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Renting a Car? Understand Your Insurance Options

By RBC Insurance • Published May 3, 2024 • 5 Min Read

Making sure you have proper car rental insurance should be part of your pre-travel plan, whether you’re renting a car for a road trip or need a vehicle for personal use or a business trip.

Driving gives you the freedom to explore a variety of new locales at your own pace, or it can simply get you from point A to point B. If you’re renting a car, there are a few things to think about beyond the make and model before you drive off the rental lot. Choosing the right car rental insurance can ensure that you’re adequately protected if there’s an accident and injuries or the car is damaged or stolen. Plus, you’ll want to avoid paying for things you don’t need.

How do you choose the right level of auto rental insurance coverage? There are several factors to consider so you can enjoy a worry-free journey.

Key takeaways

  • Options for rental car insurance include your current personal car insurance, credit card provider coverage, and insurance provided by the rental company.

  • The right level of coverage can help protect you in the case of an accident, injuries, theft, or damage to the car.

  • Types of coverage you should be familiar with include collision damage, liability coverage, personal accident insurance, and personal effects coverage.

  • Your insurance premium may vary if you add an additional driver, leave the country, or purchase additional rental company insurance, so carefully review the terms and conditions.

Car rental insurance options to consider

Your current personal car insurance

Depending on the policy, your current personal car insurance may provide adequate coverage for renting a car. It’s important to understand what coverage you have (or don’t have!) on your existing policy.

If you’re road-tripping between Canada and the United States, check with your personal car insurance company about cross-border travel, as you might need to pay some additional fees or it might not cover it at all. It is important to note that coverage on a personal policy for a rental car, whether for pleasure or business use, is available only if you purchase Legal Liability for Damage to Non-Owned Automobiles. Note that this endorsement is only valid in Canada and the United States. It won’t apply if you plan to drive internationally.

Credit card rental car insurance

Many credit cards provide car rental insurance coverage, which can be a great way to save money as you can avoid purchasing additional insurance. But before you rely on your card alone, you’ll need to review the terms and conditions, as coverage can vary widely. You’ll likely need to pay for the entire rental using your credit card to be eligible for the coverage. You also might need to decline additional coverage from the rental company.

Rental car insurance provided by the rental company

Rental car companies offer many different types of coverage. But do you really need the extra insurance? Here are the types to consider:

Collision damage waiver (CDW), or loss damage waiver or physical damage waiver

This usually covers damage to the rental car if there’s an accident, theft, or vandalism. But it might not cover all types of damage—for example, damage to the windshield, mirrors, or tires—and there’s usually a deductible (the amount you’re responsible for paying), so always have a thorough read of the policy.

Liability insurance

Liability insurance is critical, so the legal minimum is often included with your rental car. It can protect you if you injure someone or cause damage to another person’s property or car while driving the rental car. You might need to purchase more than the minimum required by your province or territory. If you’re driving in the United States, where insurance payouts are typically higher, you may want to consider a higher limit.

Personal accident insurance (PAI) and personal effects coverage (PEC)

The last thing you want to worry about while road-tripping is how you would cover medical expenses if there were an accident. That’s where PAI comes in. It can provide

coverage for medical and rehabilitation costs as well as other expenses, like lost income.

If you purchase PEC, you’ll have coverage for any personal belongings that might be stolen from the rental car.

If you know which company you are renting from, contact it in advance to see if you can get a copy of its insurance document to review options and limits and identify gaps or overlaps with your existing coverage.

What to do before renting a car

Before hitting the road in your rental, there are a couple of steps you should take to make sure you have the right coverage:

  1. Call your current personal car insurance provider: Speak with your insurance company to learn whether your current policy covers car rentals, what type of coverage is available under your current policy, and whether any additional coverage is required based on your rental needs and where you will be travelling to.

  2. Understand the coverage available through your credit card or rental company: If your situation requires you to use car insurance provided through your credit card or the rental car company, be sure to check your credit card certificate of insurance and contact the rental company to understand the terms and conditions for both options.

The more you understand in advance of your travels, the more you can relax knowing that you’re covered in any scenario. Connect with an RBC Insurance Advisor to learn more about personal car insurance and coverage while renting a car by calling 1-877-749-7224 or get a quote online today.

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*Home and auto insurance products are distributed by RBC Insurance Agency Ltd. and underwritten by Aviva General Insurance Company. In Quebec, RBC Insurance Agency Ltd. Is registered as a damage insurance agency. As a result of government-run auto insurance plans, auto insurance is not available through RBC Insurance in Manitoba, Saskatchewan and British Columbia.

This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.

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