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Accident in a rental car in Texas: insurance, the damage waiver and the rental agreement

What Texas law says about a crash in a rental car: why the damage waiver is not insurance, what a renter's own auto policy may cover according to TDI, the financial responsibility rules, and the federal rule on rental company owner liability.

10 min readPublished October 30, 2026Last updated October 30, 2026Edited by Joseph Budzinski, CTO, InjuryClaimGuide

The short answer

In Texas, a rental company's "damage waiver" is not insurance. Business & Commerce Code chapter 91 defines it as the company's agreement not to hold an authorized driver liable for damage to the rented vehicle, makes it optional, and says the notice given to renters must state that "The waiver is not insurance" (Bus. & Com. Code §§91.001, 91.052). Insurance for a crash in a rental car can come from several places, including the renter's own auto policy, coverage connected to the rental, and the other driver's liability policy, and the Texas Department of Insurance tells drivers that policies differ (TDI).

This guide provides general informational guidance and is not legal advice. It does not say which policy covers any crash, who was at fault, or which deadline applies to anyone; an attorney can tell you that.

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Key facts (as of October 30, 2026)

  • A damage waiver is not insurance. It is "a rental company's agreement not to hold an authorized driver liable for all or part of any damage to a rented vehicle" (§91.001).
  • It is optional. A rental company "may not impose or require the purchase of a damage waiver as a mandatory charge" (§91.055).
  • The renter must agree in writing. A company may not sell a waiver unless the renter agrees "in writing at or before the time the rental agreement is executed" (§91.051).
  • The law lists when a waiver can be voided. Section 91.056 names the grounds, including use by someone who is not an authorized driver and use to carry persons or property for hire (§91.056).
  • Texas generally requires financial responsibility for a vehicle. A person may not operate a motor vehicle in Texas unless financial responsibility is established for it, subject to the exceptions the chapter lists (Transp. Code §601.051).
  • Federal law limits owner-only liability for rental companies. The limit depends on the owner being in the rental business and on there being no negligence or criminal wrongdoing by the owner (49 U.S.C. §30106).

Whose coverage can be involved in a rental car crash?

Several different sources of coverage can be connected to one rental car crash. Which of them applies depends on the facts, the rental agreement and each policy's own terms. In general terms:

  • The renter's own auto policy. The Texas Department of Insurance says that when you drive a rental car for personal use, a personal policy may provide coverage "under your liability or comprehensive coverage," and warns that "there could be exclusions that could limit or reduce your coverage" (TDI auto guide).
  • Coverage offered by the rental company. TDI says rental agencies "offer damage waivers and liability policies" (TDI auto guide). The waiver is the optional agreement about damage to the rented car; a liability policy is a separate product.
  • The other driver's liability insurance. Texas generally requires financial responsibility for every vehicle operated in the state, for example through a liability policy (Transp. Code §601.051), and an owner's liability policy must pay amounts the insured becomes obligated to pay as damages arising out of the use of a covered vehicle (§601.076). Whether another driver is responsible for a crash is a question this guide does not answer.
  • Personal injury protection and uninsured or underinsured motorist coverage. Under Insurance Code chapter 1952, an auto liability policy issued in Texas must include personal injury protection and uninsured or underinsured motorist coverage, unless an insured named in the policy rejects the coverage in writing (§1952.101; §1952.152). Personal injury protection is defined as paying reasonable expenses to the named insured, members of the insured's household, and any authorized operator or passenger of the named insured's motor vehicle, including a guest occupant (§1952.151). This guide does not say whether any policy applies to a rental car. Our guides to personal injury protection and uninsured and underinsured motorist claims explain the general rules.

What does Texas require of a rental company's damage waiver?

Texas regulates private passenger vehicle rental companies in Business & Commerce Code chapter 91. A "rental company" is a person in the business of renting private passenger vehicles to the public for 180 days or less, and a "rental agreement" is an agreement for 180 days or less (§91.001). The chapter was amended in 2025, effective September 1, 2025, by S.B. 72 and H.B. 3016.

What the chapter requires:

  • Written agreement. The renter must agree to a waiver in writing at or before the rental agreement is executed (§91.051).
  • A set notice. A renter who buys a waiver not included in the base rate must receive a notice in at least 10-point type saying the waiver is optional, that the renter may wish to find out whether their own automobile insurance or credit card agreement provides coverage for rental vehicle damage or loss, and that "The purchase of the waiver is not mandatory. The waiver is not insurance" (§91.052).
  • A posted notice. The company must also post a notice where the waiver is offered, which says a personal automobile policy "may or may not provide coverage for your responsibility for the loss of or damage to a rented vehicle during the rental term" (§91.053).
  • No pressure. An employee or agent may not contradict the chapter or use coercive language or a coercive act to persuade a renter to buy a waiver, and after a renter declines, a further statement or question about the waiver is considered coercive (§91.054).
  • Refunds for unused days. A company must refund waiver charges for days the waiver was not in effect if the vehicle is returned early or the renter cancels the waiver and the company confirms the vehicle was not damaged before the cancellation (§91.057).

