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Do You Need to Buy Rental Car Insurance?

Feb. 10, 2020
4 mins
A woman driving her car glances and smiles at her un-pictured passenger

Whenever you pop into a car rental agency to rent a vehicle, the customer service representative always asks whether or not you wish to purchase rental car insurance. If you didn’t think it through beforehand, it could be a head-scratcher. Do you opt-in and purchase the rental agency’s insurance policy on top of the cost of the vehicle? Or do you decline it to save a few bucks?

Rental companies typically offer four types of auto insurance for the vehicle you rent:

  1. A collision damage waiver protects you from paying for any damages to the rental car or it if it is stolen
  2. Supplemental liability insurance protects you and any other authorized driver against third-party injury, death, and property damage claims
  3. Personal accident insurance covers you and your passengers for any medical expenses resulting from a car accident
  4. Personal effects coverage pays for losses, theft, or damage to any personal items you have inside the rental car

Is it in your best interest to opt-in for all four coverage types? Do you need to shell out the extra cash for any of these protections?

The answer lies in whether you have coverage or not elsewhere already. Many credit cards and auto insurance policies provide coverage for when you rent a car. But you need to be sure. If you’re not sure, call your credit card issuer and insurance broker or agent to find out ahead of time. You don’t want to get into a collision, have no insurance, and be on the hook for thousands of dollars’ worth of damages.

Also, know that if you have an at-fault accident with a rental vehicle, and you are more than 25% at fault for the collision, the accident will count against your driving record, regardless of who pays the damage claim.

Does My Credit Card Provide Rental Car Insurance?

Different credit cards offer different options. Rental car insurance is standard on some cards; for others, you may need to pay extra. It’s best to contact your credit card issuer to get the lowdown on your coverage options and limitations. For example, collision damage coverage may only apply when renting automobiles from companies approved by your credit card company, and when using your credit card. If you are not paying for rental car coverage through your credit card, you are personally liable for the rental vehicle if you get into an accident.

Will My Auto Insurance Policy Provide Coverage for a Rental Vehicle?

Most Ontario auto insurance companies offer additional coverage for damages to vehicles that you don’t own. Formally known as Ontario Policy Change Form (OPCF) 27 or "Legal Liability for Damage to Non-Owned Automobiles”, when added to your car insurance policy, it provides you with coverage for any vehicle you drive but do not own. That includes rental cars or if you borrow a friend’s car. Moreover, OPCF 27 is a more economical option than purchasing a rental company’s collision damage waiver.

If your auto insurance policy includes OPCF 27, you do not need to purchase additional coverage from a car rental company.

It’s similar in Alberta, where motorists can ask their insurer to add Standard Endorsement Form (SEF) 27 to their policies. SEF 27 extends the physical damage coverage and deductible you have on your personal vehicle to a rental vehicle.

Err on the side of caution and give your insurance provider a call before you pick up a rental vehicle to make sure you have coverage. Also, be aware OPCF 27 and SEF 27 are only valid in Canada and the U.S.

What If I Need to Rent a Car Outside of Canada and the U.S.?

If you’re renting a car outside Canada and the U.S., do a little homework and find out what your insurance options are. Even if you have OPCF 27 on your auto insurance policy, it will not cover you for driving a rental vehicle in Mexico, for example. Or if you rent a car in Europe, the rental vehicle insurance endorsement on your auto policy will not apply. The same goes for the rental car insurance your credit card may provide. Be risk-averse. If you are driving a rental car outside Canada or the U.S., buy the rental company’s insurance.

Do I Need to Buy Rental Truck Insurance?

Driving a large truck or cube van is another matter when it comes to auto insurance. The coverage options are similar to those for rental cars. Truck rental insurance includes damage waivers, supplemental liability insurance, personal accident and cargo protection – as well as auto tow coverage, which you will need if you are using a rental truck or trailer to tow your car.

Before you decline truck rental insurance from the rental company, make sure to have coverage through your credit card or auto insurance policy. Even if you have coverage for a rental car, you may not have protection for a rental truck. Many insurance companies and credit cards don’t offer coverage for other types of vehicles like vans and trucks. In this case, it may be wise to buy the rental company’s insurance policy.


The RATESDOTCA editorial team are experienced writers focused on sharing stories and bringing you the latest news in insurance and personal finance. Our goal is to provide Canadians with the information and resources they need to make better insurance and financial decisions.

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