Does My Auto Policy Cover a Rental Car?

Have you been standing at a car rental desk when the clerk asks you “would you like to add insurance to your rental car today?” And, you wonder… “Does my auto policy cover the rental? Does the credit card that I am using to pay for the car cover it or should I buy the rental company’s insurance?”

Your auto insurance policy will typically protect you in a substitute vehicle (or a rental car) “to a certain extent”. For instance, if you have a $500 deductible on comprehensive and collision coverage, the rental car would be covered with the same deductible. BE AWARE that your personal auto policy does not cover vehicles over a certain size (some U-Hauls, trucks, etc.) your travel outside the United States, or drivers not listed on your policy.


It’s always a cost/benefit decision, but my suggestion is typically “YES” pay for the Loss Damage Waiver (LDW). When you sign a car rental agreement, you are willing to pay for:

1. Physical damage to the vehicle (i.e. collision, theft, hit and run)

2. Loss of Use – time that the vehicle is out of service to repair the damage

3. Diminished value – decrease in the value of the vehicle due to the damage the vehicle has incurred.

If you have comprehensive and collision coverage on your auto policy, it will extend to a rental vehicle with the same coverage and deductible that you purchased on your auto policy. It will NOT cover LOSS OF USE AND DIMINISHED VALUE. Without the LDW, you would be responsible for your deductible, loss of use and diminished value  of the rental vehicle and that can mean thousands of dollars and a lot of time and disruption on your part.

For car sharing and peer to peer car rental services, the coverage is not standardized. It is important to go to the company website and read the insurance coverage information carefully. If you have any questions at all, call the customer service number.

Most importantly, please call any of us at Magnolia Insurance Agency if you have any questions before you rent a vehicle. Your assets are on the line, and we are here to help you protect them properly!

– Toni Matous CPCU, CIC (Cell: 206.228.5898, Office: 206.284.4886)

3424 West McGraw Street, Seattle, WA 98199, USA

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