Quick Answer

Yes, most car insurance policies extend to rental cars with the same limits and deductibles you already carry.
However, your insurance does NOT cover everything. There are major gaps that lead to expensive rental charges if you’re not prepared.

Key Takeaways:
• Your personal car insurance usually covers rentals
• It does not cover loss of use or admin fees
• If peace of mind is most important to you, LDW eliminate all financial responsibility
• Credit cards may cover collision but not liability

This guide explains exactly what’s covered, what isn’t, and whether you should buy LDW or CDW at the rental counter.

What Your Car Insurance Covers on a Rental Car

Collision Coverage

If you have collision coverage on your personal policy, it usually applies to a rental car. It covers damage from accidents or impacts.

Comprehensive Coverage

Covers non-collision incidents such as:

• Theft

• Vandalism

• Hail

• Weather damage

• Animal strikes

• Falling objects
  

Liability Coverage

Your liability insurance follows you into the rental. It covers damage or injuries you cause to others.

Medical or Personal Injury Protection

These may extend depending on your state and personal policy.

Important:
Your rental car receives the exact same coverage your personal vehicle does. No more, no less.

What Your Car Insurance Does NOT Cover

Loss of Use Fees

Daily charges while the rental is out of service during repairs.
Insurance companies often deny this — but rental companies charge it aggressively.

Diminished Value

If a repaired vehicle loses resale value, the agency may bill you.
Insurance may not cover this.

Administrative Fees

Charges for:

• Towing

• File handling

• Storage

• Claims paperwork

• Inspection costs
  

Your Deductible

You’re still responsible for your deductible, often $500–$1,000.

Rental Vehicle Restrictions

Your personal policy may not cover:

• Large SUVs

• Pickup trucks

• Vans

• Luxury vehicles

• Specialty or exotic cars
  

CDW vs LDW Explained

What Is CDW (Collision Damage Waiver)?

CDW is not insurance. It is a waiver that removes your financial responsibility for:

• Collision damage

• Theft

• Vandalism

• Most exterior repairs

If damage occurs, the rental company waives the cost instead of billing you.

What Is LDW (Loss Damage Waiver)?

LDW includes everything in CDW plus waiver of additional fees, such as:

• Loss of use

• Administrative fees

• Diminished value

Simple explanation:

• CDW = waives damage

• LDW = waives damage + all fees
  

Should You Buy LDW or CDW?

LDW/CDW is recommended if:

• You only have liability insurance

• You have a high deductible

• You don’t want to file a claim

• You want zero out-of-pocket risk

• You’re renting in a high-risk city (Las Vegas, LA, Miami, NYC)

• You want protection from small scratches, door dings, or windshield chips
  

You may NOT need LDW/CDW if:

• You already have full coverage

• You have a credit card with primary rental protection

• You’re okay paying your deductible AND fees associated with damage (loss of use, diminished value, etc)
  

Credit Card Rental Coverage Explained

Requirements for Credit Card Coverage

To be covered, you must:

• Pay for the rental with that credit card. Credit card must be in driver's name.

• Decline LDW or CDW at the rental counter

• Rent an eligible class of vehicle (generally not luxury, trucks, or large vans)
  

Cards with Primary Coverage

These cards offer the strongest protection:

• Chase Sapphire Preferred

• Chase Sapphire Reserve

• Capital One Venture X

• Some American Express cards (with premium protection added)
  

What Credit Cards Usually Cover

• Collision damage

• Theft

• Towing

• Some loss of use fees
  

What Credit Cards Usually Do NOT Cover

• Liability

• Injuries

• Luxury or specialty vehicles

• Administrative fees (depends on the card)
  

Real Life Examples

1. Windshield Crack

A rock hits the windshield on the freeway. Without LDW:

• Deductible

• Admin fees

• Loss of use

Total bill: 800+ dollars.

2. Parking Lot Damage

A renter returns the car with a dent from a parking lot hit-and-run.
Rental car company holds the renter responsible because the vehicle was in their possession.

3. Lost Key Fob

Modern key fobs cost 350–550 dollars.
Insurance typically doesn’t cover this unless you have LDW.

FAQ

Will my car insurance cover a rental car?

Yes. If you have full coverage, it usually extends to rental cars.

What does my insurance cover on a rental car?

Collision, comprehensive, and liability — but it does not cover loss of use, diminished value, or admin fees.

What is CDW?

CDW is a waiver that removes your responsibility for most collision damage or theft.

What is LDW?

LDW includes CDW and also waives fees such as loss of use, admin charges, and diminished value.

Should I buy LDW?

Buy LDW if you want zero out-of-pocket responsibility. Decline it if you have strong insurance and a good travel credit card.

Do credit cards cover rental cars?

Many premium travel cards provide collision coverage but rarely include liability.

What is Loss of Use?

Loss of use is a fee the rental company charges for the money they lose while the car is being repaired. For example
if the car is in the shop for 5 days, they charge you for 5 days of lost earnings / revenue.