One of the most common mistakes at the rental counter is paying for coverage that your auto insurance policy already provides. Whether it’s a quick trip or a long-term lease, you can save money by checking if your personal car insurance covers a rented vehicle before hitting the road.

The answer will depend on your policy and its endorsements. Between the QEF 27 Endorsement, coverage offered by some credit cards and the rental company’s insurance, each option is worth checking out to avoid paying twice.

In a nutshell

• Your policy may already cover a leased vehicle if it includes the QEF 27 Endorsement.
• The endorsement extends your existing coverage (collision, comprehensive) to the leased vehicle.
• Coverage is valid in Canada and the United States only.
• For a long-term lease, the vehicle must be insured as if you own it.
• The Société de l'assurance automobile du Québec (SAAQ) covers bodily injuries for all Quebec residents whether a vehicle is rented or not.

Does personal car insurance cover a rental vehicle?

Your personal car insurance can cover a rental vehicle, depending on the endorsements and the type of rental – meaning you may not have to purchase additional coverage. To find out what your policy covers and which coverages apply, contact your insurance provider before renting a vehicle to confirm.

Insurance obligations are different for short-term rentals and long-term leases. A short-term rental (like from a rental agency for a trip or a temporary need) relies on endorsements like the QEF 27 to cover damage to the leased vehicle. A long-term lease (like a car lease from a dealer) requires a full contract, just as it would for a vehicle you own.

Understanding the difference between insurance for a leased or financed vehicle and insurance for a rental helps you choose the right coverage, starting with the options available for a short-term rental.

How does car insurance work for short-term rentals?

When you rent a car for a trip or a short-term need, several options can provide coverage: your personal insurance (with the QEF 27 Endorsement), the protection offered by the rental agency and your credit card. Each offers different coverage and has its own deductible, so it’s essential to compare them before signing at the counter.

QEF 27 Endorsements and coverage of a leased vehicle

The QEF 27 Endorsement covers damage to a vehicle that you do not own. If you rent or borrow a vehicle in Canada or the United States, this protection covers you in the event of damage. Check with your insurer to see what’s included in your policy.

What’s covered by QEF 27: damage to the rented vehicle for which you are at fault. If the accident was not your fault, the Direct Compensation Agreement (DCA) will apply and your own insurer will compensate you for any material damage incurred.

What else is covered? The coverages (all perils, collision or upset, comprehensive, specific perils) and deductibles that apply to a leased vehicle are specifically listed in the QEF 27 Endorsement or in the “Declarations” section of your insurance contract. They may differ from what’s covered for your personal vehicle, so check your endorsement to understand the coverages and deductibles that apply.

QEF 27 conditions:

• Coverage applies in Canada and the United States only.
• Endorsement may not cover certain types of vehicles (motorcycles are a good example).
• The specific terms and conditions of your policy must be verified with your insurance company.

If your policy doesn’t contain this endorsement, consider contacting your insurer to add it before renting. The annual cost of the QEF 27 Endorsement can often be lower than the daily fees charged by rental agencies, making it a cost-effective option for drivers who rent regularly.

Do you need to purchase the insurance offered by the rental agency?

Not necessarily. Rental agencies generally offer insurance to cover damage to the rented vehicle in the event of an accident or theft. However, this coverage may overlap with your QEF 27 Endorsement. 

What coverage does my credit card provide for a rental vehicle?

Some credit cards offer coverage for rental vehicles when the transaction is paid for with the card. This protection generally covers damage to the rented vehicle and may waive the agency’s deductible. However, conditions vary from one issuer to another. Be sure to check restrictions like maximum rental duration, eligible vehicle types, coverage limits per person and covered territories before relying on this insurance.

The Autorité des marchés financiers (AMF) recommends taking the time to carefully read the terms and conditions of the coverage offered by your card company, because this protection does not replace legal liability. For example, credit cards typically don’t cover damage caused to a third party.

Car Insurance for a long-term vehicle lease

Car insurance for a long-term vehicle lease (auto lease) differs from temporary rental. You must insure the leased vehicle as if it were your own. The lessor has specific coverage requirements, while the dealer requires proof of insurance that includes public liability and property damage.

What are the dealership’s insurance requirements on a car lease?

The dealership typically requires comprehensive coverage before approving a lease. The vehicle remains the property of the lessor for the duration of the contract, which is why proof of insurance is mandatory before handing over the keys. Third-party liability, collision and upset coverages are also often included in the policy.

If your current policy does not meet these requirements, your insurer can adjust your contract to cover the cost of any missing coverage.

Mandatory and recommended coverage for car leases in Quebec

In Quebec, the minimum mandatory civil liability coverage is $50,000, but a higher amount is recommended for a lease. In addition to liability coverage, the lessor generally requires the following coverages:

• Collision
• Comprehensive 
• Replacement cost coverages are optional but could be relevant for a long-term lease, as they cover the full amount in the event of total loss.

