Whether you’re renting a car for business or pleasure, you’re going to need insurance coverage. This can come from your personal auto insurance policy, but you may also have coverage through your credit card.
We’ll explain the ins and outs of rental car insurance and explore the best credit cards that include coverage, so you can make an informed decision and hit the road with all the protection you need.
Key Takeaways
- There are a few types of rental car insurance that together, provide coverage for the vehicle and pay for medical bills if people are injured in an accident.
- Your personal auto insurance policy or credit card might include rental car insurance, but read your policies carefully to see if you have enough coverage.
- To make use of credit card rental car insurance, you’ll need to charge the full cost of the rental to your card.
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What is rental car insurance?
Rental car insurance provides coverage when you’re driving a rental car.
You can get rental car insurance in a few ways. It may be included in your personal auto insurance policy, it may be part of your credit card insurance package, or you can get it with your travel insurance. Otherwise, you can purchase it through the car rental company – though it’s typically more expensive this way.
Purchasing rental car insurance from the rental company isn’t mandatory as long as you have some other form of car insurance that meets the legal requirements in the province.
Types of rental car insurance
If you decide to purchase insurance at the rental car counter, you’ll be presented with several kinds of coverage. To be prepared (and confident that you’re only purchasing the insurance you truly need), take a look at how these types compare.
Note that of these, only third-party liability coverage is legally required (most provinces require at least $200,000 in coverage), but that means it should be included in your personal auto insurance. Check your policy to see your third-party liability coverage limits – most experts recommend $1 million to $2 million.
| Type of coverage | What it covers | What it doesn’t cover | Approximate cost | Best alternative |
|---|---|---|---|---|
| Third party liability coverage | * Damage and injury to other people/vehicles | * Your own medical injuries | Up to $10 per day | Personal auto insurance |
| Collision and loss damage waiver (CDW, LDW) | * Damage to the vehicle caused by accidents, natural disasters, vandalism, and theft * Lost revenue for the rental company | * Other people’s property damage * Medical bills * Loss, damage, or theft due to reckless behaviours or negligence * Might exclude parts of the car | Up to $40 per day | Credit card insurance |
| Personal accident insurance (PAI) | * Medical costs for you and passengers * Might include accidental death and dismemberment coverage | * Property damage | Up to $9 per day | Credit card insurance |
| Personal effects coverage (PEC) | * Lost, damaged, or stolen personal property | * Medical coverage | Often bundled with PAI, but can be up to $7-8 per day | Credit card insurance |
Pro Tip: If you’re unsure whether you have adequate coverage, some rental car companies offer supplemental liability insurance for a reasonable fee.
How much does car rental insurance cost?
As you may expect, what you’re charged for insurance depends on where you are, who you are, and what kind of vehicle you’re renting. Prices will be lower for budget cars and higher for luxury rentals.
We looked at car rental prices at the Toronto, Halifax, and Calgary airports, and compared both compact cars and intermediate SUVs in Toronto. The following prices are per day for a driver who is 25+ and in addition to the base rental cost..
Here’s what we discovered:
| Rental company | CDW – Toronto (Compact) | CDW – Toronto (SUV) | CDW – Halifax (SUV) | CDW – Calgary (SUV) | PAI | PEC |
|---|---|---|---|---|---|---|
| Advantage | $19.99 –$29.99 | $19.99–$29.99 | N/A | N/A | N/A | N/A |
| Alamo | $31.99 | $36.99 | $38.88 | $37.99 | $6.99 | N/A |
| Avis | $30.00 | $40.00 | $40.00 | $40.00 | $5.95 | $3.95 |
| Budget | $30.00 | $35.00 | $35.00 | $35.95 | $9.90 | Bundled |
| Dollar | $39.54 | $39.54 | $40.24 | $36.94 | $8.35–8.98 | Bundled |
| Enterprise | $31.99–$36.99 | $31.99–$36.99 | $34.99–$41.99 | $15.99–$37.99 | $6.99 | Bundled |
| Hertz | $34.99 | $34.99 | $34.99–$54.99 | $34.99–$54.99 | N/A | N/A |
| Iversta | $21.99–$31.99 | $28.99–$38.99 | N/A | N/A | N/A | N/A |
| National | $31.99 | $31.99 | $38.99 | $37.99 | $6.99 | Bundled |
| Payless | $29.00 | $32.00 | $35.00 | N/A | $9.00 | N/A |
| Routes | $28.58 | Only windshield for $19.48 | N/A | $26.72 | N/A | N/A |
| Thrifty | $34.99 | $54.99 | $54.99 | $34.99 | $7.95 | Bundled |
| Zoom | $24.99–$34.99 | $24.99–$34.99 | N/A | N/A | N/A | N/A |
Your personal car insurance policy may cover a rental car
Your personal auto insurance may include some level of coverage for a rental vehicle. For example, you may have third party liability coverage and limits for accident benefits (often tied to the limits for your personal car insurance).
If you want to use your personal car insurance for a rental car, read through your policy to be sure you’ll be covered or call your insurance provider and ask.
Your credit card might offer rental car insurance
Have a look at the documents your credit card issuer sent you when you signed up for your credit card. If you can’t find the booklet with the certificate of insurance, you can search for it online.
Rental car insurance offered by your credit card might only be partial coverage. In that case, something is better than nothing and you can pay the difference for additional coverage when you pick up your vehicle.
