Property damage liability insurance only covers damage you cause to other people’s property. And if you hit another vehicle or damage a fence while driving a rental car,
your liability coverage may help pay for that other person’s property damage. However, it won’t pay for any damage to the rental car.
You can purchase a Collision Damage Waiver (CDW), also known as a loss damage waiver, from the car rental company. This waiver covers vehicle damage due to accidents, theft, weather, fire and vandalism.
Moreover, many credit cards offer rental car coverage as a complimentary benefit. This coverage typically helps pay for damage to the rental car as long as you use that card to pay for the full rental and decline the rental company’s collision damage waiver (CDW).
If your credit card offers secondary rental coverage, it typically pays out only after your primary auto policy has processed the claim, covering remaining costs like your deductible.
Will my liability insurance cover the car I rented?
Liability insurance typically does not cover damage to the rental car. Instead, it only pays for damage you cause to other people’s property or injuries to others if you’re at fault in an accident.
To cover damage to the rental car, you’ll need to rely on your policy’s collision and comprehensive coverage or a rental car company’s Collision Damage Waiver (CDW). Check with your insurer to confirm what’s included in your policy before heading to the rental car counter.
What happens if I crash a rental car and only have liability insurance?
If you crash a rented car and only have liability insurance, you’ll have to pay for any damage to the rental car yourself. But if another driver caused the accident, their property damage liability insurance would typically cover the damage to your rental car, up to their policy limits.
You will be protected in two cases: if you have a damage waiver from the rental company and if you have collision coverage.
The table below explains who pays for rental car damage after an accident, depending on your insurance coverage, rental car protection and who caused the crash.
| Situation | Who pays |
|---|---|
| You caused the crash and have liability only, no waiver | You’ll have to pay out-of-pocket |
| You caused the crash and carry collision coverage | Your insurer minus any deductible |
| You have Collision Damage Waiver (CDW) | The rental company waives the charge, as long as you followed the contract |
| You paid with a card that has rental coverage | Your card, as primary or secondary coverage depending on the card |
| Another driver caused the crash | The other driver’s property damage liability |
Do I need extra rental insurance if I already have full coverage?
If your policy has collision and comprehensive coverage, it often applies to a rental car you drive for personal use. This means you might not need the rental company’s waiver. Full coverage usually protects the rental, but you’ll still have to pay your deductible. Before you turn down the waiver at the counter, here are some gaps to watch for:
- Loss-of-use fees: What the rental company charges for income lost while the car is being repaired.
- Diminished value: The drop in the car’s resale value after an accident.
- Administrative and towing fees: Charges the rental company adds when processing a claim.
- Your deductible: You still pay it out of pocket, and a claim may raise your premium at renewal.
The rental company’s collision damage waiver (CDW or LDW) closes these gaps. Some credit cards cover them as well, but card coverage is usually secondary, meaning it pays only after your auto policy does.
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How does credit card rental car coverage work?
Many credit cards offer rental car coverage as a benefit, often called an auto rental collision damage waiver, if you pay for the entire rental with that card. If you pay for a rental with the card and decline the rental company’s collision damage waiver (CDW/LDW), the benefit may cover the damage or theft of the rental car, subject to certain limits and exclusions.
Most cards offer secondary coverage, which pays only after your personal auto insurance, typically covering your deductible and any remaining fees. Some premium cards offer primary coverage, which pays first, so you can avoid filing a claim with your own insurer.
The bottom line
Your existing auto insurance may provide coverage when renting a car, potentially saving you from purchasing additional insurance. If you have full coverage, your policy will probably extend to the rental vehicle; confirm rental car coverage with your insurer before your trip.
Frequently Asked Questions
Does liability insurance cover the other car if I crash a rental?
Yes, in most cases. Your liability coverage usually extends to a rental car you drive, so it covers the other driver’s damages and injuries up to your limits. It won’t pay for the rental itself.
Does car insurance cover a rental if I don’t own a car?
Not if you don’t have a policy, because there’s no coverage to extend. You’d rely on the rental company’s waiver or your card’s benefit. If you rent often, a non-owner policy can provide liability coverage.
Will a rental car accident raise my insurance rates?
It can. If you cause the crash and file a claim on your own policy, it’s treated like any other at-fault claim. A card with primary coverage can keep the claim off your auto policy.
What is loss of use on a rental car?
It’s what a rental company charges for the days a damaged car can’t be rented out. Not every auto policy covers it, but some credit cards do.
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