Rental Car Insurance: How To Protect Yourself When Renting a Vehicle
What is rental car insurance?
Rental car insurance is any type of auto insurance coverage that applies to a vehicle you’re renting, which may include:
- A collision damage waiver offered by the rental car company
- An endorsement on your personal auto insurance policy for liability to non-owned vehicles
- Limited collision damage coverage through the credit card you used to book the rental car
In most cases, buying the rental car coverage offered by the rental company offers the most complete protection, but you may have some coverage already through your personal auto insurance or credit card.
One other form of “rental car insurance” in Canada is loss of use coverage, known in Ontario as OPCF 20 or transportation replacement coverage. This optional car insurance add-on allows you to get a temporary rental vehicle through your insurance company if your insured vehicle is undrivable following a covered loss.
What kind of insurance do you need when renting a car?
When renting a car, you need liability coverage for damage or injuries you cause while operating the rental car as well as coverage for damage to the rental vehicle itself and for your own medical bills.
Third-party liability coverage is provided by the rental car company and will cover you while you’re driving the car. You don’t need to purchase additional liability coverage, although the liability portion of your personal auto insurance policy might extend to your rental vehicle as supplemental coverage, and you may have the option to purchase additional liability coverage from the rental company.
Physical damage and accident benefits coverage, on the other hand, isn’t automatically included with your rental and comes with a separate, added fee. The four types of rental car coverage offered by rental companies are:
- Collision or loss damage waiver (CDW or LDW): Covers most damage to your rental vehicle from an accident, theft, or vandalism; subject to a deductible
- Additional liability insurance: Extends your liability limit beyond the minimum set by the rental company
- Personal accident insurance (PAI): Provides limited coverage for your medical costs in the event of injury or death
- Personal effects coverage (PEC): Covers your personal belongings if they’re stolen from a rental car
Every type of coverage offered by the auto rental company may already be included in your personal car insurance policy. Check with your insurance broker or agent before purchasing car rental insurance to see what your own policy does and doesn’t cover.
Do I need rental car insurance if I already have car insurance?
If you already have car insurance, it may extend to a rental vehicle if you have an endorsement on your policy known as Legal Liability for Damage to Non-Owned Automobiles, or OPCF 27. Without this endorsement, your personal car insurance coverage can’t extend to a rental vehicle, and you’ll need to purchase separate coverage from the car rental agency.
OPCF 27 may extend the following coverage to a vehicle that you rent or borrow:
- Collision or upset coverage
- Comprehensive coverage
- All perils coverage
- Third-party liability coverage
- Accident benefits
- Uninsured automobile coverage
- Direct compensation property damage (DCPD)
The details of your policy language will determine exactly how and to what limits your personal auto insurance coverage applies to rental cars. Always consult your insurance broker before renting a vehicle to understand what is and isn’t covered.
Does your regular car insurance cover rental cars?
Your regular car insurance covers rental cars only if you have OPCF 27, or Legal Liability for Damage to Non-Owned Automobiles, on your policy. You can include this endorsement when you purchase auto insurance or add it at any time by contacting your broker to request the change. Be sure to check your policy limit as it could be lower than the value of the vehicle you’re renting.
Other ways to get rental car insurance
In addition to purchasing rental car coverage through the auto rental company or extending your personal coverage through use of an endorsement, you may have partial rental car insurance through the credit card you used to book the rental.
Most Canadian credit cards offer some rental car insurance as a built-in benefit; however, coverage limits, restrictions, exclusions, and conditions all vary and typically offer less coverage than either the rental car company or your own policy. Read the details of your agreement before renting a car to understand what your credit card may cover and what may not be covered.
Rental car insurance vs. your own insurance vs. credit card coverage
Here’s a rundown of how your rental car coverage options compare.
How to decide if you need rental car insurance
To decide whether you need rental car insurance, consult your insurance broker before your trip to go over the details of your personal auto insurance and identify any gaps in coverage. If you don’t currently have OPCF 27 on your policy, you may choose to add the endorsement or to purchase coverage directly from the rental agency instead.
PolicyMe’s licensed insurance brokers are available whenever you shop for car insurance or need professional insight on an insurance question. If you’ve got coverage through PolicyMe, we can schedule a call to confirm your coverage details and ensure you have the right coverage for your upcoming trip.
What happens if you damage a rental car?
If you damage a rental car, the accident will go on your Ontario driving record if you were more than 50% at fault. You may also be financially responsible for the full cost of repairs unless you have either OPCF 27 through your personal auto insurance or a CDW through the rental agency.
FAQ: Rental car insurance
This article is for general information only and is not insurance or legal advice. Examples and any sample quotes or rate ranges are illustrative and do not constitute an offer or guarantee of coverage, price, or eligibility. Actual coverage, discounts, and premiums depend on your individual circumstances and the insurer provider; if there is any discrepancy, your policy and insurer documentation govern. For advice about your situation, speak with one of our licensed insurance professionals.