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Do I Need Rental Car Insurance?

Curtis Killen

As president of KBD, Curtis aims to simplify insurance for his clients. He’s helped lead KBD to become one of Canada’s fastest 400 growing companies according to the Globe & Mail.

If you’re renting a car, you need insurance. Period. 

Now, there are several ways you can get coverage.

But renting a car without insurance is not something we’d suggest.

One way or another, you’ll need rental car insurance.

Before we go any further, what do we mean when we say rental car insurance?

We’re referring to auto insurance coverage for rental vehicles. 

So let’s say you’re vacationing down in Florida.

You flew down and you need a car while you’re down there.

So you rent one from one of the big car rental companies like Avis or Enterprise.

They’ll ask if you’re interested in a short-term insurance policy for the time you’re driving that vehicle.

Here’s how that exchange typically goes:

You approach the counter and secure your rental car.

🧑‍💼 Employee: You’re all set. Now do you want car insurance?

🧑 You: Uh, no. I’m good.

🧑‍💼 Employee: ARE YOU SURE??? 👿

🧑 You: Uh, well. Uh. I think — well. 

💭  Wait — am I covered with my car insurance policy back home?

🧑‍💼 Employee: *Death stare*

🧑 You: Okay, fine, whatever. I’ll take it.

🧑‍💼 Employee: Great! You won’t regret it. That’ll be $30…

🧑 You: Okay, that’s not so— 

🧑‍💼 Employee: …per day.

🧑 You: 🤦

That’s rental car insurance in a nutshell.

Those agents know how to sell you on their insurance.

While you do need insurance in some form, you don’t necessarily need their insurance.

Faced with a pushy employee, many of us just cave and wind up getting it.

And it’ll typically cost anywhere from $15-$40 per day extra.

All that being said, there are reasons you might want to pay more and take their insurance.

In this blog post, we’ll uncover all that.

We’re going to help you understand what you’re getting and whether you need it so you can make that decision for yourself, free of fear.

In today’s blog:

🚨 Spoiler Alert

Q: Do I need rental car insurance?

A: Yes.

There are four ways you can get it.

More on each of these car rental insurance options later.

First, let’s explain how it works.

How does rental car insurance work?

You may be wondering: Doesn’t the car rental company carry their own auto insurance?

Of course they do.

But why should they be absorbing all the risk?

At least that’s how they see it.

To lower their risk exposure, rental companies (like Avis or Enterprise) will require their clients to carry their own car rental insurance policy in order to rent a car from them. 

When you scuff up the fender on your rental car and it calls for a $5,000 fix, I can guarantee you the likes of Enterprise are not submitting that claim.

Since they’ve required you to get insurance, they can have your coverage take care of the claim.

What if you have car insurance back home?

As a Quebec resident, most car insurance policies automatically include an add-on coverage called endorsement QEF 27: Coverage for damage to vehicles you do not own.

Here’s what will be listed on your policy if QEF 27 is included:

QEF 27 Quebec Car Insurance

With QEF 27, it’s like taking your current car insurance policy from Quebec and applying it to that car down in Florida.

If you have it, you can decline the car insurance at the Avis counter — if you have the guts. 

Through your Quebec policy, you would be covered for third party liability and collision for the same amount on your policy.

Depending on who your Quebec car insurance carrier is, your collision coverage might range somewhere between $40,000-$70,000.

In the screenshot example above, which is an Intact car insurance policy, you’ll see the collision amount is at $60,000.

In other words, make sure you rent a car that is worth $60,000 or less and you’ll be fully covered.

If you want to ball out and go for a high value car (over $60,000), you’ll have to purchase insurance through the car rental company.

Do I need car rental insurance?

Uh, yeah.

The real question is who do you get it from.

The car rental company or your current Quebec provider?

If you have adequate coverage at home, then you don’t need to worry.

But like Quebec, all other states and provinces in North America have laws requiring you to carry, at minimum, car rental liability insurance.

If you don’t meet that requirement, you’ll have to purchase it at the counter.

Now let’s say you want to be a hero (or as we’d say, an idiot) and you want to try your hand at renting a car without insurance.

If you don’t have rental car insurance and you get in an accident, here’s what could happen:

  1. You’ll pay for the vehicle damages out of pocket
  2. You could be sued

That first one is obvious. 

But that second point is the one you need to worry about.

Accidents can happen anytime, anywhere.

But now imagine you’re on vacation, driving on roads you’ve never seen, head bobbing up and down from the GPS to the road.

You hit a pedestrian or another driver. They’re injured and need medical attention.

As you know, the U.S doesn’t have the friendly Medicare situation we do north of the border.

Medical bills are expensive.

And Americans are not shy to sue for those costs.

If you cause bodily injury to another person in the U.S, this could cost you in the hundreds of thousands and potentially above $1,000,000.

That’s a scary situation.

What we’re really saying here is: Get rental car insurance!

It doesn’t necessarily need to be through the car rental company, but you need to have an active policy so you can avoid getting dinged over an innocent mistake.

When you shouldn’t purchase rental car insurance

Before you get too excited, let us reiterate the point: You need rental car insurance.

But you don’t always need to buy it abroad.

If you have the QEF 27 endorsement already included in your auto insurance policy, you’re all set.

Alternatively, if you have a credit card that offers car insurance, you can submit a claim through them.

Read the fine print.

Be sure to confirm which coverages are included and what the deductibles are.

How much does car rental insurance cost?

That depends where you get it from.

If you have the QEF 27 endorsement, you’re looking at roughly $50-$100 per year on your existing policy.

If you buy it through the car rental company, it might cost you the same amount — per day.

So there’s a clear cost savings by using your existing car insurance policy from home on your rental.

But there’s another important thing to think about: How a claim will affect your future automobile insurance costs.

The more claims you submit, the more you’ll pay for your premiums down the road.

And claims stay on your record for five years.

If you get in an accident on vacation and submit a claim through your Quebec policy, that’s a ding against your profile.

On the other hand, if you get a temporary policy at the counter and wind up submitting through them, it won’t appear on your claims history at home.

What happens on vacation stays on vacation.

Claiming through your credit card, if possible, can also save you that mark against you. Do that whenever possible.

Wrap-up

Moral of the story: Get rental car insurance. 

Whether it’s through your existing policy or that annoying sales agent at the rental car counter is up to you.

Some people do end up double insuring — getting the rental insurance on location on top of having at-home coverage that extends to rentals.

If you do, make sure to put any claims through the standalone policy, the credit card or the temporary car rental policy. 

If you can avoid it, do NOT put a claim through your Quebec car insurance policy, because it’ll follow you around for 5 years.