Planning to rent a car in Canada? Before hitting the road, it’s essential to understand how insurance coverage works. Many Canadians assume that their personal auto insurance or credit card coverage is sufficient—but the reality is more complex.
In this guide, we explain how personal auto policies, credit card protections, and rental company insurance interact, so you can avoid unpleasant surprises. We’ll also share helpful tips to help you choose the right coverage and drive with peace of mind!
Does your personal auto insurance cover rental vehicles?
Yes, your personal auto insurance may cover a rental car—but only if you have the correct endorsement.
In Quebec, this is known as endorsement F.A.Q. 27. This protection, often called rental vehicle coverage, allows the coverages in your existing policy—such as collision, civil liability, and accident benefits—to extend to rental vehicles in Canada and the United States.
At OVC Insurance, we can help you review your current auto insurance policy and confirm that it includes the proper coverage before you rent a vehicle. As an independent brokerage working with over 20 insurers, we compare market options to offer you the most suitable coverage and policy limits for your needs.
Compare policies with OVC Insurance
What does rental vehicle coverage actually include?
If your policy includes rental vehicle coverage such as F.A.Q. 27, it generally mirrors the coverage on your personal vehicle.
This means that if your own car is insured for collision, theft, and liability, the rental car will usually receive the same protection.
However, some important exclusions apply. For example:
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Personal belongings inside the rental vehicle are generally not covered (you would need home insurance or personal property coverage).
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Coverage may not apply if you drive outside Canada or the United States.
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If someone else (such as a spouse or friend) drives the rental car without being listed on the rental contract, your insurance likely will not cover them.
It’s also important to remember that your policy’s coverage limits, deductibles, and exclusions still apply when driving a rental vehicle.
Who must be listed on the rental contract?
To use your own auto insurance for a rental vehicle, you must be the person renting the vehicle and signing the contract. If a friend or family member rents the car in their name, your coverage likely will not apply—even if you are insured under the same auto policy.
Get the right coverage before you rent
Does my credit card cover rental car insurance in Canada?
Many Canadian credit cards include rental car insurance—but it’s not automatic. To activate it, you usually must:
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Pay for the rental with your credit card
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Decline the Loss Damage Waiver (LDW) or Collision Damage Waiver (CDW) offered by the rental company at the counter
This type of coverage is often limited to damage or theft of the vehicle and usually does not include civil liability, bodily injury, or personal accident insurance.
Every card is different. Premium cards may offer more generous benefits, while others have strict limits or complex claims processes (repair costs, depreciation, required deposits, etc.).
What’s covered (and what’s not)
When properly activated, credit card rental car insurance usually covers:
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Damage caused by an accident, collision, fire, theft, or vandalism
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Coverage in most of Canada and the United States
However, important exclusions apply:
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No civil liability coverage (you are not protected if you injure someone or damage another vehicle)
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No coverage for injuries (you’ll need your auto insurance, travel insurance, or personal accident coverage)
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No coverage for personal belongings inside the vehicle
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Certain vehicle types—such as cargo vans or luxury cars—may be excluded
These limitations become especially important if you leave urban areas, cross the border, or use car-sharing services.
Always review your credit card terms
Before relying on your credit card for rental car insurance, carefully review your cardholder agreement. Some cards require you to decline all coverage options offered by the rental company, while others impose specific administrative fees or require online claims processes.
Buying insurance from a rental company: Is it worth it?
Most Canadian rental car companies offer optional insurance packages when you pick up the vehicle. These usually include:
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Collision Damage Waiver (CDW) or Loss Damage Waiver (LDW): Covers damage to the rental vehicle, often replacing the need for collision or comprehensive coverage under your own policy.
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Civil liability coverage: Protects you if you cause injury to someone or damage another vehicle.
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Personal accident insurance: Covers medical expenses for the driver and passengers in the event of injury.
These options can be particularly useful if you don’t have the F.A.Q. 27 endorsement, umbrella liability insurance, or adequate credit card coverage. They’re also helpful for new drivers who may not yet qualify for full coverage under their own policy.
Is the extra cost worth it?
Although purchasing insurance from a rental agency may be more expensive, it can be worthwhile if:
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You’re crossing the border and unsure whether your policy covers the U.S.
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You’re renting a vehicle not covered by your own policy (such as luxury models or commercial trucks).
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You don’t have personal comprehensive or collision coverage.
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You want a simple, hassle-free claims process.
That said, these options often come with strict limits and higher overall costs. You should also ask how your personal data is handled, as rental companies may have different privacy and security policies.
Before accepting rental insurance, speak with a trusted insurance broker. At OVC Insurance, we can review your current auto policy and suggest alternatives—such as umbrella liability insurance—that may offer broader protection at a lower cost.
Not sure about your rental car coverage? Let’s review your policy together.
What to do before renting a car in Canada
1. Check your auto insurance
Review your auto policy to see if it includes rental vehicle coverage such as F.A.Q. 27. Also confirm whether coverage extends to the United States if you plan to cross the border.
2. Contact your broker or insurer
Speak with your broker to understand your coverage limits, deductibles, and whether additional protection is needed. We can also advise on umbrella coverage that may offer better protection at a lower cost.
3. Confirm your credit card coverage
If you plan to rely on credit card insurance, verify the benefits with your financial institution. Some premium cards offer strong coverage, while others apply strict exclusions or don’t cover certain vehicle types.
Make sure the card covers both collision damage and civil liability, and ask about the claims process in Canada versus the U.S.
4. Review rental company options
If your personal insurance or credit card doesn’t provide enough protection, consider purchasing coverage directly from the rental company. Compare packages, look for hidden fees, and review privacy policies—especially when booking online.
OVC Insurance: Your trusted partner for personalized coverage
At OVC Insurance, we help individuals and businesses manage their insurance needs. We work with more than 20 reputable insurers to find the right protection—whether for your car, home, business, or a rental vehicle.
Our team takes the time to clearly explain your options, compare available coverage, and ensure you’re properly protected without overpaying. With OVC, you don’t just get an insurance policy—you gain a partner who prioritizes your peace of mind.