Date Published: 2024/01/15

Read Time: mins

Does my car insurance policy cover rental cars?

A yellow sign in an airport that has a car and a key on it with the words “car rental” and an arrow.

As winter drags on, many Canadians find themselves planning trips to warmer destinations to escape the cold or visit family. If you're one of those lucky travelers and plan on renting a car at your destination, it's important to know what you're covered before hitting the road. 

This article will explore how your car insurance policy may or may not cover rental cars. We will talk about the various coverage options available for rental vehicles and provide some useful tips to ensure that you have adequate coverage while driving a rental vehicle.

Does personal car insurance cover rental cars for vacation? 

The short answer is that it depends on your policy. Your car insurance will typically extend to a rental car while you're on vacation in Canada or the United States if you have purchased additional liability coverage for damage to vehicles you don't own. This coverage is called the "Legal Liability for Damage to Non-Owned Automobiles" endorsement, also known as the OPCF 27 endorsement in Ontario and the SEF 27 endorsement in Alberta. The OPCF 27/SEF 27 endorsement is only valid for non-owned vehicles in Canada and the United States. If you plan on driving internationally (outside of Canada and the U.S.), you will likely need to purchase coverage elsewhere to ensure you're protected. 

It's important to read your policy carefully and check with your insurance broker to ensure you have the appropriate coverage. You may also have some coverage through your home insurance policy, health insurance policy, or credit card. Let's delve into the details.

Types of rental car insurance and understanding your coverage

There are four common types of insurance available for rental cars. Depending on your policies and agreements, you may already have coverage through your car insurance, health insurance, home insurance, or credit card. 

  • Liability insurance (LI).Before driving a rental car, you'll need liability insurance at a minimum. LI provides coverage for any injuries or property damage you may accidentally cause to others. It is mandatory across Canada and in most U.S. states.
    • Are you already covered? Liability insurance is generally covered by your car insurance policy through the OPCF 27/SEF 27 endorsement. Before renting a car, check with your insurance broker to ensure your endorsement applies and you have the necessary coverage to protect yourself against liability claims. 

  • Loss Damage Waiver (LDW) or Collision Damage Waiver (CDW). This coverage protects you from costs related to theft or collision. By paying for LDW or CDW, you forfeit the rental company's right to pursue you for damages. 
    • Are you already covered? You may have coverage for a stolen or damaged rental car through your car insurance policy if you have collision and comprehensive coverage (and the OPCF 27/SEF 27 endorsement). Your credit card company may also provide coverage for theft or damage to the rental vehicle, depending on your agreement. Check with your insurance broker and credit card company to confirm your coverage and ask about any limitations.

  • Personal accident insurance (PAI).Personal accident insurance provides accidental death and dismemberment coverage for you and your passengers. Although not mandatory, having PAI is a wise choice to avoid leaving yourself unprotected.
    • Are you already covered? You may have personal accident insurance coverage through your car insurance policy if you have the OPCF 27/SEF 27 endorsement. Your health insurance policy may also offer PAI coverage. Check with your auto and health insurance providers to confirm your coverage limits and whether they apply while driving a rental car.

  • Personal effects coverage (PEC). Personal effects coverage protects your belongings inside the rental car. There is usually a specified limit and a deductible that would need to be paid before any claim is paid out. Typically, the coverage extends up to $500. 
    • Are you already covered? Your belongings may be covered through your home or tenant insurance. Many home insurance and tenant insurance policies provide coverage for belongings that are damaged or stolen while in your vehicle — even while away from home. Check with your home or tenant insurance provider to understand what you're covered for.  

Tips to ensure you're covered when renting a car

Before hopping into a rental car, follow these steps to avoid any unpleasant surprises on the road.

  1. Ask the rental agency about necessary coverage. Inquire about minimum required coverage and additional coverage options. Refrain from assuming your personal car insurance policy fully extends to the rental vehicle.
  2. Understand what you're already covered for. Review your existing car insurance policy, home insurance policy and credit card policy carefully to understand their coverage and limitations. 
  3. Connect with your insurance broker if you have questions. Contact your insurance broker if you have questions about your current car insurance policy or want to learn more about coverage options available when renting a car.
  4. Purchase additional coverage if needed. If needed, supplement your coverage with additional protection through your insurance provider or by purchasing insurance from the rental car company.

If you're a current Orbit policyholder and have any questions about your car insurance coverage, call 877-976-7248 to review your policy or learn more about your coverage options.

If you're shopping for car insurance and would like to request a quote, contact an Orbit broker at 877-976-7248.