Straight answers to the nagging questions about Rental Car Insurance when needing to rent a vehicle in Canada or U.S.

airport sign with directions to the airport express area, the rental car area, and the taxi area

You’ve just started your vacation. You’ve arrived at your destination by plane, collected your luggage, and are in the process of renting a car. You’ve given the person behind the counter your driver’s license and credit card, and now you are being asked if you want to buy “coverage” from the rental car company.

Do you need it?

Possibly not, but how can you be sure? The best way is to be prepared and know the answer to this question before you leave on your vacation.

Why shouldn’t you buy insurance from a rental car company? The person behind the counter is (usually) not a licensed insurance professional. He or she is not conversant with insurance laws and won’t know whether or not your personal auto policy covers you when you rent a vehicle.


This Coverage Is Incredibly Expensive

* Fact. While it’s true you could be making a costly mistake if you need the rental car coverage and don’t buy it, you’re also making a costly mistake if you buy it when you don’t need it.

Rental car insurance is incredibly expensive. On a daily basis, which is how it is sold, the rental car coverage can cost 10 to 20 times more than your personal auto policy. If you buy all the coverages offered by the rental car companies, you could easily double the daily cost of your rental vehicle.

So who needs to buy the rental car coverage?  Well, here’s who doesn’t. If you have insurance for your own cars, which include collision, comprehensive coverage and the SEF 27 Legal Liability For Damage to Non-Owned Automobile Endorsement, you don’t need the rental car insurance – provided you are renting a private passenger type vehicle for pleasure use and the only drivers that will be driving the rental car are the same drivers listed on your auto policy and rental contract.  If the person renting the vehicle is a corporation, unincorporated association, partnership or entity, coverage extends to indemnify all individuals listed on the auto insurance policy and spouse of each.  Restrictions apply so please contact anInsurance Broker to explain this and ensure coverage would apply to your situation.  If renting a vehicle outside of Canada or the  U.S. your auto insurance policy including SEF 27 Endorsement does NOT provide rental coverage, so you would then have to purchase insurance from the rental agency.

If travelling with friends or anyone not listed as a driver on your policy, or if the Rental Agreement Contract differs from the name on your auto insurance policy, then it is recommended to purchase the insurance from the rental agency.

The other important item to know is the limit of coverage provided under your SEF 27 Endorsement on your own auto policy. Insurance companies offer various limits and you need to make sure that the limit would cover the total loss of the vehicle you are renting. Also remember if you have no glass coverage on your auto policy, you would then have no glass coverage on your rental vehicle.

Talk to your auto insurance broker whenever planning to rent a vehicle.

* Note. One thing to keep in mind: Your collision and comprehensive coverages on your personal auto policy have deductibles (the amount you must pay before the insurance kicks in). Those deductibles apply to damage to rental cars as well.

What if You Don’t Carry the SEF 27 Endorsement?


If you do not carry the SEF 27 Legal Liability For Damage to Non-Owned Auto Endorsement, call your Broker to explain your situation and the option to add this coverage on, making sure that you also have collision and comprehensive coverage on your auto policy. Find out  what your insurance company policy limit is for the rental car  before leaving for your trip, so that you know what your coverage limit would apply on  the rental car you decide on.

If not, then depending on the length of time of the rental vehicle and cost, either add collision, comprehensive and the SEF 27 Endorsement  to your auto insurance policy OR purchase the rental insurance from the rental company.

Please call your auto insurance broker whenever renting a vehicle to discuss your situation, coverages, limits and the restrictions, to ensure coverage would respond in the event of a claim.

 If you have any concerns about whether you need to buy the coverages offered by rental car companies, you should talk to your auto insurance broker. Rental car insurance can double your daily rate. That’s a lot to pay for something you don’t need.