Illinois Rental Car Insurance Law

When someone comes to our Chicago-based firm after a rental car accident, they’re often overwhelmed by questions about Illinois rental car insurance law, coverage layers, and who ultimately pays for injuries or property damage. We meet clients every week who were traveling for work, visiting family, or simply trying to rent a vehicle for daily errands, only to find themselves facing confusing rental contract, aggressive insurance provider inquiries, and uncertainty about their rights under Illinois law.

We stand with you through each step of this process. When you’re trying to understand how these laws work, our role as your Chicago auto accident lawyer is to explain how liability coverage and optional rental company protections interact so you can move forward with clarity and confidence.

Who Is Responsible for Carrying Insurance on a Rental Car?

Under Illinois law, both the rental car company and the renter have a legal responsibility to insure. Many clients are surprised to learn that when you rent cars in Illinois, multiple overlapping policies may apply depending on the terms of the rental agreement, the renter’s existing car insurance, and mandatory state laws.

Illinois Mandatory Insurance Obligations

625 ILCS 5/7-601 requires every person who operates a vehicle in Illinois to carry liability insurance meeting state minimums. This includes drivers operating a rental vehicle, meaning the renter must have liability coverage through a personal insurance policy or purchase equivalent protection through the rental company.

Rental Company Insurance Requirements

Under 625 ILCS 5/9-105, a rental company must maintain liability protection or a bond for its fleet. This policy typically provides secondary or excess liability coverage, stepping in only when the renter’s auto policy does not meet the required limits or when contract terms trigger rental company responsibility.

Damage Waivers and Additional Laws

625 ILCS 27/ governs waivers and disclosures that rental companies must provide. This law clarifies when a renter may be held responsible for physical damage to the rental car and what constitutes a valid waiver.

When Coverage Applies

• Renter’s personal policy is usually the primary coverage, meaning it responds first to bodily injury liability coverage, property damage, and certain collision-related losses.
• The rental car company’s policy may apply secondarily or only in very specific situations described in the rental contract.
• Renters may also be liable for damage depending on fault, excluded drivers, or contractual violations (e.g., unauthorized drivers, commercial use, DUI).

Understanding which policy applies, and when you might be held liable for accident costs, often requires reviewing both the rental contract and your current policy.

What Insurance Policies Apply When You Rent a Car in Illinois?

When you drive a rental car in Illinois, several categories of insurance coverage may apply. These work together in layers:

Your Personal Auto Insurance

Most Illinois drivers carry comprehensive insurance that provides:

• Liability insurance
• Collision coverage
• Comprehensive coverage for non-collision losses such as theft or vandalism
• Uninsured/underinsured motorist (UM/UIM)
• Medical payments (MedPay)

Your existing car insurance policy typically serves as the primary coverage when you drive a rental vehicle, unless the contract or law states otherwise.

The Rental Company’s Liability Policy

Rental companies must maintain liability coverage, but it is often excess coverage. It may apply when:

• Your personal auto policy excludes rental cars
• The rental company lists you as a non-owner driver
• Permissive-use rules apply

Many rental contracts restrict unauthorized drivers, limit who qualifies as other authorized drivers, and may impose added fees or exclusions for young drivers or certain business uses.

A violation may void coverage or cause the renter to be held accountable for all damages.

Optional Supplemental Policies

Most rental agencies sell supplemental coverage. Whether these apply depends on contract terms and Illinois law requires certain disclosures under 625 ILCS 27/.

What Insurance Options Are Available Through Rental Car Companies?

Rental companies commonly offer several insurance options designed to protect renters from specific types of loss. These can provide significant additional protection, but only when understood correctly.

Collision Damage Waiver (CDW) & Loss Damage Waiver (LDW)

A CDW or LDW is not technically insurance. Instead, it is a waiver that covers damage to the rental vehicle under the contract, meaning the rental company will not pursue the renter for certain types of physical loss.

Waivers may not cover:

• Unauthorized drivers
• DUI or reckless driving
• Off-road use
• Intentional acts

Even with a waiver, renters may still be charged for “actual cost,” diminished value, or loss-of-use unless prohibited by law.

Supplemental Liability Insurance (SLI)

SLI increases liability coverage above the minimum policy limits required by Illinois law. This protects renters facing large bodily injury or property damage claims.

Personal Accident Insurance (PAI)

PAI provides limited medical expenses and accidental death benefits for the renter and passengers. It can supplement health insurance or MedPay but is usually secondary.

Personal Effects Coverage (PEC)

PEC covers personal belongings stolen from the rental car, though it may overlap with homeowners or renters insurance. High-value personal effects may be excluded.

