Accidents can happen, even on vacation, so it’s important to make sure you’re covered just in case.
With rental cars, the menu of insurance coverage options and their associated fees can often be overwhelming — and add quite a bit to your final bill. Luckily, many of the most popular credit cards offer car rental insurance as part of their benefits. If you pay with the right card, you can skip added protections at the rental car counter.
Still, coverage on these policies varies significantly, so you’ll want to ensure you know exactly what your credit card offers.
“Break out your reading glasses, because you need to read the contract,” says Scott Hammersand, certified personal risk manager with Overmyer Hall Associates in Columbus, Ohio. “It is your responsibility to read the credit card agreement and rental contract to ensure you understand the risk and coverage, as every card and rental company contract is different.”
Read on to learn more about what to look for in your credit card’s rental car insurance policy and if it is enough coverage for you.
How Car Rental Insurance Works
There are a few important terms to know when talking about car rental insurance.
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Primary vs. Secondary Coverage
With credit card rental car insurance, there are two types with important distinctions — primary and secondary.
“While many credit cards offer rental car insurance, there may be huge differences in what is actually covered. That is because credit cards offer either primary or secondary coverage,” says Phil Dengler, co-owner of The Vacationer, a travel planning site.
“If your card offers primary coverage, you get to first file eligible claims with your credit card company, which is a huge benefit,” he says. “If your card offers secondary coverage, you must first file eligible claims with your personal auto insurer.”
Primary coverage is more comprehensive. Secondary coverage only pays for what your normal car insurance does not. For this reason, primary car rental insurance is much less common as a credit card benefit.
Whether you have primary or secondary coverage, you’ll almost always need to decline the car rental company’s loss damage waiver to activate coverage.
“After declining coverage, pay for the entire rental with your eligible credit card,” says Dengler. “Before relying on your credit card’s rental car insurance, you should read the terms. Restrictions may include using the vehicle for commercial purposes, exotic vehicles and renting in certain countries.”
Collision vs. Liability Coverage
A collision waiver or loss damage waiver protects you in case your rental car is damaged or stolen. This can cost up to $30 per day if you purchase from the rental car company. Most commonly, when you think about credit car rental insurance, it is referring to collision coverage.
There is also liability insurance, which covers the damage to another driver’s property and medical costs if someone else is injured. Most of the time, you’ll get liability insurance through your standard auto insurance, though you can purchase supplementary plans from rental car companies if you need more coverage.
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Does Your Credit Card Offer Car Rental Insurance Benefits?
To find out whether your credit card includes rental car benefits, log into your online account and look for a benefits section. If you can’t find the information, call the phone number on the back of your card and speak with a customer service representative.
Keep in mind that credit card companies sometimes change the benefits that come with a particular card, so it’s a good idea to double-check the terms first.
Is Your Credit Card Rental Insurance Enough Coverage?
The answer to this depends both on your credit card and the kind of car you are driving.
First, keep in mind that credit card car rental insurance typically just covers loss or damage, so your standard auto insurance policy will need to have sufficient liability coverage, or you’ll have to purchase a supplementary liability policy from the rental company.
When it comes to the collision damage waiver, primary insurance is usually good enough, but secondary might not be thanks to the extra work involved in filing multiple claims, says Dengler.
“For cards with primary coverage, I always recommend declining the auto insurer’s coverage,” Dengler says. “For cards with only secondary coverage, I think it may be worth buying the auto insurer’s coverage, but it depends on your trip length and driving conditions.”
According to Hammersand, you should also be aware of any restrictions or stipulations your credit card policy adds. This can include the type of cars that are covered and other terms.
“I have seen cards that require you pay the entire rental on the card, that the (price) for the auto must be $40,000 or less and others that say you can’t purchase the rental car company loss damage waiver,” says Hammersand.
Alaina Hixson, director of sales and operations at The Churchill Agency insurance firm, says choosing whether or not to purchase a rental company’s insurance policy depends on your normal car insurance coverage as well.
“If you don’t carry comprehensive and collision coverage, have high out-of-pocket deductibles or want to avoid claims on your personal auto policy, you might want to consider purchasing coverage from the rental car company,” says Hixson. “However, if your personal auto insurance carrier offers the extension of coverage, that is more likely to be your best route.”
Keep this in mind if you have secondary insurance coverage on your credit card — or if you bypass your card’s offer altogether.
Comparing the Best Credit Cards With Car Rental Insurance
Primary car rental coverage is a rare perk on credit cards, but there are still plenty of good choices.
