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Do You Need Rental Car Insurance Coverage

Thursday, 7 January 2021

When you rent a vehicle, whether it be for travel, business or during car repairs, you should have insurance in case of an accident, injury or theft. While rental companies offer insurance packages at the time of booking or pick-up, it’s possible that your current auto policy or credit card provides all the coverage you need. Understanding your own policy will help you make an informed decision as to whether or not to insure the rental car and avoid paying for redundant coverage. While the best way to find out about your policy is directly through your broker, this blog will discuss how rental car insurance coverage works to help you find out if the additional coverage is right for you.

Does My Current Auto Policy Have Rental Car Insurance Coverage?

It depends. The best way to get a clear answer is to speak directly with your broker about your policy. When you purchase your auto insurance policy some coverages are optional and one of them is directly related to rental car insurance coverage.

Legal Liability for Damage to Non-Owned Automobiles (OPCF 27) – this is an optional endorsement you may select that would cover damage and theft of any vehicle in your care, including rental vehicles. This coverage effectively transfers your personal auto insurance coverage to the rental car and applies to any drivers listed on your policy. Be sure to check the limits and restrictions to ensure you have adequate coverage through this endorsement. If you do not have OPCF 27, your broker can easily add it to your policy, or you may decide to purchase the additional insurance through the rental car company as an alternative.

Personal Property - Your home insurance may cover personal possessions in your rental car such as luggage, photography equipment, etc. If you have property insurance, reach out to your broker to see if your contents would be covered in your situation.

Does My Credit Card Have Rental Car Insurance Coverage?

Possibly. Some higher-end credit cards provide rental car insurance coverage when you book and purchase the rental with your credit card. Credit cards may include coverage for damage, theft, accident and health protection within a given limit, however they will not usually provide liability or personal injury coverage. It’s best to check with the issuer of your credit card to see what coverage might be available to you.

What rental car insurance coverage does the rental car company offer?

When purchasing rental car insurance coverage directly through the rental company, they will offer multiple options – some may already be covered by your existing auto policy, home policy and credit card.

Loss Damage Waiver (LDW) / Collision Damage Waiver (CDW) – this waiver would cover collision or theft of the rental car. You are essentially paying the car rental company to waive its right to pursue you for damage, loss and lost revenue for repairs. With OPCF 27 on your auto policy, or a credit card covering damage and theft, this coverage may not be needed. Before you opt out, get a more specific answer from your insurance broker and credit card company based on your policy.

Personal Accident Insurance (PAI) – different packages are made available to cover the driver and passengers in the car in the event of accident death and dismemberment. Typically, the driver is covered up to $100,000 and passengers $10,000 through a rental company package. Without OPCF 27 on your auto policy, you will be leaving yourself exposed to risk.

Liability Insurance – this coverage would protect you from being held liable in a collision whether you are at fault, have injured others, or damaged another person’s property. Your auto insurance policy may already cover you if you have $1 million - $2 million liability along with the OPCF 27 endorsement that transfers the coverage to any rental you drive.

Personal Effects Coverage (PEC) – the rental car company may also encourage you to insure the personal belongings and valuables. There is usually a limit and a deductible for this coverage, and you may already have insurance for your personal belongings through property insurance.

International Travel & rental car insurance coverage

The OPCF 27 endorsement only transfers your personal auto policy to rental vehicles within Canada and the United States. Speak with your broker and credit card company about rental car insurance coverage before you travel outside Canada or the US. Rental companies in some countries (Ireland for example), make it very difficult to avoid purchasing the Collision Damage Waiver coverage through the rental company. To avoid this, they may require proof in writing from your credit card confirming coverage.

What Happens if I am in an accident with a rental car?

One final thing to consider is that if you are in an accident with a rental car and you’ve relied on your personal auto insurance policy or credit card coverage, you will first have to pay for damages out of pocket and later submit them for reimbursement. If this is a financial situation you would prefer to avoid, the convenience of the rental car company insurance might be worth it for you to avoid the hassle of the claims process.  


As you weigh your options for rental car insurance coverage, a simple conversation with your broker can help you make that choice. BIG’s insurance professionals are here to provide you all the necessary details of your policy so that you can make an informed decision related to rental car insurance coverage. Contact us now to learn more!

By: Amy Legault