Always Check with Your Agent

Every plan is different. Depending on what kind of coverage you have on your car, your policy may cover a rental car on vacation. But not all companies extend coverage to rental cars, so you should always check with your agent before renting a car to see if you’re covered already.

Keep reading to learn more about the when, why and how of covering your rental car.

It Depends on the Trip

Some companies cover rental cars in some cases and not others. For example, a company may offer coverage on leisurely trips but not for business trips. A company may also have qualifiers for specific scenarios in which they will cover a rental. Make sure you know what these are in advance.

It Depends on the Rental Car Company

Rental car companies have different insurance policies of their own. Read the contracts carefully to make sure you know what is covered before you sign. Personal auto policies will generally provide coverage when renting a car, so you often won’t need the extra coverage.

Some rental companies may make you pay for any damage to the vehicle in full when you return it and before your insurance company can to do anything to help. Some may even make you pay for damage that isn’t your fault, so you should avoid these companies when traveling.

It Depends on Where You Rent

Different states have different requirements for liability coverage, so it is essential to know the expectations of the state you are renting in before you sign anything. Most states require rental companies to provide liability coverage and physical damage coverage secondarily. Generally, state requirements focus on liability. Liability is frequently included in your rental agreement because of state-mandated insurance requirements. Physical damage is not automatically included in your rental and is usually offered as optional and with an additional expense.

If you are renting a car in another country, you almost always need to buy insurance from the rental company. Canada is the only country that is easy to navigate with plans from the U.S.

What Makes Rental Car Insurance Complicated

Many factors can complicate rental car insurance. One factor could be sharing a rental car with friends or family. Whoever fills out the original contract is responsible for the vehicle. If someone else uses the car and gets in an accident, then the person responsible for the car and contract is different from the person responsible for the accident. In this scenario, the best option will probably be getting insurance from the rental car company. This way, there are not multiple insurance companies involved if something were to happen.

“Loss of use” and “diminishing value” are two phrases that can also make things complicated. If you get into an accident in a rental car, the company can charge you for every day the car is away being worked on by claiming loss of use. The idea here is that they could have had a paying customer using this vehicle if it had not been in an accident and taken away for repair. An insurance company may be able to help with these costs by requiring that the rental company proves they were entirely out of other cars to give customers during the specified period.

Diminishing value is the idea that a car’s resale value is lower after an accident. Some rental companies may charge you the difference between the resale value before and after the accident. Most insurance companies will not pay this. Because of that, you can try to get the rental company to strike it from their contract, or you can get the rental company insurance to cover it since it will then technically be on their dime. If neither of these options is viable, we suggest finding another rental car company to use.

Who to Use

We recommend avoiding any rental car that indicate they are a cheap or “budget” option. We find these companies to have inconsistent rental agreements between locations. Most of the bigger-name rental companies have reasonable rental agreements, but we still recommend reading them very closely before signing anything. And of course, you can always contact your team at Rally to help!


We’re always at your service. Reach out to us directly.