Covering Your Bases: Do You Need Insurance to Rent a Car?

In today’s piece on insurance and car rentals:

  • Insurance with rental cars in Canada
  • Insurance with Roam
  • Personal insurance and insurance through your credit card
  • Insurance terminology to know

Last Updated September 25, 2023

5 min read

Greetings Canadian road-trippers and business travellers! As you gear up for your next journey, you might find yourself asking, “do you need insurance to rent a car?” Roam, your trusted companion for car subscriptions in Canada, is here to clear the air on this topic. Let's dive right into it.

The Basic Canadian Overview

In the vast landscape of Canada, renting a car can provide unmatched convenience. But with this convenience, there's often a lingering question, “do you need insurance to rent a car?” The straightforward answer is no, it’s not a strict requirement by law. However, going without proper insurance coverage can be akin to treading on thin ice.

In Canada, while the legal stipulations might allow you to rent a car without insurance, you could face hefty out-of-pocket costs if you're involved in an accident or if the rental car gets damaged. Hence, insurance isn’t just about fulfilling legal prerequisites; it's a safety net that can save you from exorbitant, unexpected expenses.

Insurance with Roam’s Car Subscriptions: We’ve Got You Covered

At Roam, we want our customers to have peace of mind when using our cars. Our policy stands robust with a maximum combined liability of a whopping $2,000,000. Not just that, we offer comprehensive all-perils coverage that shields you from unexpected events such as collisions, vehicle theft, and any major damage that might befall your vehicle.

The best part? Our streamlined insurance coverage aligns perfectly with your subscription timeline. It begins on the start date of your subscription and conveniently concludes on the end date, ensuring you're always protected while you roam.

Your Personal Auto Insurance: Can It Help?

For many Canadians, the first port of call when considering rental car insurance is their existing personal auto insurance policy. But can this policy be extended to a rental car? The answer largely depends on the specifics of your insurance coverage. Most comprehensive personal car insurance policies in Canada can cover rental cars, but there might be limitations based on the type of vehicle, the purpose of the rental (business vs. leisure), or the duration of the rental. Deductibles will still apply, and if an accident occurs, claims might lead to an increase in your future insurance premiums. Thus, before counting on your personal insurance, a detailed discussion with your insurance company is crucial to ensure you're adequately covered.

Navigating Rental Company's Insurance Offers

When you approach a rental counter in Canada, it’s typical to be presented with a bouquet of insurance options, each sounding more crucial than the last. Let's demystify these offers:

Collision Damage Waiver (CDW): Often mistaken for insurance, the CDW is an agreement that the rental company will absorb the repair costs if the car gets damaged. However, there might be exceptions. For instance, if the damage is due to reckless driving or if you violate the terms of the rental agreement, the waiver might become void.

Personal Accident Insurance (PAI): This insurance kicks in if there's an accident causing injury. It covers medical bills, ambulance fees, and sometimes even death benefits. While the name makes it sound indispensable, if you have a robust health insurance plan or personal injury protection, you might already be covered.

Personal Effects Coverage (PEC): Beyond the vehicle and your well-being, there's the matter of your belongings. If you’re traveling with valuables like electronics or jewelry, PEC ensures that your belongings are covered against theft or damage while inside the rental car. However, homeowners' or renters' insurance often provides similar protection, so cross-check before opting in.

Liability Insurance: This is a pivotal cover, especially if you're at fault in an accident that causes injury to others or damages property. While most personal car insurances in Canada offer liability coverage, the extent might vary, so it's essential to ensure you have enough.

Always remember, while these offers can provide robust protection, it’s vital to weigh them against any existing coverages you have to avoid redundant expenses.

