of use fees, it’s up to you to decide if purchasing a CDW or LDW from the rental company is worth it for extra protection.
Does liability insurance coverage cover rental cars?
Yes, liability insurance typically covers rental cars within your coverage limits, but it won’t cover any damage to the rental!
Liability insurance covers any damage or injuries you might cause to others while driving a rental car. For example, if you accidentally rear-end someone, your liability insurance would help with the other driver’s repair bills or medical costs (up to your policy’s limits).
Though specific terms vary by state, liability insurance coverage is required in nearly every US state to legally get behind the wheel.
But remember, liability insurance doesn’t cover damage to your rental car. That’s where collision and comprehensive insurance come in.
How does car insurance cover a rental car?
Let’s explore how your car insurance can help with rental-related accidents:
Collision insurance
Collision coverage includes damage to the rental car from an accident with another car, like a dented bumper. The typical coverage amount is up to your collision coverage limits, usually $50,000 or more, after you pay the deductible.
Comprehensive insurance
Comprehensive coverage includes helping to cover the replacement cost if your rental car is stolen, or repair costs if it’s damaged by an event that’s not a car accident (think vandalism, hitting an animal, or hail damage). The typical amount is determined by the value of the rental car and is limited by your comprehensive coverage limits, with deductibles typically ranging from $100 to $1,000.
Liability coverage
Coverage includes damages or injuries you cause to others resulting from an accident involving your rental car. The typical coverage amount varies based on state requirements or your selected policy limits, usually ranging from $25,000 to $50,000 for bodily injury or property damage liability.
What should I do if my rental car is damaged?
If your rental car is damaged—whether from a collision with another vehicle or uncontrollable events like a fallen tree during a storm—here’s what you need to do next:
- Contact the rental agency: Notify the rental car company as soon as the damage occurs and follow their instructions.
- File a police report if necessary: For theft, vandalism, or major accidents, a police report is often required before filing an insurance claim.
- Document the damage: Take photos of the damage from multiple angles and gather any incident details (e.g., location, time).
- Organize rental agreement details: Ensure you have your signed agreement and any additional services you purchased (like a CDW).
- Notify your insurance company: Once you have and notify your rental car company, it’s time to file a claim with your insurer.
At Lemonade, we designed our digital claims process to be as quick and easy as possible. Just submit your claim through the app with the help of our chatbot, AI Jim. We’ll pair you up with one of Lemonade Car’s claims adjusters to help you with the rest of the process.
How does Lemonade provide coverage for rental cars?
Simplified rental car coverage
Lemonade Car includes broad coverage that can protect your rental car, when you build your policy to include both collision and comprehensive coverage. Whether your rental car is damaged in an accident or stolen, Lemonade has your back.
Temporary transportation coverage
If you have both collision and comprehensive coverage on your car, you’ll get the option of selecting temporary transportation coverage for your car, depending on the state you live in.
Most insurance companies only cover rental cars when your car’s in the shop, but Lemonade does things differently. Pretty much any type of transportation is covered for up to a month while you’re waiting on repairs (as long as the reason for your car repair is covered). That means we’ll help with the costs of Ubers, Lyfts, rental cars, or even public transport like buses and trains (up to your daily limit).
Transparent policy management
With Lemonade, you can easily adjust your coverage limits, deductibles, or start dates directly in the app, putting the power to customize your policy in your hands. Whether you need to increase your coverage after adding a teen driver or lower your deductible for peace of mind, it’s all just a few taps away. This means you have full control over your rental car coverage options, making it simple to get exactly what you need, when you need it most.
Before we go…
Understanding when your car insurance covers rental cars can save you from unexpected costs during your travels. While full coverage often extends to rental cars, gaps like loss of use fees or rentals outside your policy’s coverage area might leave you unprotected.
Whether you’re sticking to the roads in the U.S. or venturing abroad, ensuring you’re fully covered gives you a smooth ride and peace of mind. Want to make sure your policy has you covered? Click below to get your free car insurance quote today.
FAQs
Who is responsible if a rental car breaks down?
If a rental car breaks down due to a mechanical issue outside your control, it’s usually the rental company’s responsibility to fix it or provide a replacement. Call their roadside assistance number right away, and they’ll guide you. However, if you caused the breakdown (like by ignoring low oil or warning lights), you might be on the hook for repair costs.
How can I insure a rental car for international travel?
You can add insurance directly through the rental company when booking or picking up the car. Alternatively, check if your travel insurance or credit card offers rental car coverage overseas—just make sure it’s valid in the country you’re visiting.
Does my credit card cover rental car insurance?
Most credit cards offer rental car insurance, but the coverage can vary. Typically, they cover damage or theft if you pay for the rental with the card and decline the rental company’s insurance. Call your card provider to confirm what’s included and any restrictions before you rent.
Do I need car insurance to rent a car?
Technically, you don’t need your own car insurance to rent a car since rental companies offer their own coverage options. However, if you already have car insurance, it can usually extend to rentals, which can save you from buying extra coverage. Just confirm your policy details so you’re not stuck with unexpected costs.
How do I know if my personal car insurance covers a rental car?
Your personal car insurance typically covers a rental car if you have collision and comprehensive coverage. Check your policy or contact your insurance company to confirm details like geographic limits or exclusions. That way, you’ll know exactly what’s covered before you hit the road.
Does car insurance cover my personal belongings if they’re stolen from my rental car?
No, car insurance doesn’t usually cover personal items stolen from your rental car. But, renters or homeowners insurance can protect your personal belongings regardless of where the theft happens. It’s also a good idea to keep your valuables out of sight when you leave your car outside.
A few quick words, because we <3 our lawyers: This post is general in nature, and any statement in it doesn’t alter the terms, conditions, exclusions, or limitations of policies issued by Lemonade, which differ according to your state of residence. You’re encouraged to discuss your specific circumstances with your own professional advisors. The purpose of this post is merely to provide you with info and insights you can use to make such discussions more productive! Naturally, all comments by, or references to, third parties represent their own views, and Lemonade assumes no responsibility for them. Coverage and discounts may not be available in all states.
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