What Happens if You Crash a Rental Car With Insurance?

Every time I rent a car, I'm still amazed that you can just drive off the lot with a multi-thousand-dollar piece of equipment after answering fewer questions than a high school biology exam, one of them always being: Do you want to purchase optional rental car coverage?

If you paid for your rental with a credit card or if you have your own auto insurance policy, you might think you're all set and can decline it. And that may be true — but you could still be on the hook for part or all of the cost if you happen to crash that car.

It really can be quite difficult to understand what happens if you crash a rental car with insurance. That's because there are lots of different costs that could stem from a car crash, and your already-existing coverage only protects against some of them, but there are lots of exclusions.

Key takeaways

• Crashing a rental car means lots of potential expenses, and your own car insurance may only cover some of it.
• Some credit cards cover damage to the rental car, but there are many limits, and you may need to use your personal insurance first.
• Consider coverage for your own injuries, damage to your personal belongings, and extra crash-related charges from the rental company too.

What happens if you crash a rental car with insurance?

If you crash a rental car, first things first.

• Make sure everyone's OK: Call 911 or the relevant emergency services if someone needs help. If it's safe and you can do so, move out of the way of traffic.
• Document the damage: Take photos that you'll need later for evidence.
• Exchange info: If it's safe, get the other driver's name, contact info, insurance info, car make/model, registration information, and license plate number.
• Contact everyone else: Notify the rental agency, your own personal car insurance company (if you'll be filing a claim), and the credit card company (if you're using your card's rental insurance benefits). We'll get into when each coverage type applies below.
• File a police report: Insurers and the rental company generally require this as official proof of damage in addition to the photos you took.
• Coordinate payouts: Stay in touch with the rental company, your insurer, and/or the credit card company until all charges are resolved.

What kind of rental car insurance coverage do you need?

"Rental car insurance" is a broad term that can mean lots of different things. I always find it helpful to ask two main questions for any insurance product, especially for something like rental car insurance: What specific things do I actually need coverage for? and Where can I get that coverage?

Putting these two pieces together helps make sure you're not missing anything. No one wants to get a surprise bill for several thousand dollars because they didn't understand their policy, after all.

What specific things do I need coverage for when renting a car?

If you crash your next rental car, here are the main costs you could be on the hook for. Try to keep these costs in mind when thinking about how to bulletproof your own coverage.

• Personal liability: This covers injuries and property damage that you cause to other people, like totaling their car or sending them to the ER.
• Physical damage to the rental car: This will cover repairs to the rental car itself or replacement if the damage is bad enough.
• Loss of use: Loss of use covers lost revenue for the rental agency while their moneymaker's out of commission and being fixed since they can't rent it out.
• Personal items: Your own possessions that are damaged or lost in a car crash, like if your laptop or your suitcase gets crunched up like a trash compactor, need to be protected too.
• Medical bills for you and your passengers: Personal liability coverage doesn't pay out if you or your passengers are injured in a car crash, but this coverage will.
• Administrative and towing charges: This covers the miscellaneous business and towing charges involved with getting your crashed car to the shop and coordinating its repair.

Where can I get rental car coverage?

As you can see from the list above, you potentially have a lot at stake when you get behind the wheel of a rental; it's not just the car itself. Luckily, you're probably already covered for most of this stuff, but you could buy coverage elsewhere if needed too.

• Your personal auto insurance policy: As long as the policy and the rental are in your name, any coverages generally extend to cars you rent too. For most people, that's at least some amount of personal liability coverage, collision, and comprehensive damage protection.
• Your renters or homeowners insurance policy: These policies often cover personal items in your car that are damaged — such as a broken laptop or the contents of your suitcase. Your auto policy only covers the car, after all, not what's inside it.
• Your health insurance policy: This pays for your own injuries but not those of your passengers. They could use their own health insurance or file a suit against you or the other driver.
• Credit card collision damage waiver: Many credit cards offer a "collision damage waiver" or "loss damage waiver" as a benefit. If you use that card to pay for the rental, it'll help pay for damage to the rental vehicle as long as your name is on both documents.
• Third-party travel insurance policy: Some third-party travel insurance companies, like Allianz, allow you to buy separate travel auto insurance policies for specific trips.
• Rental agency insurance policy: Lastly, you can expect the rental agency itself to offer you different coverage options before you get the keys to your vehicle.

A good place to start is checking the details for your own auto insurance policy (if you have one) and then working backward from there. Find out what's covered, what's not covered, and any relevant limitations. You could find this written out in your auto insurance agreement or by asking your insurance agent. From there, you can decide what other coverages you want and which ones you're comfortable skipping on.

Does my insurance cover rental cars?

Yes, your own personal car insurance covers cars that you rent, but only if both the rental car and your auto policy are listed in your name. Any coverages you've bought for your own car also extend to cars you rent, such as your personal liability coverage. If you have a full-coverage policy (typically required if you lease or finance your car), your collision and comprehensive coverage will cover physical damage to the rental car too.

That's a welcome relief, but there are a few important caveats here.