These options shape how much the renter may ultimately reimburse if an accident occurs. They also interact with Illinois car accident insurance coverage options in ways many people aren’t aware of until they’re facing a claim.

When Should Illinois Drivers Consider Additional Insurance Coverage?

We often advise renters to consider additional insurance when:

• They’re young drivers or new renters
• They’re renting a high-value vehicle
• They’re traveling for business and using employer-provided rentals
• They’re concerned about coverage gaps in their car insurance plan
• They are traveling out of state (different laws may apply)
• Their credit card’s rental protection has exclusions

Credit Card Coverage

Many credit cards offer secondary collision coverage, but typically exclude:

• Liability claims
• Trucks, vans, or luxury vehicles
• Long-term rentals
• Out-of-state accidents and reciprocity issues

We walk clients through these limitations so they know what’s actually covered.

What Additional Coverage May Protect You in a Rental Car Accident in Illinois

Even when your personal insurance is primary, additional coverage can make a significant difference.

UM/UIM Coverage

Uninsured and underinsured motorist coverage protects renters when another motorist causes the crash and lacks adequate insurance. This is often critical after a serious vehicle accident.

MedPay Coverage

MedPay pays medical expenses regardless of fault and can help cover treatment immediately after a car accident.

Umbrella Coverage

Umbrella coverage provides extra liability protection when damages exceed your auto or rental policy limits.

Out-of-State Accidents and Reciprocity

When Illinois renters are involved in out-of-state accidents, reciprocity laws may automatically adjust the policy’s liability limits to the minimum required by the other state.

What Are the Coverage Limits on Rental Cars Under Illinois Law?

Illinois minimum liability limits are:

• $25,000 per person for bodily injury
• $50,000 per accident
• $20,000 for property damage

These limits also guide how rental company policies are structured. But actual coverage limits may be higher, depending on:

• The renter’s personal policy
• Supplemental coverage
• The rental company’s contract
• Commercial or employer-related use

Coverage determines how much the insurance provider compensates and how much the renter may owe.

Who Can Be Held Liable in a Rental Car Accident in Illinois?

Liability after a rental car accident depends on fault, insurance terms, and policy exclusions.

If the Renter Causes the Crash

The renter’s car insurance generally applies. A renter may be held liable if their policy excludes rental cars or if they violated the rental contract.

If Another Driver Causes the Crash

The at-fault driver’s insurance should pay. UM/UIM coverage pays if they are uninsured or underinsured.

Shared Fault

Illinois follows comparative negligence under 735 ILCS 5/2-1116, meaning a person who is more than 50% at fault cannot recover damages, and recovery is reduced by percentage of fault.

Employer-Provided Rentals

Liability may extend to the employer under vicarious liability rules or commercial insurance policies.

Unauthorized Drivers

If someone not listed as an authorized driver, or someone without a valid driver’s license, operates the car, the renter may be held responsible even if that driver caused the accident.

Insurer disputes are common in rental cases. We help our clients navigate these disagreements and pursue the compensation they deserve.

How Illinois Financial Responsibility Laws Apply to Rental Vehicles

Financial responsibility laws ensure that every driver in Illinois, including renters, can pay for injuries and damage they cause. Under 625 ILCS 5/7-601, the renter must carry liability coverage. Under 625 ILCS 5/9-105, the rental company must also maintain a liability buffer.

Waivers of responsibility for damages affect liability, but they don’t replace insurance. Insurers determine primary vs. excess coverage by reviewing:

• Contract terms
• Waivers
• Fault determinations
• Policy exclusions

Because several insurance policies may apply, these cases often require a detailed legal review.

What to Do After a Rental Car Accident in Illinois

If you are involved in a rental car accident, we recommend:

1. Report the accident to police immediately.
2. Notify the rental company as required by the rental agreement.
3. Document the accident scene, vehicle damage, and injuries.
4. Contact your insurance provider and provide required information.
5. Save the rental contract, waiver documents, and receipts.
6. Notify your credit card company if it offers rental protection.
7. Seek medical care and document all medical expenses.

We guide our clients through each step to protect their rights and preserve evidence.

How an Experienced Lawyer Can Help You Explore Your Auto Insurance Options

Rental car accidents often involve overlapping policies, complex contracts, and disputes about responsibility. As your Chicago traffic accident lawyer, we help when:

• Liability is unclear
• Multiple parties deny coverage
• Injuries are severe
• Loss-of-use or administrative fees are inflated
• A rental company accuses the renter of violating contract terms
• An insurance provider refuses to pay what the coverage requires

We review each insurance policy, interpret contract clauses, negotiate with insurers, and stand beside you throughout the claims process. We handle these cases on a contingency fee basis, meaning you owe no upfront costs and no attorney fees unless we recover compensation for you. Contact us today for a free consultation.