Rental car insurance: What you need to know before you hit the road

It can get confusing trying to navigate the different types of protection offered by your credit card, your car insurance and the rental company. That’s why this article is here to help you understand your coverage options. Read on to find out how to choose the right protection and avoid paying for what you already have.

1. Do you already have coverage for your rental car?
2. Is it worth taking the rental agency’s car insurance?
3. Differences between renting a car in Canada / the United States and abroad
4. Your checklist: 3 things to do before renting a car
5. Key takeaways
6. Rental car insurance FAQ

Before saying yes to the insurance sold at the rental counter, take a minute to check and see what coverage you’ve already got. Often, your auto insurance or your credit card will provide more than enough.

You’ll first want to check your auto insurance policy. Your auto coverage may already include coverage for rental vehicle damage and theft.

You should also look into whether the credit card you rented the car with offers any protection. Depending on the credit card and provider, you may already have rental car insurance, subject to certain terms and conditions.

Once you’ve done all that, you’ll be ready to make an informed decision at the rental car counter. You’ll know exactly what coverage you already have, what you may be missing and whether you really need the insurance offered by the rental car company.

An endorsement is optional coverage that you can add on to your policy—it’s not automatically included in every auto insurance policy. If you already have car insurance, you’ll first want to check and see if it includes endorsement 27 before you rent.

Referred to as OPCF 27 in Ontario and QEF 27 in Quebec, endorsement 27 is available in multiple provinces and territories and protects you against legal liability for damage to non-owned automobiles. If endorsement 27 isn’t available where you live, similar coverage extensions may exist under another name.

Terms and conditions of this coverage may vary depending on your insurer, so it’s important to review your policy. Check and see if you have endorsement 27 and which vehicles and destinations are eligible, how much the applicable deductibles are and what type of damage is covered.

You’ll also want to look into the maximum coverage available, which, for some insurers, is $100,000. If you want to rent, for example, a luxury car or high-end SUV worth more than your insurer's maximum, it will not be covered by your insurance policy. In this case, we recommend checking with either:

1. Your credit card provider: Many cards offer complementary rental car insurance that may cover the entire value of the vehicle
2. The rental car company: They can offer you insurance and additional coverage for your rental

You can always speak with your insurance company for clarifications before renting a car.

If you don’t have endorsement 27 or other sufficient coverage, it might be a good idea to get the insurance offered by the car rental agency. That way, you won’t have to pay a big bill out of pocket if something happens.

While endorsement 27 is often associated with rental cars, it may also cover passenger vehicles. For some non-motorized vehicles, like trailers and pop-up campers, it’s a good idea to check with your insurer to see if they’re eligible. Recreational vehicles like motor homes, ATVs, snowmobiles and motorcycles are typically excluded.

Dreaming of an RV getaway or snowmobile adventure? Before you rent a vehicle you’re not insured to drive, check with your insurer to see if a coverage extension can be added to your policy. If that’s not possible, you should consider the insurance offered by the car rental agency, even if the deductibles are sometimes pricy.

No personal car insurance, no problem. All you need to do is make sure you’ve got the coverage you need before you hit the road. There are two types in particular you’ll usually want to have:

• Third-party liability coverage, which offers protection if you injure another person or damage their property (mandatory automobile insurance coverage across Canada, subject to provincial and territorial requirements)
• Rental car damage coverage, which offers protection if you damage your rental vehicle

Most rental companies offer both types of coverage.

Your credit card might just be your best friend when it’s time to rent a car. Many cards, including some that we offer, provide insurance for car rentals that can complement your own car insurance or even replace some of the coverage sold by rental companies.

Depending on your credit card and provider, the inclusions, exclusions and covered territories will vary. That’s why it’s important to check the terms and conditions before getting behind the wheel. Once you understand exactly what coverage you have, you can avoid paying twice for the same insurance.

When you’re picking up your car, the car rental company usually offers you coverage options. They say it’s a must-have—and sometimes it is, but often it’s just more of what you already have.

Rental agencies typically offer protection options such as collision damage waivers (CDWs) and loss damage waivers (LDWs). Terms vary from rental company to rental company, but both waivers are designed to offer theft and collision coverage. If you don’t have endorsement 27 or credit card coverage, it’s worth looking into these.

Not sure if the rental company insurance is the way to go? Here’s a handy flowchart to help you figure out whether you really need additional coverage.

Where you rent a car can impact your insurance coverage. Before the keys are in the ignition, always check and see where your coverage applies.

• Endorsement 27 generally applies to rental car damage across Canada, subject to the terms and conditions of your policy.
• Your liability insurance generally covers you if you cause injuries to others or damage to their property.

• Endorsement 27 may also apply to damage to your rental car, depending on the destinations covered in your policy.
• Your liability insurance generally covers you if you cause injuries to others or damage to their property, subject to the terms and conditions of your policy.
• Liability coverage requirements and minimums vary from state to state.

• Endorsement 27 (coverage for rental car damage) doesn’t apply outside of Canada and the US. It’s a good idea to check if your credit card provider offers any coverage and compare it with the coverage offered by the rental agency.
• While your home insurance’s liability coverage applies outside of Canada, it doesn’t apply to damage caused by a vehicle. Check with your rental agency to see if liability insurance is included in your rental agreement, and if not, you’ll typically be able to add it on.
• Depending on your destination, you may need an international driver’s licence, in addition to your Canadian licence.

Here are the 3 key steps to take before picking up your rental car:

1. Contact your insurance company

Check and see if your policy includes endorsement 27 and figure out the specifics: deductibles, destinations covered, eligible vehicles and any exclusions.

2. Contact your credit card provider

Look into whether you have any credit card provider coverage for rental cars and ask about the specific coverage, exclusions and terms and conditions.

3. Make up your mind before pickup

Once you know what coverage you have, you’ll know if you really need insurance from the rental car company or not.

• If you have car insurance, look into endorsement 27, which can cover damage to a rental car.
• Your credit card may protect against certain risks related to renting a car, but make sure to check the terms and conditions, exclusions and territories covered.
• There are different insurance requirements for recreational vehicles and international rentals.