When you’re vacationing, rental car insurance is probably the last thing on your mind. After all, you’re probably thinking about all the places you’ll go—not whether you’re at risk of a road accident. But is rental car insurance necessary? And, if so, what options do you have?
For this guide, we reviewed FSRA’s rental-vehicle guidance, the current OPCF 27 form, the current Ontario Automobile Policy, and the Financial Consumer Agency of Canada’s car-insurance overview.
Is Rental Car Insurance Mandatory in Canada?
You generally do not have to buy the rental company’s optional protection, but the vehicle must carry the legally required liability coverage.
You don’t have to buy the optional protection offered by the rental company. Before declining it, check whether damage to the rental is covered by your auto policy, credit card or travel insurance.
Types of Rental Car Insurance
So, you’ve decided on rental car insurance—which option should you get?
Personal Accident Insurance
Personal accident insurance may cover medical expenses or provide benefits if you or your passengers are injured in an accident. Coverage amounts vary between rental companies.
Loss Damage Waiver or Collision Damage Waiver
A loss or collision damage waiver may cover the costs if the rental car is damaged in an accident, stolen or vandalized.
These waivers may also address charges for:
- lost revenue while the car is being repaired;
- administrative fees;
- towing; and
- reduced resale value.
Check the rental agreement because exclusions vary between companies.
Personal Effects Coverage
Personal effects coverage may provide compensation if your belongings are damaged or stolen. Before purchasing it, check whether your home, tenant or travel insurance already covers those belongings.
Liability Coverage
Liability coverage provides financial protection if you injure someone or damage their property. You may be able to purchase supplemental liability insurance if you want coverage beyond the amount included by the rental company.
Your Personal Car Insurance
If you already have personal car insurance, you may be able to purchase coverage for a vehicle you don’t own. In Ontario, this endorsement is called Legal Liability for Damage to Non-Owned Automobiles, or OPCF 27.
OPCF 27 applies to eligible non-owned vehicles in Canada and the United States. It doesn’t extend to rentals in other countries.
Read More: OPCF 27: Liability for Damage to Non-Owned Vehicles
Alternatives to Rental Car Insurance
If you have a credit card or travel insurance, you may already have some rental-car protection.
Credit-Card Coverage
Credit-card holders may have collision-damage coverage on rental vehicles when they:
- charge the full rental amount to the credit card; and
- decline the collision damage waiver offered by the rental company.
Coverage may be primary or secondary. Primary coverage responds first, while secondary coverage pays eligible costs not covered by another policy.
Check the certificate before renting. Vehicle exclusions, rental periods, eligible drivers and claim procedures vary by card.
Travel Insurance Coverage
Some travel insurance plans offer rental-car coverage as an add-on. Depending on the policy, it may cover expenses such as towing, salvage, fire-department charges or loss of use.
Before Renting a Car
Read the rental agreement and any insurance policy or credit-card certificate before declining the rental company’s protection. Coverage may have a deductible and may exclude certain vehicles, drivers or types of damage.
If you’re relying on your personal auto policy, discuss the rental with your insurance company before your trip.
Read More: Is U.S. Car Insurance Valid in Canada?