Rental car prices have been on the rise in recent years. The post-pandemic increase in demand exacerbated this trend. Prices skyrocketed as rental car companies, which sold off most of their fleet during the height of the pandemic, struggled with the surge in demand as lockdowns lifted and people began traveling again. 

With the steep increase in rental car prices, it’s not surprising that renters have also become more discerning when it comes to additional costs when hiring a car, such as rental car insurance. If you’re reading this, you’re one of those renters who want to make sure you’re not paying too much for rental car insurance coverage. 

How much does rental car insurance cost?

There are a few different factors that affect how much rental car insurance will cost you: 

The value of the car. Pricier cars such as luxury cars naturally command a higher insurance cost compared to an economy car. 

The length of time you’ll be driving the rental car. Insurance for a one-day rental will obviously cost less than insurance for a month-long rental. 

The location where you’ll be driving the rental. Some places are considered to be high risk than others, so you're likely to have to pay more for insuring your rental. 

The type of coverage you’re getting. If you intend to get full coverage that includes everything down to personal accident or personal effects coverage, then expect to pay more than if you’re just getting one type of insurance (ie. damage cover or supplemental liability).

From whom you’re buying insurance. For instance, most rental car companies also offer insurance options that you can buy when you book your car. But there are also third-party rental car insurance companies where you can buy coverage before or after you’ve booked a rental. Third-party rental car insurance is often cheaper than insurance sold by rental car companies. 

Types of rental car insurance coverage

The cost of rental car insurance varies depending on the type and amount of coverage you purchase. It makes sense to familiarize yourself with the different insurance coverages so you know which one to purchase.

The collision damage waiver (CDW or LDW)

The Collision Damage Waiver (also called Loss Damage Waiver) covers damage to your rental vehicle in a collision. This is technically not insurance but an agreement with the rental car company that waives the renter’s responsibility for damage to the vehicle if it is involved in an accident. It’s often pricey and there are things that could void the waiver so make sure to read the fine print carefully before purchase. 

Liability coverage 

Liability insurance covers you if you damage other people’s vehicles or property. If you don’t have personal car insurance, you would need primary liability coverage (ie. Renter’s Contingent Liability Insurance) so you’re covered up to the state minimum requirement. You also have the option to purchase supplemental liability insurance to increase your coverage beyond the state minimum for personal and property injuries.

Personal accident insurance (PAI) 

Personal accident insurance provides coverage for medical expenses and even death benefits for you and your passengers. You’re not legally required to get PAI but it can be a good idea to have if you are concerned about the cost of an accident.

Personal effects insurance (PEI) 

Personal effects insurance is purchased to protect personal belongings. It can cover items such as clothing, electronics, and jewelry (up to a certain amount) that’s lost or stolen from the vehicle. There are often exclusions so if you have any valuable items, be sure to check with your insurer to see if they are covered under your policy.

Major Car Rental Companies’ Insurance Cost

So how much do the different types of rental car insurance coverage usually cost? Below is a table of the average prices for coverage per day from popular rental car companies:

As you can see from the table above, Thrifty charges the highest for CDW but the cost is usually the same whether you get an economy or premium car. Budget and Hertz charge the lowest, but the cost can vary depending on the model and make of the car you rent.

If you purchase all the insurance a car rental agency offers, you'll pay anywhere from $27 to $176 or more per day. This includes the CDW, liability coverage, and personal accident and/or personal effects insurance.

How to get the best deal on rental car insurance

If you’re looking to save on rental car insurance but still want to get fully covered, you have the option of buying from third-party rental car insurance providers. 

As you can see from the table above, Bonzah provides the cheapest full coverage at a cost of $55.63 per day. This includes primary damage, primary liability, supplemental liability, and PAI/PEI. That covers $35K in damage to your rental car, $60K in liability damage/injury to others in the state of NY. And the icing on the cake is the supplemental liability that covers you from $60K up to $500,000 aggregate in NY (liability coverage levels differ throughout the US).

In some cases where you don’t need to purchase primary liability because some states have required minimum liability that’s covered by the rental car company, you can opt to buy only primary damage and supplemental liability coverage. This would bring down your insurance costs to $33.85. 

Even when you compare Bonzah’s rate with the insurance offered by the rental car company, you’re still getting the best offer while reducing the risk of variable charges. By going with the third-party insurance, you don’t have to wonder if you’ll be charged the lower or higher insurance rate.