Car Rental Insurance in Costa Rica: EXPLAINED

If you’re renting a car in Costa Rica for the first time, we know how confusing it can get. Finding car rental agencies is no problem, but once you look at the quotes, you might be surprised at how different the prices are from one website to the next. We’ve been there, too.

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The biggest reason for the varying prices is insurance.

In Costa Rica, there is mandatory car rental insurance required for all vehicles, but it can seem misleading when not all companies or websites include the insurance cost upfront. Some might even hide it in fine print to seem like a more “competitive” option, only to charge tourists much higher when it’s time to pick up the vehicle.

Nobody wants to start their Costa Rica vacation suddenly having to cough up hundreds (sometimes even thousands) of dollars in insurance just to get their rental car—that’s why we’ll tell you what you need to know here.

In our experience, renting a car is still the best and most efficient way to explore Costa Rica. Understanding how car rental insurance works is a necessary step to enjoying your vacation with peace of mind.

So in this guide, we’ll explain everything from different car rental insurance coverage, third-party insurance, and tips on how to safely rent a car in Costa Rica.

Cars parked in Guanacaste, Costa Rica
Cars parked in Guanacaste, Costa Rica
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Understanding Car Rental Insurance in Costa Rica

Rental car agencies can charge up to USD $50 a day for insurance on top of what you pay for the vehicle. The amount adds up quickly, especially if you’re there for weeks or months at a time, so it’s important to know what you’re paying for.

Every rental car quote in Costa Rica may include 3 charges: the car base price, the mandatory third-party liability insurance, and the collision damage insurance or liability damage waiver. The first two are fixed charges, while the third can be optional if you meet the insurance requirements.

Car Base Price

This is the daily price for the vehicle without any insurance or add-ons. Depending on the type of vehicle and time of year, this can range from USD $10-$20/day or up to USD $50-$100 in the high season.

Mandatory Third Party Liability Insurance (TPL)

As the name suggests, this mandatory insurance is required by Costa Rica law. This protects renters from liabilities in case of an accident, such as injuries to bystanders or third-party property damage.

Depending on the rental car company, this can also be called liability protection, third-party insurance, third-party liability coverage, supplemental liability insurance, or additional liability insurance.

With the mandatory insurance, all vehicles will have an additional daily fee on top of the car base price. Take note that this is usually not included in the estimated rental price.

How do I get TPL?

Some rental car companies allow you to arrange this through a third-party insurance company, but many automatically add it to your bill.

How much is TPL?

When it comes to car rental providers, our recommendation is Vamos Rent-a-Car. Their current pricing for mandatory insurance starts at USD $15.95/day for Sedan, Intermediate, Standard, and Full Size cars, and USD$17.95 for the Premium category.

Note that if this is the only travel insurance you’re planning to get for your car rental in Costa Rica, you’ll need to provide proof of additional coverage for Collision Damage and put down a deposit of $2,000 to $3,000 depending on the vehicle.

Cars for rent in Liberia Airport in Guanacaste
Cars for rent near Liberia Airport in Guanacaste

Collision Damage Waiver / Liability Damage Waiver (CDW/LDW)

The Collision Damage Waiver (CDW) or Liability Damage Waiver (LDW) is not insurance but a waiver that covers financial responsibility in case of any damage to the rental car itself.

These damages include bumps, scratches, windshield cracks, accidents, and/or theft. If any of these happen to the vehicle, the CDW will shoulder the financial responsibility instead of the authorized driver or renter.

How do I get CDW?

This extended protection insurance can be purchased through a car rental agency, through your credit card insurance, or travel insurance providers via third-party websites.

Payment options for CDW include the same credit card used for deposit, a different credit card, a debit card, or cash. You may also combine several payment options, i.e. pay with a debit card to its limit, then pay the remainder in cash.

What are 2 Types of CDW?

Our preferred partner, Vamos Rent-a-Car, gives the renter (and other authorized drivers) two options to handle loss or damage to the rental vehicle: a Basic CDW and a Full CDW. We’ll break down each CDW coverage below.

Is CDW mandatory?

CDW/LDW is required by all car rental companies, but you can opt out if you have your own insurance coverage.

For example, credit card holders can avail of third-party coverage through a major credit card. If you don’t want to pay extra for CDW/LDW, you’ll need to present proof of your coverage with a letter from your credit card company.

Max checking out the car for rent.
Max checking out the car for rent.

How do I decline both CDWs?

Car protection through Collision Damage Insurance is a frequent perk offered by many premium credit cards. In Costa Rica, proof of coverage is required in writing. To decline the CDW, the rental car agency will ask for proof of Liability Coverage in the form of a letter from your credit card or travel insurance provider. Make sure this includes the following:

  • Full name of the cardholder/renter
  • Names of any additional drivers
  • Last 4 digits of the credit card used to rent the vehicle
  • Selected car class category (Van, SUV, 4×4, etc.)
  • Rental period
  • Specifically describes the liability coverage included and its limitations (i.e. restrictions on where the vehicle may be driven such as off-road, etc.)
  • Country-specific restrictions: make sure Costa Rica is included

If you rent a car without a CDW and an accident occurs, you will be liable for the full amount of the damages upfront, up to the total price of the vehicle. It will be your responsibility to submit a claim and follow through on it. Once the claim process is successful, then the credit card company will proceed to reimburse you for all the expenses.