Enforcement. The attorney general or a county or district attorney may sue for a civil penalty or an injunction, and a person injured or threatened with injury by a violation may seek an injunction (§§91.102-.103).

When can a damage waiver be voided?

Section 91.056 says a rental company "may not void a damage waiver unless" one of four things applies:

  1. an authorized driver causes the damage intentionally or by wilful and wanton misconduct;
  2. the damage arises out of use of the vehicle by a person who is not an authorized driver, who is under the influence of an intoxicant that impairs driving ability, or who is committing a crime other than a traffic infraction; or out of use to carry persons or property for hire, to push or tow anything, for driver's training, to engage in a speed contest, or outside the continental United States unless the rental agreement specifically authorizes it;
  3. the company entered into the rental transaction based on fraudulent information the renter supplied; or
  4. the vehicle is stolen and the renter fails to return the vehicle's ignition key to the rental company, file a report with law enforcement not later than 24 hours after discovering the theft, and cooperate with the rental company and any authority investigating the theft (the statute joins these three items with "and") (§91.056).

Who counts as an "authorized driver" is also defined: the renter; a person the rental company expressly designates on the rental agreement as an authorized driver; the renter's spouse with a driver's license who meets any minimum age requirement; an employer, employee or coworker of the renter who holds a license, meets any minimum age and is engaged in a business activity with the renter at the time of the rental; and a licensed person driving directly to a medical or police facility in a reasonably believed emergency (§91.001). Chapter 91 defines the rental agreement as the agreement that states the terms governing the use of the rented vehicle.

What does TDI say about driving a rental car for work?

The Texas Department of Insurance says that when you drive a rental car for personal use, your own auto policy "might provide coverage under your liability or comprehensive coverage," and that you should "ask your insurance agent if your policy covers you if you're driving the rental car for work." Its coverage table lists accidents that happen while "driving for business" among the things most policies do not cover, and lists accidents that happen while you or someone covered by your policy is driving a rental car among the things most policies cover (TDI auto guide). Our guide to driving for work explains how Texas law treats a crash during work driving.

Does the rental company have to pay because it owns the car?

A federal statute addresses owner liability for rental companies. An owner of a motor vehicle that rents or leases it "shall not be liable under the law of any State or political subdivision thereof, by reason of being the owner of the vehicle (or an affiliate of the owner)," for harm to persons or property that results or arises out of the use, operation, or possession of the vehicle during the rental or lease, if the owner is engaged in the trade or business of renting or leasing motor vehicles and "there is no negligence or criminal wrongdoing on the part of the owner (or an affiliate of the owner)" (49 U.S.C. §30106(a)). The same section says it does not supersede state law that imposes financial responsibility or insurance standards on an owner, or that imposes liability on rental businesses for failing to meet state financial responsibility or liability insurance requirements (§30106(b)).

This guide describes the rule as written. It does not say whether the rule applies to any particular crash, company or driver.

What financial responsibility rules apply to every vehicle?

"A person may not operate a motor vehicle in this state unless financial responsibility is established for that vehicle," for example through a motor vehicle liability insurance policy (Transp. Code §601.051). An owner's liability policy must pay, on behalf of the named insured or another person who uses a covered vehicle with the named insured's express or implied permission, amounts the insured becomes obligated to pay as damages arising out of the ownership, maintenance, or use of the vehicle (§601.076), and an operator's policy must pay amounts the insured owes from use of a vehicle the insured does not own (§601.077). Our guide to Texas minimum auto insurance and the §601.072 reference entry explain the minimum amounts.

What does Texas law require at the scene?

The same duties apply in a rental car as in any vehicle. Under §550.023, the driver of a vehicle involved in a collision that injures or kills a person or damages a vehicle driven or attended by a person must give their name and address, the registration number of the vehicle being driven and the name of their motor vehicle liability insurer, show a driver's license if asked and available, and give injured people reasonable assistance. Under §601.053, the operator must show evidence of financial responsibility to a person involved in the collision who asks.

How does shared responsibility work in Texas?