“Numerous Chase cards offer primary rental car insurance, and some do not have an annual fee,” says Dengler.
| Card Name | Maximum Coverage | Maximum Rental Period |
|---|---|---|
| Chase Sapphire Reserve | Up to $75,000 | Up to 31 days |
| Chase Sapphire Preferred Card | Up to the actual cash value of most rental cars | Up to 31 days |
| United Explorer Card | Up to the actual cash value of most rental cars | Up to 31 days |
| United Club Infinite Card | Up to the actual cash value of most rental cars | Up to 31 days |
| Ink Business Unlimited Credit Card | Up to the actual cash value of most rental cars | Up to 31 days |
| Ink Business Preferred Credit Card | Up to the actual cash value of most rental cars | Up to 31 days |
| United Business Card | Up to the actual cash value of most rental cars | Up to 31 days |
| The Platinum Card from American Express | Up to $75,000 | Up to 30 days |
| American Express Gold Card | Up to $50,000 | Up to 30 days |
| The Business Platinum Card from American Express | Up to $75,000 | Up to 30 days |
[Read: Best Low-Interest Credit Cards.]
How to Choose the Right Credit Card for Car Rental Insurance
When it comes to choosing a credit card with rental car coverage, consider your overall needs. In general, primary coverage is preferred, though secondary coverage can be just as helpful if you already have an affordable, comprehensive personal auto insurance policy. Additionally, consider the following:
— What is the interest rate? You don’t want to rack up a ton of interest if you carry a balance into the next month, so look for a card with a low rate.
— Is there an annual fee? Sometimes an annual fee is worth it if the card provides valuable benefits, but you may prefer to stick with a fee-free card.
— Can you earn rewards? Many credit cards let you earn points, miles or cash back on your spending. If you need to spend the money anyway, you might as well get some back.
— What other perks are available? In addition to rental car insurance, look for a card that offers features that match your spending and lifestyle. For instance, if you travel a lot, you might want a card that also offers free checked baggage or a credit toward in-flight purchases.
What to Look for in Your Credit Card Car Rental Insurance Policy
When you get a credit card that offers rental car insurance, you’ll first want to take a look at the benefits guide to see the full slate of terms and conditions. You’ll want to get answers to these questions:
— Is the coverage primary or secondary? Find out whether you will need to rely on your own car insurance, if you have it, before the credit card’s coverage takes effect.
— How do I ensure that I’m covered? Your card might supply coverage, but that doesn’t mean you’re in the clear. Usually, you must pay for the rental in full with the card that provides the coverage, plus decline the rental agency’s collision or loss damage waiver. You must also be the primary renter of the car.
— What types of vehicles are covered? Some credit card rental agreements exclude certain types of vehicles, such as motorcycles, trucks, vans, and older or expensive cars. Additionally, coverage usually only applies to traditional rentals and not car-sharing services such as Zipcar.
— How long am I covered? Typically, your rental protection will last 14 days, although some policies last 30 days or longer. If you plan to take an extended trip, you might need to rely on your own insurance once your card’s benefits end.
— In which countries am I covered? Certain countries are excluded from international coverage. For example, Ireland, Israel and Jamaica are often excluded because local laws require drivers to purchase collision damage protection from a rental company.
— What type of incidents are — and are not — covered? Theft and physical damage to the rental car are the most common types of covered loss, but many policies will also pick up the cost of towing and related fees. However, almost all credit card policies will not pay for injuries or damage you cause to other cars or property because of an accident. If you’re at fault, you’ll need to rely on your own auto insurance for liability coverage, which may not be enough for a major accident. Additionally, credit card policies generally don’t cover personal items stolen from the vehicle. Check your homeowners or renters insurance policy instead.
— What if I don’t have auto insurance? You’ll need to purchase basic liability coverage through the rental company.
How to File a Claim With Credit Card Car Rental Insurance
Your credit card’s terms and conditions will provide details for how to file a claim if you’re in an accident or your car is stolen. Keep in mind, the most important thing is to document everything and act quickly.
Make sure you have copies of your credit card’s policy, your standard auto insurance, the other driver’s insurance, photos of damage and any police report.
You’ll typically need to file a claim within a certain number of days, so don’t delay the process. Contact the rental car company as soon as the incident occurs and your credit card issuer and auto insurance as soon as possible afterward.
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Comparing Credit Cards With Rental Car Coverage originally appeared on usnews.com
Update 04/05/23:
