Rental Car Insurance

Published: March 27, 2015

Updated: May 15, 2018



When renting a car, one of the most frequently asked questions is, “Do I need the optional insurance?”

The answer is a little more complex than a simple yes or no. The optional insurance that these rental companies are offering is called a collision damage waiver or a loss damage waiver, and it comes in the form of an additional daily charge for the rental car.

This option covers you if you’re responsible for damaging the rental vehicle, but it comes with exceptions. For example, if you’re involved in a collision on an unpaved road, the coverage might not apply. Because coverage varies from company to company, it’s important to check the fine print.

Other Options

There are other options when it comes to insuring your rental car: your own current car insurance policy may cover it, or your credit card company may offer coverage if you pay for the rental on it (and decline the optional collision damage waiver).

If you have what’s called a Rental Vehicle Insurance Endorsement (OPCF 27, sometimes called Endorsement 27) on your current auto insurance policy, you’re covered if you inflict damage on a vehicle that you don’t own, including rental cars. This endorsement only applies to rental cars in Canada and the United States however, so if you’re travelling outside of Canada or the US, be sure to use a different option.

Your credit card is the final option for rental car insurance. Check to see if your card offers this type of coverage, and if it does, you’ll likely have to pay for the rental on the card, as well as decline the optional damage waiver.

Sometimes, your card company will dictate which companies it will provide coverage for. It might not cover rental vehicles from certain companies, as it doesn’t have an agreement with them.

Generally, having the endorsement on your current car insurance policy is advisable. It’s not too expensive, and it can save you if you ever have an at-fault accident in your rental vehicle. Just remember that at-fault accidents in any vehicle count against your record.

If you don’t select one of the above options, you will be responsible for the full cost of the damages resulting from an at-fault accident in a rental vehicle.