You’re at the rental office, ready to pick up your rental vehicle and be on your way. But will it be insured in the event of an accident? Do you have coverage in your current auto insurance policy, or should you purchase it from the rental company? Is it required? Here, we’ll walk through your options to help you make the best choice for your needs.
 
The rental vehicle company
Most rental vehicle companies offer a “collision damage waiver” or “loss damage waiver” that covers damage to the rental vehicle in your care¹. This protection is usually charged at a daily rate on top of the rental charge. If you purchase the collision damage waiver, the responsibility for the cost of the damage will be transferred from you to the rental vehicle company¹. However, the protection you get can vary from company to company and often comes with exclusions. Always read the fine print before making your final decision.
 
Your credit card
Your credit card may already provide collision damage coverage on your rental vehicles. To be eligible for this coverage, you’ll likely need to charge the total rental amount to your credit card and decline the rental vehicle company’s collision damage waiver¹. Your credit card coverage may have certain conditions, such as renting vehicles from preapproved companies. Check with your credit card company to learn more about their coverage limitations.
 
Your current auto insurance policy
Most insurance companies offer additional optional liability coverage for damage to vehicles you don't own. It comes in the form of an endorsement called "Legal Liability for Damage to Non-Owned Automobiles," also known as "Rental Vehicle Insurance Endorsement" or "OPCF 27"¹. This endorsement enhances your protection and covers damage to rental vehicles in your care. The yearly cost of this add-on to your policy is reasonable, making it a cost-effective alternative to a rental vehicle company's collision damage waiver.
 
It's important to note that the OPCF 27 is only valid for driving rental vehicles in Canada and the United States, so you'll have to purchase coverage elsewhere if you travel outside Canada and the U.S.
 
Keep in mind
In the event of an at-fault collision with your rental vehicle where you're 50% or more at fault, the accident will still count towards your driving record regardless of who pays the claim¹.
 
Suppose you're not covered under your current auto insurance policy, through your credit card, or otherwise, and you choose to decline the rental vehicle company's collision damage waiver. In that case, you will be responsible for paying the costs that result from any at-fault damage to the rental vehicle in your care¹.
 
Be sure to speak with your insurance broker to understand your coverage level before visiting the rental office. If you're a current OTIP policyholder, contact us at 1-833-494-0089 to review your existing auto insurance policy, and discuss additional optional coverage such as OPCF 27. If you're not insured with OTIP and are shopping for auto insurance, call us at 1-833-615-9326 to get a quote and receive a $20 gift card of your choice!
 

1. Financial Services Regulatory Authority of Ontario – Protecting yourself when renting a vehicle

 
Related article: What you need to know about loss of use coverage