Rental Car Insurance Abroad (2026): What Travel Insurance Covers, What It Doesn't, and How to Avoid Getting Burned
CDW, excess reimbursement, credit card coverage, and how to protect yourself when renting cars outside Spain
Rental Car Insurance Abroad
Rental car insurance abroad isn't one product—it's several layers working together: CDW (Collision Damage Waiver) from the rental company, excess reimbursement from third-party insurers, credit card coverage (if you have it), and sometimes travel insurance rental car benefits (limited). The most common mistake is assuming you're 'fully covered' when you're only partially protected.
- CDW limits liability but usually leaves a €500–€2,000 excess you still pay
- Excess insurance reimburses what CDW doesn't cover—often much cheaper than rental desk upgrades
- Credit card coverage varies by issuer, card tier, and rental location—read terms carefully
- Standard travel insurance rarely covers rental cars reliably—check your policy wording
- Common exclusions: tires, glass, undercarriage, roof, keys, admin fees, and 'loss of use' charges
- Document the car thoroughly at pickup—photos and video of every scratch and dent
Quick Answer
Rental car insurance abroad isn't one product—it's several layers working together: CDW (Collision Damage Waiver) from the rental company, excess reimbursement from third-party insurers, credit card coverage (if you have it), and sometimes travel insurance rental car benefits (limited).
The most common mistake is assuming you're "fully covered" when you're only partially protected. This guide explains what each layer actually covers, what gets excluded, and how to build a setup that works before something goes wrong.
In This Guide
Renting a car abroad is one of the fastest ways to turn a "small problem" into a big bill. A scratch you didn't notice, a cracked windshield, a tire puncture, or a disputed damage claim can cost hundreds or thousands—especially when the rental company holds a large deposit on your card.
Most travelers assume one of these will protect them:
- "My travel insurance covers it."
- "The rental company's insurance is enough."
- "My credit card covers rental cars."
- "I'll just be careful."
In practice, rental car protection depends on the exact product: CDW, excess reimbursement, liability, deposit rules, and how damage claims are handled.
This guide explains the difference between rental car insurance options in 2026, what travel insurance typically covers, what it usually does not, and how to choose the right setup for your trip.
"Rental car insurance" is actually several different things
People use one phrase, but the risk is split into separate categories:
1. Damage to the rental car (collision/theft)
This is where CDW (Collision Damage Waiver) and theft protection sit. It limits your liability for damage to the vehicle itself.
2. Your financial responsibility (the excess/deductible)
Even when CDW exists, you often still pay an "excess" if damage happens. That's where excess reimbursement insurance comes in—it covers what CDW doesn't.
3. Third-party liability
If you cause damage or injury to others, liability matters. In many countries, this is mandatory and included to some extent, but limits and rules differ.
4. Extras that often aren't covered
Glass, tires, undercarriage, roof damage, keys, towing, admin fees, and "loss of use" charges can be excluded or limited depending on the product.
Key insight
Understanding these layers prevents the most common trap: thinking you're "fully covered" when you're actually only partially protected.
What is CDW (Collision Damage Waiver) and why it's misunderstood
CDW is not always "insurance" in the classic sense—it's often a waiver the rental company provides that reduces what you pay if the car is damaged.
But CDW usually comes with:
An excess you still must pay
Sometimes €500–€2,000 depending on the car and rental company
Exclusions
Damage to tires, glass, undercarriage, roof often not covered
Conditions
You must follow rental rules, report properly, not drive where prohibited
Bottom line: CDW is often "partial protection," not full protection. Most travelers discover this only when something happens.
What is rental car excess insurance?
Excess insurance (sometimes called excess reimbursement) is designed to cover the amount you would otherwise pay under CDW if damage occurs.
This is why it's popular: it can reduce your out-of-pocket risk when the rental company's CDW still leaves a large excess.
How excess insurance works
| Step | What happens |
|---|---|
| 1 | Damage occurs (scratch, dent, etc.) |
| 2 | Rental company charges your excess (e.g., €1,000) |
| 3 | You pay the rental company |
| 4 | You submit claim to excess insurer with documentation |
| 5 | Excess insurer reimburses you (if claim is valid) |
However, excess insurance also has terms:
- It may not cover everything the rental company charges (admin fees, loss of use)
- It often requires documentation (damage report, police report if needed, invoices)
- Exclusions may still apply (certain vehicle types or prohibited uses)
Best practice
If you want the most stable setup, match CDW and excess cover so they work together without gaps.