• Deductible: The same deductible applies whether you crash your own car or a rental car. On the other hand, insurance from a credit card doesn't usually have a deductible.
• Claims history: Filing a claim with your own insurance company could raise your rates. (But if you caused the car crash, your rates will go up anyway since it'll be listed on your driving record.)
• Payout limits: If you bought full coverage insurance for your own car, the same limits apply to car rentals too — meaning if you're renting a more valuable car than your own, you'll be on the hook for the difference if it's totaled.
• Non-owner car insurance: If you don't have a car to insure but you rent one often enough, some insurance companies will offer this special policy type that could be much more affordable.
• Car rental riders: Some car insurance companies sell an optional "rider" that ensures you're protected from the extra charges that often take people by surprise when they crash a rental car, like loss-of-use fees, towing fees, and administrative charges.
• Difference in payout calculations: Most personal auto insurers will reimburse repairs for their actual cash value. But the rental company will want a higher payment based on its "diminished value," which accounts for the fact that damaged-and-repaired cars are worth less. You'll be on the hook for the difference between these two numbers.

Credit card rental car insurance

Many credit cards also offer rental car insurance, especially travel rewards cards. This usually comes in the form of a "loss damage waiver" or "collision damage waiver" that waives your responsibility for any damage or theft of the car. Here are a few important points to note as well.

• No deductible: Collision damage waivers don't generally charge a deductible, unlike your own auto policy.
• Paying with the credit card: You'll need to pay for the rental car with the credit card offering those benefits, of course. You can't mix and match payment methods and cardholder benefits.
• Potentially higher coverage: Most policies cover all applicable damage on rental cars valued up to $75,000 or more. In other words, it's not based on what your own car is worth at home.
• No liability coverage: Rental coverage provided through your credit card company typically doesn't include liability coverage, so if you're found to be at-fault for an accident, your credit card insurance won't cover liability damages.
• More rules and terms: It's easier to void coverage from a collision damage waiver than your own auto policy, such as by not following the rental agreement. If you cause a crash while driving drunk, for example, your personal full-coverage auto policy still covers you — but the credit card rental insurance won't.

Finally, make sure you understand one key important difference that's worth diving into a bit more.

Primary coverage vs. secondary coverage

Most credit card rental car insurance policies actually require you to file a claim with your own insurer first. They only actually cover any remaining costs, and so they're known as "secondary coverage" policies. You'll also need to pay a deductible with your own auto insurer first, which the credit card company may reimburse later. You could also see a rise in your car insurance rates from filing a claim.

Primary coverage is rarer and usually offered with premium credit cards, but it allows you to skip filing a claim with your own insurance first. That's less hassle for you, and you could avoid a concurrent rise in rates for your own auto policy from filing a claim, so it's a better type of coverage to look for.

Popular credit cards with rental car insurance

Auto collision damage waivers come standard with many credit cards these days. But, it's worth considering some of the best credit cards for rental car insurance if you'll be relying on them frequently.

Chase Sapphire Reserve^®

The Chase Sapphire Reserve^® is one of my favorite travel credit cards that I keep planted in my wallet. It offers primary coverage for rentals worth up to $75,000. This card is meant more for short-term vacations because coverage won't apply on car rentals of over 31 consecutive days, antique cars are not covered, and you can't drive off-road with the car (no Finnish car racing for you, sorry).

Ink Business Unlimited^® Credit Card

Most credit cards won't cover any damage if you use the rental for business purposes. But that's precisely when the damage waiver applies with the Ink Business Unlimited^® Credit Card. Even better, it offers primary coverage for up to $60,000 worth of damage on cars that typically sell for up to $125,000 — so feel free to rent that convertible when wooing your next client.

Capital One Venture X Rewards Credit Card

Another card that features prominently in my wallet, the Capital One Venture X Rewards Credit Card, features similar coverage types and terms as the Chase Sapphire Reserve card (i.e., primary coverage on rentals worth up to $75,000). One noticeable difference is that coverage only lasts for 15 days within the U.S., not 31 days like with the Chase card. (Overseas rentals up to 31 days are covered, though).

When to turn down the rental car company's insurance

You'll need at least state-minimum coverage one way or another, whether from your own policy or the rental company. But after that, choosing what types of insurance to buy or skip on is a risk that only you can judge. As for me, here's what I need to have in place before I'm comfortable turning down the rental company's insurance.

• A credit card offering primary collision damage waiver coverage
• A personal car insurance policy offering personal liability coverage
• A health insurance policy that covers me and my family
• A homeowner's insurance policy in case we lose anything pricey in an accident

We're OK filing a claim with our other insurance types if we need to, even if it causes a rate hike. We also have enough money saved up to pay any applicable deductibles, and we're OK with paying loss-of-use charges, admin fees, and towing charges too.

But if you're not confident that you can afford these things, it's worth saying yes to the rental car company's insurance if it helps you relax and enjoy the trip more.

FAQs

Bottom line

My spidey senses were right when I judged that driving a rental car came with a lot of risks. If you're just relying on your credit card's auto rental damage waiver, it's probably not enough. Chances are, you're not going to total a rented Porsche by rear-ending a school bus while carrying a load of expensive luxury goods, but you never know.

Regardless of whether you ever do crash a rental car or not, making sure you have a strong personal auto insurance policy in place goes a long way toward giving you peace of mind. Consider getting a quote from the best car insurance companies to make sure you're paying the right price for the best coverage. From there, you can at least be informed about what risks you face when renting a car so that you could take action if you decide it's warranted.