Texas uses proportionate responsibility. A claimant "may not recover damages if his percentage of responsibility is greater than 50 percent" (Civ. Prac. & Rem. Code §33.001), and the trier of fact determines the percentage of responsibility of each claimant, each defendant and each designated responsible third party, among others (§33.003). Our guides to the 51 percent rule and proportionate responsibility explain it in more detail.

Is there a Houston or Harris County rule on rental car crashes?

We found no City of Houston or Harris County rule specific to rental-car crashes, and we did not review the Houston Airport System's rules for rental-car operations at its airports. The rules above are statewide. Our guide to getting a crash report in Houston explains the process.

How long does Texas law generally allow to file an injury lawsuit?

Texas generally requires a personal injury suit to be brought not later than two years after the day the cause of action accrues, with exceptions the Code states (Civ. Prac. & Rem. Code §16.003). Our guide to the Texas statute of limitations for injury claims explains the general rule.

Records people commonly keep after a rental car crash

It can help to keep these in one place:

  • The rental agreement, any damage waiver or other coverage page, and the rental company's contact and claim numbers
  • Photos of the vehicles, the license plates and the scene, if it was safe to take them
  • The other driver's name, insurer and vehicle registration number, as exchanged under §550.023
  • The date, time and exact place, and the crash report number
  • Names and contact details of witnesses
  • Medical bills and records, and records of missed work and pay
  • Your own auto policy's declarations page and any claim numbers or letters from an insurer

Our guides on what evidence helps an injury claim and what to do after a car accident in Houston explain how records like these are commonly used.

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About InjuryClaimGuide

InjuryClaimGuide is a legal advertising service. We are not a law firm and do not provide legal advice. We do not recommend or endorse any attorney, and we do not analyze the merits of any potential claim. Routing to participating firms is based on geography, practice area, language, and firm capacity.

Frequently asked questions

Is a rental car damage waiver insurance in Texas?
No. Business & Commerce Code §91.001 defines a damage waiver as "a rental company's agreement not to hold an authorized driver liable for all or part of any damage to a rented vehicle." The notice the law requires renters to receive says "The waiver is not insurance." The Texas Department of Insurance says the same, calling it an agreement that the rental agency will not charge the renter for damage to the car.
Does my own auto policy cover a rental car in Texas?
The Texas Department of Insurance says policies differ, and that some cover damage to a rental car from a wreck or theft. Its auto guide also says a personal policy may provide coverage under its liability or comprehensive coverage when you drive a rental car for personal use, that exclusions could limit or reduce that coverage, and that you should ask your agent whether the policy covers driving a rental car for work. This guide does not say what any particular policy covers.
Can a Texas rental company require me to buy the damage waiver?
Under Business & Commerce Code §91.055(b), a rental company "may not impose or require the purchase of a damage waiver as a mandatory charge." Section 91.051 says a company may not sell a waiver unless the renter agrees to it in writing at or before the time the rental agreement is executed, and §91.054 bars coercive language or acts to persuade a renter to buy one.
When can a rental company void a damage waiver in Texas?
Section 91.056 lists the only grounds. They include damage caused intentionally or by wilful and wanton misconduct; use by a person who is not an authorized driver, who is under the influence of an intoxicant that impairs driving ability, or who is committing a crime other than a traffic infraction; use to carry persons or property for hire, to push or tow anything, for driver's training, or in a speed contest; use outside the continental United States unless the agreement authorizes it; a rental based on fraudulent information; and certain failures after a theft. This guide does not say whether any ground applies to anyone.
Is a rental company liable just because it owns the car?
Federal law says an owner of a motor vehicle that rents or leases it "shall not be liable under the law of any State" by reason of being the owner for harm that arises out of use of the vehicle during the rental, if the owner is in the business of renting or leasing vehicles and there is no negligence or criminal wrongdoing on the owner's part (49 U.S.C. §30106(a)). The section does not displace state financial responsibility or insurance standards or state liability for failing to meet them (§30106(b)). This guide does not say how it applies to any crash.
What information must a driver give after a crash in Texas, including in a rental?
Under Transportation Code §550.023, the driver of a vehicle in a collision that injures or kills someone or damages a vehicle driven or attended by a person must give a name and address, the registration number of the vehicle being driven and the name of the motor vehicle liability insurer, show a driver's license if asked and available, and give injured people reasonable assistance. Under §601.053, the operator must show evidence of financial responsibility to a person involved in the collision who asks.
Can InjuryClaimGuide tell me which insurance covers my rental car crash?
No. InjuryClaimGuide is a legal advertising service. We do not apply the law to anyone's situation and do not evaluate any claim. An attorney can advise you about your specific situation.

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