Car Insurance and Rental Cars: Everything You Need to Know

You’re probably renting a vehicle for one of two reasons, and they couldn’t be more different. One, you are planning a trip and want to rent a vehicle to travel. Or, the not-so-fun reason, you were in a car accident and your vehicle is in the shop for repairs. Both of these situations prompt the question: Does my car insurance cover rental cars? The answer: If you have car insurance, most insurance companies will extend coverage to your rental vehicle. But, the amount of coverage they will extend is what you need to figure out. We recommend calling your local, independent insurance agent or company to examine your policy. But, we get it. You have questions because insurance can be confusing. So, here are our answers to common questions about rental cars and car insurance:

Does my car insurance cover a rental car to travel?

  1. Do I need extra insurance when renting a car to travel?

  2. Will I have coverage if I travel out of the country?

  3. What questions should I ask my insurance agent or company to determine if I have coverage?

  4. What if someone else drives my rental car?

  5. What types of rental vehicles will my insurance cover?

  6. Does my car insurance cover a rental car after my vehicle is damaged in a covered accident and needs repair?

1. Does my car insurance cover a rental car to travel? If you’re traveling and need a car, your car insurance will most likely extend to the rented vehicle. But, each insurance company does this differently. At Auto-Owners, we extend the most extensive coverage you have on any personal vehicle on your policy, within our coverage territory (U.S., Canada, and Mexico). Although, if you’re traveling to Mexico, you will want to read more about how their government may not recognize your insurance in section three, below. For example, let’s say you rent a vehicle to go on a weekend trip. The coverage that extends to your rental is the same as your vehicle with the most coverage on your policy. So, if you have a vehicle on your car insurance with collision coverage, then collision coverage will extend to your rented vehicle. If you don’t have collision coverage on any vehicle on your policy, then collision coverage will not extend to your rental vehicle. Again, the best way to be sure is to call your local, independent agent that services your policy. This is one of the many reasons we like working with independent agents. They make asking questions, like this, as easy as making a quick phone call. Read more: What is an Independent Insurance Agent? Everything You Need to Know 2. Do I need extra insurance when renting a car to travel? If you have car insurance, most insurance companies will extend coverage to your rental vehicle. But, when you get to the car rental counter you will most likely be presented with extra protection options. Sometimes these overlap with your existing personal car insurance coverages. This means you could potentially pay for the same thing twice. Yuck! To get a better idea of how your existing auto insurance policy compares with the car rental protection plans, check out our table below. (Remember, these will differ depending on your insurance and the car rental company.)

Damage Waiver: Protection you can purchase from the car rental company that typically waives your responsibility for damage of the rented vehicle, conditional on the rental agreement.

  • If your auto insurance includes collision coverage and comprehensive coverage, you may already have coverage for this.

  • For Auto-Owners policies, if you have a vehicle with collision and comprehensive coverage, we extend it to your rented vehicle, as long as you are traveling within the coverage territory. This means you have coverage and shouldn’t need the damage waiver.


Personal Accident Insurance: Protection you can buy from the car rental company that typically covers medical expenses in the event of an accident. Again, it is dependent on the rental agreement.

  • Most car insurance policies include a medical payments coverage, which pays for qualified medical expenses for you and the passengers in your vehicle involved in the accident.

  • However, check the limits you selected for your policy. If your medical payments coverage limits are low, you may want to consider adding this coverage.

Personal Effects Coverage: Protection you can purchase from the car rental company that usually covers damage to personal items in the rented vehicle.

  • Your car or homeowners/renters insurance may cover this. Depending on the items, you may already have coverage if your belongings are damaged in your rental vehicle.

Supplemental Liability Protection: Protection you can buy from the car rental company that provides extra liability protection to your existing car insurance liability coverage.

  • Most car insurance policies include liability coverage, but when you purchase your policy, you choose a limit. If you selected a low limit, you may want to consider paying for the rental company’s supplemental liability protection.

So, here’s the alarming part. Sometimes, despite all these options, there may still be gaps in your insurance for a rental vehicle. At Auto-Owners, we offer three endorsements to avoid these gaps and hidden fees:

  • Rented Automobile Replacement: Some car rental companies specify in their agreements that if you total one of their vehicles it must be replaced with a new vehicle. This endorsement will replace the rented vehicle with a new one. Otherwise, you could be on the hook for replacing it.

  • For Auto-Owners policies, this endorsement is included if you have comprehensive and collision coverage!


  • Loss of Use - Rental Fee Reimbursement: If you damage your rental vehicle the rental agreement may require you to continue paying the daily or weekly rental fee. This endorsement will pay the fee that would have been paid if the rental vehicle had not sustained damage.

  • For Auto-Owners policies, this endorsement is also included if you have comprehensive and collision coverage!


  • Rental Gap: If you are in an accident in your rental vehicle, the rental car company may handle repairing or selling the vehicle in a few different ways. Some of them can leave you paying for a perceived loss in value or diminished value.

  • If the company repairs it, they may charge you for a perceived loss in value, since the vehicle is now damaged and therefore worth less. Alternatively, if they sell the vehicle after repairing it, they may charge you for diminished value. Diminished value is the difference in the vehicle’s value before the damage and the amount the rental company was able to sell the vehicle. This endorsement covers the amount of diminished value, or perceived loss in value, so you’re not caught with that bill.