Does travel insurance cover rental car damage?
Sometimes, but not reliably enough to assume.
Many standard travel insurance policies focus on medical, cancellation, delays, and baggage. Rental car coverage, if present, is often:
Limited – may only cover €500–€3,000 of excess
Secondary – reimbursement after you pay first
Subject to exclusions – vehicle type, driving conditions, geographic limits
The right approach:
- Check whether your travel insurance includes rental car excess coverage
- Check the limit (€500? €3,000? More?)
- Check exclusions (vehicle type, driving conditions, countries)
- Confirm how claims work (what documentation is needed)
If your trip relies on the rental car, don't treat this as an afterthought.
Credit card rental coverage: helpful but not guaranteed
Many credit cards offer some level of rental car coverage, but it varies hugely and can be restricted by:
- Country of rental – some exclude specific countries
- Car category – luxury, vans, SUVs often excluded
- Declining rental CDW – may be required to trigger card coverage
- Secondary vs primary – may only pay after other insurance
- Payment requirement – must pay full rental on that card
- Reporting deadlines – strict documentation requirements
Key advice
Credit card coverage can be excellent in some cases, but it can also fail due to one small requirement missed. If you plan to rely on credit card cover, treat it like a policy: read the conditions and confirm your destination is eligible.
How to choose the right rental car protection (simple framework)
Start by answering one question: What outcome would hurt you financially?
If you can't afford a large deposit hold or unexpected claim, you want a structure with low excess exposure.
The simplest safe approach
Ensure you have CDW/theft protection in place
Either included with the rental or added
Reduce excess exposure with excess insurance
Especially if the excess is high (€500+)
Confirm liability is sufficient
For the country you're driving in
If you're renting for a short period in a low-risk context, you may accept higher excess. If you're renting for two weeks, driving unfamiliar roads, or traveling with family, it usually makes sense to reduce risk.
Common mistakes that lead to rental car disputes
Mistake #1: Skipping documentation at pickup
Many disputes start with pre-existing scratches that weren't recorded.
Before you drive away:
- Take photos and a short video of all sides
- Capture the wheels, windshield, and interior
- Ensure any existing damage is marked on the report
Mistake #2: Misunderstanding where you can drive
Off-road driving, beach roads, or crossing borders can violate rental terms and void coverage. Always check the rental agreement for geographic and terrain restrictions.
Mistake #3: Not following incident reporting rules
Many coverages require:
- Notifying the rental company immediately
- Filing a police report for certain incidents
- Keeping all documents
- Not admitting liability in a way that conflicts with policy terms
Small procedural errors can become expensive.
Rental car insurance abroad if you live in Spain (residents & expats)
Spain-based travelers often rent cars in Europe and in popular holiday destinations where:
- Deposits can be large (€500–€2,500)
- Damage claims are processed quickly
- Disputes are common if documentation is weak
Tell us your rental situation:
- Destination country
- Rental length
- Car category
- Whether you have a credit card with rental coverage
- Whether you want "lowest possible excess" or "reasonable risk"
…and we'll recommend the most cost-effective structure that reduces the chance of a nasty surprise.
Get Rental Car Insurance AdviceRelated guides
Clear definitions for CDW, excess, liability, repatriation, and other rental car insurance terms.
If your rental is part of a larger trip, cancellation cover protects prepaid costs.
Understand the difference between medical-only and bundled travel policies.
Family trips multiply rental car risk—more passengers, more luggage, more at stake.
If you're renting for extended periods, long-trip travel insurance may be more suitable.
Complete guide to travel insurance for Spain residents going on holiday abroad.
Expert reviewed
Written and reviewed by licensed insurance agents Maya Kallio and Marco Elsinger, who have helped over 15,000 expats in Spain since 2012.
Maya Kallio
Licensed Insurance Agent
Since 2012
Marco Elsinger
Licensed Insurance Agent
10+ years
Languages: English, Finnish, Spanish, German, Swedish
Frequently asked questions
Still have questions? Check these answers or get in touch.
What is CDW (Collision Damage Waiver)?