Here are the credit cards with the best rental car coverage:
| Credit card | Collision Damage Waiver (maximum) | Personal Accident Insurance | Personal Effects Insurance | Annual fee |
|---|---|---|---|---|
| MBNA Rewards World Elite Mastercard | $65,000 | Up to $200,000 | $1,000 per occurrence | $120 |
| BMO AIR MILES World Elite Mastercard | $65,000 | Up to $200,000 | $1,000 per occurrence | $120 |
| MBNA Smart Cash Platinum Plus Mastercard | $65,000 | Up to $200,000 | $2,000 per occurrence | $150 |
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MBNA Rewards World Elite® Mastercard®
| Extended Warranty | 1 year |
| Purchase Protection | 90 days |
| Price Protection | Yes |
| Mobile Device | $1,000 |
| Travel Accident | $1,000,000 |
| Trip Interruption | $2,000 |
| Flight Delay | $500 |
| Baggage Delay | $500 |
| Lost or Stolen Baggage | $500 |
| Rental Car Theft & Damage | Yes |
| Rental Car Accident | $200,000 |
| Rental Car Personal Effects | $1,000 |
Please review your insurance certificate for details, exclusions and limitations of your coverage.
Aside from getting car insurance for a rental, you'll earn MBNA Rewards points when you buy anything. When you’re ready to cash in your points, you have 6 generous redemption options.
Pros:
- Up to30,000 bonus points.
- Up to 5 points per $1 spent on purchases.
- 10% bonus points every year on your birthday
Cons:
- Income requirements of $80,000 personal or $150,000 household
Best Air Miles credit card
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BMO AIR MILES®† World Elite®* Mastercard®*
| Extended Warranty | 1 year |
| Purchase Protection | 90 days |
| Travel Accident | $500,000 |
| Emergency Medical Term | 15 days |
| Trip Cancellation | $1,500 |
| Trip Interruption | $2,000 |
| Flight Delay | $500 |
| Baggage Delay | $200 |
| Lost or Stolen Baggage | $750 |
| Personal Effects | $750 |
| Hotel Burglary | $500 |
| Rental Car Theft & Damage | Yes |
| Rental Car Accident | $200,000 |
| Rental Car Personal Effects | $1,000 |
Please review your insurance certificate for details, exclusions and limitations of your coverage.
In addition to insurance and a great earn rate, you'll get a suite of World Elite benefits, including VIP access to airport lounges worldwide, for a $120 annual fee that's waived for the first year.
Pros:
- Up to 9,000 welcome bonus Air Miles
- Earn up to 3 Miles per $12 spent on purchases
- Annual 25% discount on 1 Air Miles reward flight booking
- Automatic Air Miles Onyx status
- Save up to 7 cents per litre at Shell
Cons:
- Low rewards compared to other premium cards
- Income requirements of $80,000 personal or $150,000 household
Not an Air Miles collector? All BMO World Elite Mastercards carry the same rental car insurance coverage so you have other options.
GC: $125
GC: $150
Best no fee credit card
If you don’t love the idea of paying an annual fee to get a card with rental insurance, the
On the downside, you won’t enjoy the same perks and benefits as the cards mentioned above.
MBNA Smart Cash Platinum Plus® Mastercard®
| Extended Warranty | 1 year |
| Purchase Protection | 90 days |
| Travel Accident | $1,000,000 |
| Trip Interruption | $2,000 |
| Rental Car Theft & Damage | Yes |
| Rental Car Accident | $200,000 |
| Rental Car Personal Effects | $1,000 |
Please review your insurance certificate for details, exclusions and limitations of your coverage.
Pros:
Cons:
- $500 in monthly spending cap for 2% gas and groceries rewards
- Low earn rate of 0.5% on all other purchases
5 situations when you should purchase rental car insurance
Now that you have a handle on what rental car insurance is, you may be wondering if there are ever instances when you should purchase it from the rental company. We’ve got 5 of them.
1. You have minimal personal auto insurance
If you’re driving an older vehicle that isn’t worth much, you may not have full coverage on it – perhaps you only carry liability insurance. If you get into an accident in your rental car (which is a much newer, more valuable vehicle), your personal auto insurance policy probably won’t be enough to cover the damage.
2. You don’t want to file a personal auto insurance claim
If you get into an accident in a rental vehicle and file an insurance claim with your personal car insurance policy, you’ll probably see your insurance rates go up at your next renewal.
3. You’re renting a vehicle for business
Some credit card or personal auto policies disqualify you from using your personal coverage for a business need. Instead, you’ll want to speak with your employer about purchasing the required rental car insurance.
4. You’re renting outside of Canada or the U.S.
Don’t assume that your personal or credit card insurance extends to rental cars outside of North America. If you’re traveling internationally, you might have to purchase rental car insurance from the vehicle provider.
5. You’re renting for an extended period of time
Again, you’ll want to review the details of your personal or credit card policy. Some policies only cover a certain number of days; going beyond this will require you to purchase an insurance policy on the rental car.
FAQ
Should you take the insurance on a car rental?
If your personal auto insurance extends coverage to rental cars or you get rental car coverage from one of your credit cards, you may be able to decline the insurance package that the rental car company offers. Before doing so, consider the type of rental car you have, the amount of coverage on your credit card or personal car insurance policy, and your liability if you get into an accident.
Does my auto insurance cover rental cars in Canada?
Your auto insurance might cover rental cars in Canada, but since insurance is highly personalized, it’s a good idea to read the details of your policy carefully. For instance, you could have rental car insurance but the coverage might be minimal or the deductible might be higher than you’re willing to pay on a rental.
Does a Visa credit card cover rental car damage?
Many credit cards – including Visas – come with rental car coverage, but most of them only cover the collision damage waiver. You can get personal accident insurance and personal effects coverage on cards with better coverage policies.
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