What Is Rental Car Insurance in Travel Coverage?
Understanding what’s protected, what’s not, and how it fits into your travel insurance plan
Renting a car while traveling can offer convenience and flexibility, but it also introduces risks that many travelers overlook. What happens if the vehicle is damaged, stolen, or involved in an accident? Who pays for repairs? And does your travel insurance help?
The good news is that many comprehensive travel insurance policies include rental car protection — but only under certain conditions. Understanding how rental car insurance works within travel coverage helps you avoid duplicate policies, unexpected costs, and claim denials.
What Rental Car Insurance Typically Covers
Rental car insurance in a travel policy is usually referred to as Collision Damage Waiver (CDW) or Loss Damage Waiver (LDW). It generally reimburses you for:
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Damage to the rental car from collision, theft, fire, or vandalism
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Loss of use fees charged by the rental agency while the car is being repaired
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Towing costs if the vehicle needs to be moved due to damage
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Associated administrative fees imposed by the rental company
Note: This coverage applies only to the vehicle itself. It does not typically include liability for injuries or damage to other vehicles or property.
What’s Often Excluded
Rental car coverage within travel insurance does not cover everything. Some of the most common exclusions include:
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Damage to other people’s property or injuries to others (liability)
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Mechanical failure or wear-and-tear
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Driving off-road or on unapproved surfaces
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Alcohol- or drug-related incidents
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Unauthorized drivers or violations of the rental agreement
Coverage may also be limited by the type of vehicle. Luxury cars, motorcycles, RVs, and commercial vehicles are usually excluded.
| Scenario | Typically Covered? | Details |
|---|---|---|
| Scratches or dents from a collision | Yes | Covered if within the rental period |
| Theft of the vehicle | Yes | Police report usually required |
| Damage to another driver’s car | No | Covered only with separate liability coverage |
| Towing after an accident | Yes | If part of an insured incident |
| Driving without authorization | No | Voids the coverage entirely |
Caution: If you decline the rental agency’s coverage based on your travel insurance, make sure you understand your policy's terms fully. You could be left with major costs if coverage doesn’t apply.
How to Activate the Coverage
To use rental car protection from your travel insurance:
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Book the rental in your name, using a card that matches the insurance policy
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Decline the rental agency’s CDW/LDW, if your insurer requires it
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Drive only in authorized regions, on legal roads, and in accordance with the rental contract
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Report all incidents immediately, to both the rental agency and your insurer
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Save receipts, police reports, and the rental agreement to support your claim
Tip: Take photos of the car before and after rental, and document any existing damage in writing at pickup. This helps avoid false charges and supports your case if you need to file a claim.
When Credit Card and Travel Insurance Overlap
Some credit cards also offer rental car protection if you use the card to pay for the rental. However, not all cards offer the same coverage limits or terms. You may be covered under:
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Your credit card
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Your travel insurance policy
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The rental agency’s offered protection (if purchased)
It’s important to know which one takes precedence and how each applies in case of an accident. Duplicate coverage may lead to confusion, while assuming coverage exists when it doesn’t can leave you exposed.
Rental Coverage Can Be Useful — If You Know the Limits
Rental car insurance in your travel policy adds an important layer of protection when you’re driving in a new environment. But it only helps if you follow the rules, understand the exclusions, and document everything. With the right precautions, you can hit the road with confidence, knowing you’re covered against some of the most common (and costly) mishaps.