When Do You Need Travel Car Insurance?

For American travelers within the United States, your personal auto policy already covers you in every U.S. state and usually extends to rental cars. In most cases, you don’t need to buy more. 

When traveling abroad, coverage depends on the country. Your policy generally works in Canada but not Mexico, and it usually doesn’t cover you in Europe or most other destinations, where you buy coverage locally or from the rental company. 

If you already have a personal auto insurance policy, it’s good in all 50 states and Washington, D.C.

If you drive into a state with higher minimum liability limits than your home state, most policies automatically raise your limits to meet that state’s minimum for the trip. This generally means you won’t be cited for inadequate insurance when you cross a state line.

Note that if you cause a serious crash in a state with higher costs, you’re still responsible for damages above those limits.

Usually, yes, in the U.S. and Canada, but not in other countries.

Car insurance normally follows the driver and policyholder. If you already have a policy, it will cover you for personal-use rentals in the United States and Canada. It typically will not cover business use, ridesharing, long-term rentals you haven’t added to your policy, and moving trucks such as U-Haul.

Whatever coverage you carry on your own car generally applies to a rental car, along with the same deductibles and limits, according to the Insurance Information Institute.¹

If you carry liability-only insurance personally, you will only have liability insurance on the rental. You won’t have collision or comprehensive coverage unless you buy it separately. You can add it to your own policy before the trip, or you can purchase it from the rental company or from a third party.¹

Note: Do not confuse this coverage with rental reimbursement coverage, an optional add-on to your own policy that pays for a loaner while your car is repaired after a claim. This does not apply for a car you rent on a trip.²

Typically, car rental companies sell four main products at the counter¹: 

• Collision or loss damage waiver

• Supplemental liability protection

• Personal accident insurance

• Personal effects coverage

You may already carry most of this through your auto, health, or homeowners insurance. You don’t need to pay extra to duplicate this coverage, but remember that your U.S. policy’s protection typically does not extend outside the U.S. and Canada.

Note: Taking the damage waiver can make sense while driving unfamiliar roads and unfamiliar cars. But your damage waiver can become void if the crash happened while speeding, driving on unpaved roads, or driving while intoxicated.¹

Some major credit cards, particularly those marketed as travel cards, include rental car insurance coverage or damage-waiver protection. But this coverage is usually secondary: it only pays out after your personal auto policy or the rental company’s coverage.¹

Credit card rental car insurance benefits also typically cover damage to the car itself, not liability.

To take advantage of your card benefits, you generally must: 

1. Pay for the entirety of your rental contract with that card

2. Be the primary renter

3. Decline the rental company’s damage waiver

A few premium cards offer primary coverage instead. However, they may exclude coverage for high-value or exotic rental cars. Check your card issuer’s terms and conditions for the exact benefit.

Your U.S. car insurance policy covers you in the U.S. and Canada. Outside those two countries, you’ll need to buy coverage locally. Even where a country accepts your U.S. insurance, it may not meet local minimum requirements, according to the U.S. Department of State.³

Canada

Your U.S. policy generally extends into Canada. Ask your insurer for a Canada Non-Resident Inter-Province Motor Vehicle Liability Insurance Card, often called a “yellow card,” as proof your coverage meets Canadian requirements.⁴

Mexico

Your U.S. car insurance policy will not work in Mexico.⁵

Mexico recognizes only liability insurance from a Mexican-licensed insurer. Some U.S. policies extend limited physical-damage coverage a short distance past the U.S. border, but that does not meet the liability requirement in Mexico.

To protect yourself, buy a short-term Mexico tourist policy from a licensed Mexican carrier before entering the country in your personal or rented vehicle.

Europe and beyond

Your U.S. auto insurance does not extend to Europe or most other overseas destinations.

If you’re traveling to Europe, buy coverage from the rental company or a local insurer, and carry an International Driving Permit, which you can get from the American Automobile Association (AAA) or the American Automobile Touring Alliance (AATA) before you leave.³ Many countries and rental companies require this permit.

You can rent a car without owning a personal auto insurance policy. But you’ll need to buy coverage from the rental company or a third-party carrier authorized in that country. 

Rental companies are generally required to provide at least the state-minimum liability coverage, but the amount and coverage varies by state.

To protect yourself against having to pay for damage to the car, you can purchase the damage waiver from your rental car company, or pay for the rental with a credit card that provides this benefit.

Non-owner car insurance policies

Frequent renters who don’t own a car may save money with a non-owner car insurance policy. These policies provide liability coverage when you drive vehicles you don’t own.¹ 

If you rent cars a lot, a non-owner policy may be much more cost-effective than buying it from the rental car insurance company every time you pick up a rental car.

Run through this checklist before you buy anything at the counter:

1. Check your policy. Confirm whether you carry collision and comprehensive, and note deductibles, exclusions, and liability limits.

2. Check your credit card. Check your card’s terms and conditions for details on what rental coverage the card provides, and whether it is primary or secondary.

3. Confirm international coverage. For Canada, request a yellow card. For Mexico or overseas travel, plan to buy a separate policy.

4. Identify coverage gaps. Insufficient liability limits, no collision coverage, no comprehensive coverage against crime, vandalism, and other hazards, and no foreign medical coverage are the most common gaps that U.S. travelers face.

5. Buy only what you need. You don’t need to buy every coverage the rental car company offers you. Their coverage is typically expensive compared to a personally-owned policy. Every benefit you buy from the carrier should have a purpose. When you pick up your rental car, purchase the specific coverage that fills an identified coverage gap. Decline the rest.

Not sure your current coverage is enough for the trip? Luva makes it easy to compare quotes side by side, so you can easily switch to the right coverage.