CDW (Collision Damage Waiver) is a product offered by rental companies that limits your financial liability if the rental car is damaged. However, CDW usually still leaves an 'excess' or 'deductible' you must pay—sometimes €500–€2,000 depending on the car and rental company. CDW also typically excludes certain damage types like tires, glass, undercarriage, and roof damage.
What is rental car excess insurance?
Excess insurance (also called excess reimbursement or excess waiver) is a policy that covers the excess/deductible amount you'd otherwise pay under CDW if the rental car is damaged. If CDW leaves you with a €1,000 excess, excess insurance can reimburse that amount after you pay the rental company. It's purchased separately—often from a standalone provider rather than the rental company—and is usually much cheaper than buying the rental company's 'zero excess' upgrade.
Does travel insurance cover rental car damage?
Sometimes, but not reliably. Many standard travel insurance policies focus on medical, cancellation, and baggage—not rental cars. Some policies include a 'rental car excess' benefit, but limits vary (often €500–€3,000), and there may be exclusions for certain vehicle types or countries. Always check your policy wording before assuming you're covered.
Does my credit card cover rental cars abroad?
Many credit cards offer rental car coverage, but it varies significantly by card issuer, card tier, and rental location. Coverage may be limited to certain countries, car categories (luxury/SUVs often excluded), or require you to decline the rental company's CDW. Some cards only offer secondary coverage (you pay first, then claim). Read your card's terms carefully before relying on it.
What's the difference between CDW and excess reimbursement?
CDW is provided by the rental company and reduces (but usually doesn't eliminate) your liability for damage. Excess reimbursement is a separate policy—often from a third-party insurer—that covers the remaining excess CDW doesn't cover. Together, they can reduce your out-of-pocket risk to near zero, but you need both layers working correctly.
What costs are NOT covered by rental car insurance?
Common exclusions include: tires, wheels, and undercarriage damage; glass and windshield damage (sometimes optional add-on); roof damage; key replacement and lockout fees; 'loss of use' charges (when the rental company charges for days the car is unavailable); admin/handling fees; fuel mistakes (petrol in diesel); and driving violations or fines. Always check both CDW and excess policy exclusions.
What should I check before driving away with a rental car?
Before driving away: 1) Walk around the car and document all existing damage with photos and video—every scratch, dent, and mark; 2) Ensure all existing damage is noted on the rental agreement; 3) Check the fuel level matches what's stated; 4) Test all lights, wipers, and controls; 5) Take photos of the dashboard, mileage, and fuel gauge. This protects you against disputed damage claims at return.
What if I damage a rental car abroad?
If damage occurs: 1) Report to the rental company immediately (same day if possible); 2) Get a police report if required by your policy or local law (especially for theft or accidents involving others); 3) Document everything—photos, damage report, repair estimates; 4) Keep all receipts for charges paid; 5) Contact your excess insurer or travel insurer quickly to start the claim process. Delays in reporting can void coverage.
Does rental car insurance cover theft?
Theft protection is often bundled with CDW but check the terms. Coverage typically requires: reporting theft to police immediately; providing a police report; following rental company procedures; and having kept the car secured (some exclusions apply if keys were left in the car). Theft of personal belongings from the car is usually NOT covered by rental car insurance—that's where travel insurance baggage cover applies.
Are tires, windscreen, and underbody covered?
Often not, or only partially. These are common exclusions from standard CDW. Rental companies may offer separate 'Super CDW' or 'Premium Protection' add-ons that include these elements, or you can check if your excess insurance covers them. Tire and glass damage are among the most frequent rental car incidents, so clarify coverage upfront.
Should I buy insurance from the rental company or independently?
Standalone excess insurance from third-party providers is usually much cheaper than the rental desk upgrades—often €3–€8/day vs €15–€30/day from the rental company. However, rental company products provide simpler claims (they just don't charge you). Third-party excess insurance requires you to pay the excess first, then claim reimbursement. Choose based on your budget, convenience preference, and whether your card/travel insurance already provides coverage.
How do I avoid rental car deposit disputes?
Deposits can be €500–€2,500 held on your card. To avoid disputes: 1) Document the car thoroughly at pickup (photos/video); 2) Ensure all damage is on the rental agreement before signing; 3) Return the car during business hours when possible (so an agent inspects with you); 4) Take photos at return showing the car's condition; 5) Get written confirmation that no damage was found; 6) Keep all rental documents for 30+ days until deposit is fully released.
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