The Unsung Hero: Your Credit Card

Your wallet might be harboring a hidden gem when it comes to rental car insurance. Numerous credit card companies in Canada offer complimentary rental car insurance as a cardholder benefit. This coverage often mirrors the Collision Damage Waiver offered by rental companies, implying that in case of damage or theft of the rental vehicle, the credit card company will shoulder the expenses. But this benefit isn’t universal. Not all credit cards offer it, and among those that do, terms can differ. Some might require you to pay for the entire rental using that card or decline the rental company’s CDW. Before banking on your card for insurance, it’s vital to thoroughly understand its terms and also inform the credit card company about your travel plans.

Considering Additional Insurance? The Pros and Cons

Contemplating purchasing additional insurance from the rental company often comes from a place of wanting extra peace of mind. But is it always worth it?


  • Simplicity: Buying insurance from the rental company simplifies the process. There’s no need to coordinate between different providers in case of a claim.
  • Immediate Coverage: Unlike third-party insurance that might require some time to activate, the coverage from the rental company starts as soon as you drive off.
  • Potential for Comprehensive Protection: Rental companies offer packages that cover a wide range of incidents, from collision to personal effects coverage.


  • Cost: This is the major deterrent. Insurance from rental car companies often comes at a premium price.
  • Possible Overlap: If you already have personal auto insurance or coverage through your credit card, buying additional insurance might be redundant.
  • High-pressure Sales Tactics: Rental agents sometimes employ high-pressure tactics to sell their insurance products, making consumers buy more than what they genuinely need.

Before making a decision, always weigh the potential benefits against the cost and any overlapping coverage you might already have.

Non-Ownership or Rental Insurance: An Alternate Route

If you frequently rent cars or simply want a specialized insurance option that doesn’t overlap with your existing coverages, consider non-ownership auto or rental insurance. This type of auto insurance is tailored for those who don’t own a car but rent or borrow them regularly.

Benefits: It covers you for liability, and depending on the policy, it might also provide collision and comprehensive coverage for rental vehicles. Since it’s designed specifically for rentals, there’s clarity in what’s covered, reducing potential grey areas.

Cost: Often, non-ownership auto insurance can be more economical than repeatedly buying insurance from rental companies, especially if you rent cars regularly.

Where to Buy: Many insurance companies in Canada offer non-ownership auto insurance. It’s wise to shop around, compare policies, and read reviews before committing.

Unravelling the Fine Print: Terms to Be Aware Of

When renting a car in Canada and looking at insurance options, you'll often come across some jargon. Here's a brief primer on terms you should know:

Deductible: The amount you'll have to pay out of pocket before the insurance covers the rest. Lower deductibles often mean higher premiums and vice-versa.

Primary vs. Secondary: If insurance is primary, it pays first in case of a claim. Secondary insurance only pays after any other insurance has been exhausted.

Exclusions: Events or situations that aren’t covered by the policy. It’s essential to be aware of these to avoid surprises.

Territorial Limits: Specifies where the insurance is valid. If you’re planning a cross-border trip from Canada to the U.S., ensure your coverage isn’t limited to Canada alone.

Endorsements: These are add-ons or modifications to a standard policy. They can either expand or limit coverage based on your needs.

Understanding these terms will arm you with the knowledge to sift through insurance options effectively and ensure you’re adequately protected without overspending.

Final Thoughts

Renting a car in Canada gives you the freedom to explore this beautiful country at your own pace. While it’s not always legally required, having the right insurance coverage is essential to protect yourself from potential financial pitfalls. While Roam provides all-peril car insurance with all of our car subscriptions, it’s important to always check with your personal insurance company, or credit card provider, and familiarize yourself with the offerings of the rental car companies before making a decision.

Here at Roam, we’re aiming to simplify the car subscription experience for Canadians. With our free educational resources and information, we ensure you're informed and confident on the road. We're with you every step of the way.

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Disclaimer: Roam is not affiliated with or endorsed by any automaker in any way. All product names, trademarks, and trade names are the property of their respective owners.

Disclaimer: Roam is not affiliated with or endorsed by any automaker in any way. All product names, trademarks, and trade names are the property of their respective owners.

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