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Your questions about rental auto insurance, answered.

What is rental car insurance?

Rental auto insurance covers drivers for any damage to a rental car.

Rental car insurance coverage isn’t mandatory but the option will be put forward when you sign for the rental car. That’s why we encourage all drivers to review their own car insurance policies to make an informed decision on rental insurance.

For the best rental car insurance rates compare quotes on LowestRates.ca and speak to a broker or agent about adding it to your policy.

How does rental car insurance work?

People who don’t own a vehicle are recommended to purchase insurance from the rental car company. However, many credit cards offer rental car insurance coverage for consumers who use the card to book the rental. Make sure to review the coverage offered by your credit card company.

But regardless of whether someone has an existing policy, or purchases one from a rental company, you’ll need to decide if you want to add supplemental liability and personal effects coverages. These are both strongly recommended, or you’ll be on the hook for a lot of money in the event of a loss.

For the most comprehensive coverage, you’ll want to make sure you have the following:

Collision Damage Waiver

Protects the renter from paying for a damaged or stolen car. Sometimes also known as loss damage waiver, this means that the rental company waives its right to pursue you for damage.

This waiver may be redundant if you have a car insurance policy with a rental car endorsement and/or coverage through a credit card.

Supplemental Liability Insurance

Rental car liability insurance covers the renter for bodily injury or death. This coverage tops up the mandatory minimum liability insurance set to between $1 and $2 million.

Personal Accident Insurance

Covers the renter and all passengers inside the car for personal injuries and medical expenses.

Personal Effects Coverage

Covers the renter against loss, theft or damage to their personal items. If you have home insurance, there’s no need to buy personal effects insurance from a rental car company because it provides coverage for any possessions you have in the car.

The best way to get a cheap rental car insurance rate is to speak with a broker or agent after completing a quote on LowestRates.ca.

Does my auto insurance cover rentals?

The coverage on your personal car insurance policy may extend to a rental car. For example, if your personal vehicle is damaged in an accident, your policy may help pay for a rental car while yours is in the shop.

But Loss of Use coverage on your personal car does not mean that drivers automatically have coverage for a rental car. Many consumers misunderstand this and believe that it does.

If you rent cars on a regular basis, some insurance companies may offer an endorsement or extra coverage that allows drivers to apply their regular auto insurance policy to a rental car. This endorsement is called SEF\OPCF 27 (often referred to as a “27”).

Always check with your insurance representative — your agent, a broker, or even directly with the insurance company — to see what level of coverage you have before you rent a car.

Is it necessary to buy rental car insurance?

Generally speaking, rental car insurance is not required because drivers are often covered by their personal insurance policies. However, there are circumstances where we'd recommend buying rental vehicle insurance. You'll want to buy insurance from the rental car company if:

  • You don't have car insurance.
  • You don’t have enough coverage (i.e. your auto insurance policy only covers the minimum.)
  • You’re a high-risk driver.
  • You’re renting sports or exotic vehicles.
  • You’re travelling across provincial or territorial borders (insurance and liability coverage rates vary by province).

Do you need car insurance to rent a car?

No, you don’t need car insurance to sign for a rental car insurance policy. However, you have to be at least 21 years old, present a valid driver's license, and will need a credit card to pay for the rental vehicle.

Does my credit card cover car rental insurance?

Each bank and credit card provider offers something different but most credit cards provide insurance in the form of collision coverage. If your credit card offers adequate protection, you can safely decline the collision damage waiver or similar auto rental collision loss damage insurance offered by the rental company.

Coverage on most credit cards is secondary, which means the card picks up only what you can’t first recover from your own insurance. Some premium credit cards, usually the ones with an annual fee, offer primary collision coverage, which means the card takes full responsibility for the payment.

In all cases, you still have to pay the rental company upfront, then file for reimbursement from your card issuer. Typically, you only have 48 hours to make a claim for damage, loss or theft.

For the coverage to be applicable, the cardholder must use the credit card in question to pay for the rental vehicle.

If you get into an accident, there may be additional fees from the rental car company for the loss of use of their rental vehicle that your credit card provider won’t cover.

If you plan to use insurance for your rental vehicle through your credit card, call the company ahead of time to make sure you’re aware of the limits and have adequate coverage.

How to save money on rental car insurance?

Before you rent a car, always check with your agent or broker, or even directly with the insurance company, to see what level of coverage you have. This will give you the best idea of the coverage you need and how much it will cost to get rental car insurance.

For discounts on rental car insurance we suggest:

  • Skipping the rental car company’s insurance if you have adequate coverage through your personal policy.
  • Shopping around rental car companies to compare rental car insurance quotes.
  • Opting for the economy car versus luxury cars that have high replacement value.

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