Although it is an added expense, we’ve found that getting a CDW gives you the ultimate peace of mind when driving in Costa Rica. If you’re leaning towards getting a CDW for that reason, here are the two rental car insurance coverages you can choose from with Vamos Rent-a-Car:

Basic Collision Damage Waiver

Basic CDW covers liability for vehicle damages, and/or theft, and can include the mandatory TPL. Purchasing “in-house” CDW coverage from rental car agencies means they will be the ones to file a claim should any damages occur.

With Vamos, Basic CDW starts at USD $9/day for all car categories. Basic CDW with TPL is USD $24.95 for Sedan, Intermediate, Standard, and Full Size, and USD $26.95 for Premium category.

The extended coverage also includes a $750 deductible in case of vehicle damages and/or theft (except in the case of negligence). This is the amount of deposit that will be charged to your credit card on the day of your rental, in addition to the base price of the rental vehicle. 

Full Collision Damage Waiver

Full CDW frees the renter from any financial responsibility caused by accidents, theft, or total loss, except in case of negligence. With Vamos, full coverage also reduces your car rental deposit to USD $100 on the day of the rental.

The comprehensive coverage includes Basic CDW, TPL, and Glass and Tire Protection (full coverage for windshield, windows, tires, and rims).

Current pricing with Vamos is USD $18/day for Sedan, Intermediate, Standard, and Full Size, and USD $21/day for Premium. Full CDW with Basic CDW and TPL is at USD $42.95/day for Sedan, Intermediate, Standard, and Full Size, and USD $47.95/day for Premium.

One of the cars available to rent in Vamos from Liberia airport
One of the cars available to rent in Vamos from Liberia airport

READ NEXT: Renting a Car in Costa Rica Tips & Advice

Rental Deposits

All car rental agencies will put a hold on your credit card, like a security deposit.

The rental deposit lessens the bigger your coverage is. For instance, if you only have TPL, your rental deposit starts at USD $2,000. If you get Basic CDW, your deposit goes down to USD $750, and with Full CDW, that comes out at USD $100.

The rental deposit is on top of the base rate of your car rental.

Make sure your credit card limit will allow for this hold, especially considering other expenses you have on your trip. Note that it is not possible to pay the deposit fee or rental fee in cash.

In all cases, the credit card will not be charged until the renter picks up the vehicle. The charge will then be refunded when the vehicle is returned safely.

Book the Best Car Rental in Costa Rica

Renting a car in Costa Rica can be one of the most challenging parts of your visit! Unfortunately, car rentals in Costa Rica often come with significant hidden insurance fees, result in many frustrations at pick-up. The experience has ruined many trips and ballooned trip budgets for friends, family and followers. After years of not having a good solution, we finally found an honest car rental company that we proudly recommend to our readers.

We recommend booking with Vamos Costa Rica – a local car rental company that offers fantastic service and NO HIDDEN FEES and get 10% of your rental rate plus FREE additional driver, FREE child seat and other perks and benefits when booking through our link below!

Book early as rental car availability all across Costa Rica is currently lower than demand!

CHECK RATES NOW

Credit Card Coverage and Exclusions

Car rental agencies each have their own policies, but we found Vamos to be a convenient partner as they accept most credit card rent-a-car protection plans. It’s important to know that while these plans insure the rented vehicles against damage and theft (CDW), they may not necessarily protect against injuries and accidents (TPL).

If you’re a gold or platinum credit card holder, you may have the advantage of wider insurance coverage. Insurance programs provided by gold or platinum credit cards often cover small scratches and dents, as well as the entire rented vehicle in case of collision or theft.

Still, the best way to find out the rental car coverage offered by your credit card is to call your credit card company directly. Ask them for details about your credit card’s CDW and insurance protection plans for car rentals specific to Costa Rica. Iron out all these details before you leave your home country so you won’t have to worry once you make the trip to Costa Rica.

Colourful credit cards
Colourful credit cards

Tips, Advice, and Watch Outs for Rental Cars

Book your Costa Rica car rental in advance. Don’t wait until you’re at the rental counter in San Jose Airport before you know what cars are available and how much they cost.

Watch out for extra or hidden fees. Check the fine print for things like license plate fee, airport fee, environmental fee, or extra charges for unlimited mileage. These vary depending on the rental companies, so make sure to compare prices.

Choose your add-ons. Depending on your rental, add-ons may include an extra driver, a GPS device, portable WiFi, car seats, and additional surf racks.

Bring a valid driver’s license and original passport. These must be originals, not photocopies. Depending on your home country, you might also need an international driver’s license.

Assign a driver who meets the minimum age. The minimum age for renting a car in Costa Rica is 21, but rental car companies have their own policies. The diver must reach the minimum age to be eligible for insurance.

Make sure there’s enough room on your credit card for deposit. Depending on your insurance coverage, your deposit can range from $100 to $2,000. Debit card payments are not accepted, so you’ll need to pay the deposit with your credit card. Plan your budget ahead so you don’t max out your limit with your rental vehicle.

In case of any accident, file an accident report immediately. Note that no CDW covers tow truck service or vehicle recovery in case of an accident. Also, no car rental company will cover any damages incurred while crossing rivers.

No smoking in the rental car. This is often part of the rental agreement and will incur a hefty fine.

car rental insurance costa rica
Check the car for any damages before pick-up/return!

Conclusion

Finding the right Costa Rica car rental doesn’t have to be complicated! Once you find the right car insurance for you, you get to enjoy your travels without any worries. For a smooth experience with your Costa Rica car rental, we will always recommend Vamos. 

Once you’re covered, it’s time to explore Costa Rica!

When you choose the right car rental insurance, Costa Rica will be much more fun to explore! Got any more questions about rental car insurance or rental car companies? Comment below!

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