Everything you need to know to rent a vehicle in Canada

Car rental insurance 101

Insurance is a tricky matter, especially for foreigners. Not only do you have to be fluent in legalese but it may be hard to know if your credit card or travel insurance policy offers international coverage and if all the insurance options offered (sometimes, ahem… highly suggested or even added without your consent!) are necessary. Let’s take a look.

The five most common types of insurance coverage

Usually, you’ll be offered:

• Collision Damage Waiver (CDW) or Deductible Extended Waiver (DEW)
• Theft Waiver (TW), Theft Protection (TP) or Theft Protection Coverage (TPC)
• Loss Damage Waiver (LDW) for around CA$30/day
• Personal Accident Insurance (PAI), Liability Insurance Automobile or Liability Insurance Supplement(LIS) for around CA$5-10/day
• Personal Effects Protection (PEP) for around CA$3/day

These two coverages are usually optional (i.e. not included by default in the rental contract) but they are highly recommended:

• Collision Damage Waiver, which protects you from paying for a damaged or stolen car
• Personal Accident Insurance, which covers you and all passengers inside the vehicle for any medical expenses

Most insurance will include a “deductible” or “excess” with their policy, i.e. a certain amount you will be charged to cover part of the damage estimates when you make a claim. Deductibles vary greatly across insurance companies and can be very high. There are “zero deductible” insurance policies but guess what—the insurance cost will be higher too.

If you’re in Canada as a Working Holiday Visa holder, you must have bought the compulsory travel insurance coverage. However, travel insurance plans don’t always cover car rentals and when they do, they typically only cover damage due to a collision—not damage to another vehicle or medical care for anyone hurt in an accident involving the rental car. Check your policy carefully but chances are you will need to buy PAI.

You might be covered if:

• You’re paying for the rental with a major credit card like Visa Premier, Visa Infinite, Gold MasterCard or Platinum MasterCard that offer comprehensive benefits like Rental Collision/Loss Damage Insurance. Read the insurance policy carefully, as sometimes only the first 31 days of rental are covered.
• You’re a tourist in Canada and you already have valid personal car insurance in your home country. Again, read your policy carefully—are you covered abroad? Are you covered for car rentals?—and bring proof of insurance to Canada.

Common exclusions and restrictions

You bought all the insurance the rental company agent helpfully “suggested”? Well, you may still have unpleasant surprises if you need to make a claim. Two words—exclusions and restrictions. Insurance policies come with fine print and you should definitely read it!

For instance, some types of vehicles are usually not covered, such as pick-up trucks, commercial vans and luxury cars (damn, you wanted a limo, didn’t you!). Your insurance may provide no protection when you drive on unpaved roads.

Credit card insurance also comes with exclusions and restrictions. You are typically covered for collision damage and theft but PAI is excluded.

Bottom line is always read the insurance policy and rental contract. Yes, it’s long and boring but you need to know what you’re getting into.

A few more tips

Most companies don’t rent “exotic vehicles” to drivers under 25. An “exotic vehicle” can be a four-wheel-drive, a convertible, a race car, etc.

If you’re planning to cross the Canada-US border with a rental car, check the company’s cross-border policy and bring the rental agreement that shows consent from the company.

Most car rental companies do not allow travel into Mexico.