Yes, you can technically rent a car in Canada without having your own personal auto insurance policy. However, it is a significant financial risk. Rental companies are legally required to provide a minimum level of third-party liability coverage, but this is often insufficient. The real danger lies in damage to the rental vehicle itself. Without purchasing the rental company's Collision/Loss Damage Waiver (LDW) or having comparable coverage from a credit card, you would be personally responsible for the full cost of any repairs or if the car is stolen.
The mandatory base liability coverage in provinces like Ontario is typically only $200,000, but most rental companies include a higher amount, often $1,000,000. This covers damage you might cause to other people or property. It does not cover the rental car. The LDW is not insurance but a waiver that relieves you of financial responsibility for damage to the rental car. Declining it means you are "self-insuring" the vehicle, which could lead to bills of thousands of dollars even for minor incidents.
Whether your credit card offers primary or secondary coverage is critical. Primary coverage handles claims first, before your personal insurance. Secondary coverage only kicks in after your own auto insurance deductible has been applied. Many cards also exclude certain vehicle types like trucks, SUVs, or premium models.
| Consideration | Without Insurance/LDW | With Credit Card Coverage (Primary) | With Rental Company LDW |
|---|
| Financial Risk | Very High. You are liable for all damage/theft. | Low, but check your card's terms and conditions. | Very Low. You are typically waiving all financial responsibility. |
| Out-of-Pocket Cost for Accident | Full repair cost (+ loss of use/admin fees). | Usually $0, if the damage is covered. | Usually $0, depending on the waiver terms. |
| Coverage for Loss of Use | Liable for rental income lost while car is repaired. | Varies by card; some may cover it. | Often included in the waiver. |
| Coverage for Diminished Value | Liable for the car's reduced resale value. | Rarely covered by credit cards. | Often included in the waiver. |
| Required Action | Must provide a large security deposit on the rental. | Must pay for the rental with that specific card and decline LDW. | Pay the daily fee for the waiver. |
Before you rent, verify your credit card's benefits document and call the number on the back of the card for confirmation. Understand what vehicle classes are covered and what documentation is required in case of a claim. If you do not have a card with adequate coverage, purchasing the rental company's LDW is the safest financial decision.