In Quebec, the SAAQ compensates any person who has been physically injured in a motor vehicle accident, whether the vehicle is rented or not. This public coverage supplements your mandatory car insurance coverage in Quebec. Each component of the province’s mixed plan plays a different role in insuring a leased vehicle.

What insurance coverage applies to a rental car in Quebec ?

Third-party liability and car rentals in Quebec

The third-party liability coverage in your auto policy may apply to a rented vehicle depending on the terms and conditions of your contract. It’s a good idea to check with your insurance provider to confirm. If you drive outside of Quebec, you could be liable for any bodily injury that you cause in an accident. Your insurance should cover these situations, but the SAAQ does not offer this protection outside the province.

Does the SAAQ protect rental car drivers?

The SAAQ covers bodily injury for all Quebec residents, regardless of whether a vehicle is rented or not. The public insurance plan protects all Quebec residents worldwide, regardless of liability. This coverage is automatic and requires no additional steps, making it a safety net for any driver who rents a vehicle.

Collision and property damage coverage for a rental vehicle

Your insurance’s collision coverage may apply to the rental vehicle if your policy includes the QEF 27 Endorsement. If you were in an at-fault accident, you would pay the deductible specified in your policy and your insurer would cover the remainder.

However, the endorsement only extends coverage that’s already included in your policy to the rental vehicle (including the deductible). If you don’t have comprehensive coverage, it won’t apply to the rental vehicle. Keep that in mind when choosing your own insurance, as a claim can impact your premium, especially in the case of minor damage to rental vehicles.

In Quebec, the Direct Indemnity Agreement (DIA) applies to any collision between two or more vehicles whose owners are identified, including rental vehicles. In summary: each driver is compensated by their own insurer for the damages sustained, based on their share of liability. Standard collision protection covers single-vehicle accidents (like a collision with a fixed object, or running off the road), while the DIC applies when another vehicle is involved. These distinctions can help you identify duplicate coverage before signing at the rental counter.

How can I avoid paying twice for rental car insurance?

Take a few minutes to review your current coverage and compare it with what the rental agency offers before renting. Here are a few tips to keep in mind:

• Check your insurance policy: Confirm whether the QEF 27 Endorsement is included and what coverage applies to the rental vehicle.
• Check your credit card coverage: Review the terms and conditions, covered territories and maximum allowable rental duration.
• Compare with the agency’s insurance: If your policy or credit card already covers damage, the agency’s insurance is not necessary.
• Add the QEF 27 Endorsement if necessary: The annual cost is often lower than the agency’s daily fees, allowing you to save money on multiple rentals.

Having a well-configured car insurance policy before you leave can help you avoid surprises at the counter and unnecessary expenses. It’s also worth checking your coverage if you’re travelling outside the continent.

Insurance coverage for car rental abroad

The QEF 27 Endorsement only covers vehicle rentals in Canada and the United States. For any other destination, the endorsement does not apply.

If you’re renting a vehicle abroad, explore other coverage options, like insurance offered by a local rental company, travel insurance that includes rental car protection or credit card coverage (provided the countries you’re visiting are eligible). The AMF recommends checking the insurance requirements of your destination country before you leave, as minimum third-party liability varies from country to country and may exceed what is covered by your international protection.

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Frequently asked questions about car insurance and car rental

Does my car insurance automatically cover a rental vehicle?

Not automatically. Coverage depends on your policy endorsements. If your policy includes the QEF 27 Endorsement, damage to the rental vehicle is covered in Canada and the United States. Check with your insurer before renting.

How much does it cost to cover a rental car with the QEF 27 Endorsement ?

The cost varies according to the insurance provider, but it’s usually lower than the daily fees charged by rental car agencies. Talk to your insurance provider if you want to better understand the factors that influence the price of car insurance.

How does insurance differ between a short-term rental and a long-term lease?

For a short-term rental, the QEF 27 Endorsement covers damage to the rented vehicle in Canada and the United States. For a long-term lease, the insurance contract is the same as for a purchased vehicle, but the lessor typically requires additional coverage, including collision and comprehensive coverage.

Does auto insurance coverage apply to a rental vehicle outside of Canada?

The QEF 27 Endorsement covers Canada and the United States only. For rentals abroad, explore other options, like insurance from the local rental agency, travel insurance that includes rental vehicles or coverage through your credit card.

Should I purchase the insurance offered by the car rental agency?

Not necessarily. If your policy includes the QEF 27 Endorsement, the rental vehicle is already covered in Canada and the United States. Check your policy and credit card before purchasing additional coverage from the agency.

Does the deductible on my auto insurance apply to a rental vehicle?

If your policy includes the QEF 27 Endorsement, your policy deductible applies in the event of damage to a rented vehicle. Check the amount with your insurance provider before renting to avoid surprises at the counter.

How do I know if my car insurance policy covers a rental vehicle?

Check your car insurance contract or contact your insurance provider to find out if your policy includes the QEF 27 Endorsement. This document will confirm the active endorsements, applicable deductibles and which countries are covered when you rent a vehicle.