When you approach the car rental counter after a long fight or a breakdown, the last thing you want to worry about is whether to buy added insurance.
You could skip it — and the daily fee — if your credit card provides rental coverage as one of its benefits. But before you turn down this added protection, know what your policy includes. Understanding your credit card’s rental car insurance and how this benefit works can help you make an informed decision before arriving at the rental counter.
How Rental Car Coverage Works
When you rent a car, the rental company will offer you the option to purchase insurance for the vehicle. Known as a collision damage waiver or a loss damage waiver, this protection can cost as much as $45 a day. However, if you have a personal auto insurance policy and a credit card that provides rental car coverage, paying for rental car insurance is often unnecessary.
Whether you decide to take advantage of your credit card’s rental coverage will depend on the type of coverage and how it fits with your personal auto insurance policy. Below are a few terms you should understand about your credit card’s car rental benefits.
— Primary versus secondary coverage. Not all policies are created equal. Primary rental car coverage means, in many cases, you can rely on your credit card’s coverage entirely rather than file a claim with your insurance company.
This is ideal, as it saves you from paying a deductible and a potentially higher car insurance rate. According to CarInsurance.com rate data, car insurance rates go up 31%, on average, after one at-fault accident with more than $2,000 in damage. This equals about $450 per year.
With the typical secondary rental car coverage that many cards provide, you wouldn’t be able to avoid making a claim.
“The credit card benefits will only kick in once your primary, or existing, auto coverage stops,” explains Joe Stanish, co-founder of personal finance app Honeyfi, now known as Firstly.
— Collision versus liability coverage. Credit cards typically only provide collision protection. “This means that in the event you get into an accident, the damage to your car is covered,” Stanish says. However, if anyone gets hurt, or if you cause damage to another car or to property, you will need liability insurance to be fully protected.
If you have auto insurance, that policy will typically include liability for a rental car. But confirm that detail with your insurance provider. “If you don’t have auto insurance, you’ll want to accept the supplemental liability coverage the rental car company offers, which can be expensive,” Stanish says.
Check your credit card’s rental car coverage before you travel. According to Rebecca Gramuglia, consumer expert for rebate website TopCashBack.com, being aware of the details allows you to confidently make a decision at the rental counter. “Know what’s included and excluded with your credit card,” she says. “Depending on the card, you may have certain restrictions, so be aware of how much you’re covered in case of an accident.”
[Read: Best Cash Back Credit Cards.]
Does Your Credit Card Include Rental Car 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 Coverage Enough?
In general, credit card rental insurance isn’t enough on its own. Secondary coverage, for example, only kicks in once you’ve maxed out your personal auto policy coverage. Even if your card does offer primary coverage, most only cover collision and not liability. You’ll still need to rely on your personal policy or additional coverage from the rental agency if you don’t have insurance.
Comparing the Best Credit Cards With Rental Car Coverage
Although many credit cards offer rental car insurance benefits, fewer offer primary coverage. Here is a look at some of the best credit cards with primary car rental insurance:
Important Questions to Ask Your Credit Card Issuer Before Renting a Car
Make sure you understand when and how your credit card rental car benefits kick in. Many card issuers will make that information available online, but you can also call the phone number on the back of your credit card to verify. You’ll want to get answers to these questions:
— Is the coverage primary or secondary? Find out if 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 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.
— What’s the process for filing a claim? For a theft or accident, filing a claim through your credit card rather than the rental company’s insurance will require extra work on your part. Understanding that process, including what types of documentation you will need, can prevent you from wasting time dealing with a claim while on business or personal travel.
— Who’s my point of contact? Once you initiate a claim, you might need to handle the process through a third party and not the bank or rental agency. Have the right contact information in case of an accident.
[Read: Best Low-Interest Credit Cards.]
What Should You Do If You’re in an Accident?
In case of an accident, follow the same steps as if you were in your own car: Make sure no one is hurt, call first responders if necessary, exchange contact information and take photos of any damage. Contact your rental car company — keep the rental agreement on hand — to report the accident and find out how much the company will cover. Then, contact your card issuer to work out coverage of the remaining costs.
Although many card issuers ask you to file a claim within 90 to 180 days, aim to file a claim as well as a police report within 24 hours.
The process might seem tedious, but Gramuglia says you shouldn’t put off filing the necessary claims. “Doing this as soon as possible while knowing what’s covered can help you avoid unexpected expenses down the road.”
How To Choose the Right 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 loan 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.
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