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Credit Card Rental Insurance: What Is It & How Does It Work?

If you've ever rented a car, you've probably been asked this question as you filled out the rental forms: "Do you want damage insurance with your rental?"

You want to be insured, but this question raises other questions: Does my personal car insurance policy cover a rental? Does my credit card provide car insurance coverage?

Adding coverage to your car rental agreement can add a great deal to the cost but not having adequate insurance coverage may be much more expensive if there's an accident.

How Does Credit Card Rental Insurance Work?

Credit card insurance offers something called a collision damage waiver, which is the same type of coverage that rental car companies offer at an extra charge.

Not all credit cards have car rental insurance, so it's important to check the terms of your credit card agreement before you travel. It's best to check that agreement online, because terms may change over time.

If your credit card has car rental insurance, you must reserve the rental with that credit card, and pay for the entire cost of the rental with the same card.

Credit card rental insurance covers loss or damage to a rented vehicle, either in conjunction with your personal auto insurance policy or on its own.

Credit card rental insurance is not designed for long-term rentals. Between two weeks and one month is generally the time limit during which insurance will apply. Check your credit card agreement for details.

You should also check your credit card terms to see who's covered. The person named on the credit card should be the primary driver on the rental agreement. Other authorized drivers named on the rental agreement may also be covered. If someone not listed on the agreement is driving when the vehicle is damaged, the insurance probably may not apply.

Credit card insurance has what's called a collision damage waiver, the same type of coverage that rental car companies offer at an extra charge.

What Is a Collision Damage Waiver?

A collision damage waiver (CDW), which may also be known as a loss damage waiver (LDW), is what both rental car companies and credit cards generally provide as rental car insurance.

These policies are technically not insurance, but rather an agreement that the rental car company won't charge you for any loss or damage to the vehicle while you're renting it. The rental company has its own insurance to cover itself for loss or damage to a rental vehicle. The CDW essentially prevents them from having you pay rather than filing a claim on their own insurance policy.

Perhaps more important than this technicality is the fact that there are a number of exceptions to the coverage.

When you rent a car, the rental company will typically offer to add a CDW or LDW to your agreement for an additional charge. These extra fees are generally between $10 and $30 a day, which can really add up. A $20 extra daily charge over a two week vacation would add $280 to your rental car bill.

Why pay all that money if it's not necessary? You may find that your own car insurance policy covers rentals. Also CDW or an LDW provided as coverage by a credit card may apply to the actual cash value of the vehicle, or there may be a dollar limit. Given today's fast-rising car prices, it's important to know what that dollar limit is and think about that when you decide what kind of vehicle to rent.

Primary vs. Secondary Car Rental Insurance

You may be wondering, How would my credit card cover rental car damage if I have a personal car insurance policy that covers rentals? First of all, not all auto insurance policies cover rentals, so you need to check the details of your policy before making assumptions. Even if you have a policy that covers rental vehicles, there may be benefits to having coverage from your credit card company.

Credit card coverage may be considered either primary or secondary car rental insurance:

  • Primary coverage means that the credit card's coverage would apply before your own insurance policy coverage

  • Secondary coverage means that the credit card's coverage would apply only after any coverage from your own insurance had been applied

If you don't have an auto insurance policy that covers rental car damage, secondary coverage effectively becomes primary coverage. In this instance, you need to make sure that your credit card provides rental car insurance. In fact, if you don't own a car but regularly rent one, you might want to consider a nonowner car insurance policy to fill in the gaps, unless your credit card provides outstanding coverage.

Even if you have a personal car insurance policy that covers rental cars, getting primary coverage from a credit card may be worthwhile. For one thing, it will prevent you from filing a claim with your insurance company, which should keep your premiums down. However, having an accident in the rental could cause those premiums to rise.

Credit card rental insurance is not designed for long-term rentals.

Finally, there is some value to secondary coverage if that's all your credit card provides. While your personal car insurance policy may cover the bulk of the claim, secondary coverage could chip in to help cover your deductible and/or any amount in excess of your coverage limit.

What Is Commonly Excluded from Credit Card Rental Insurance?

Insurance is all about the details, and credit card rental car coverage is no exception. Just because you have insurance it doesn't mean it covers everything.

The following are some examples of things that are frequently excluded from credit card rental insurance:

  • Theft of personal property - you may have to lean on coverage from your own comprehensive insurance for this.

  • Liability for damage to other people's property - car rental companies will generally provide state-mandated minimum liability coverage, but you may want more protection than that.

  • Medical expenses due to an accident - your own car or health care insurance would have to cover this.

  • Violations of the rental agreement - that agreement can limit everything from who may drive the vehicle to how it may be used.

  • Driving of the vehicle when under the influence of drugs or alcohol - this could void your coverage.

  • Use of the vehicle for illegal activities - use the vehicle as a getaway car for a bank robbery and you're on your own.

  • Towing charges - if the vehicle is so badly damaged it needs to be towed for repairs, you may have to pay for that service.

  • Loss of use charges - if the rental company can't use the vehicle while it's being repaired, they may hit you for the lost revenue.

  • Personal use of a car rented with a business credit card - this may impact whether you are covered, or whether the coverage switches from primary to secondary.

  • Business use of a car rented with a personal credit card - if you have both personal and business cards, you need to match which you use to rent the vehicle with how you intend to use it.

  • Long-term rentals - credit card rental coverage generally doesn't extend beyond one month, and may be even shorter.

  • Exotic or luxury vehicles - the higher cost of these vehicles may preclude coverage under your credit card's terms.

  • Vans or other cargo vehicles - these may be more difficult to operate and higher targets for theft, and are frequently excluded from credit card rental coverage.

  • Cars rented through private owners - if you used an app to find someone who will rent their car to you instead of using a rental company, you may not be covered.

  • Certain countries - for various reasons, even credit cards that extend coverage beyond the U.S. often exclude certain countries.

The rental car coverage provided by credit cards varies not only according to which company issued the card, but often from one type of card to another. Check the terms of your specific card carefully to see what coverage you have.

Is Credit Card Rental Insurance Enough Coverage?

Credit card rental insurance provides some coverage in the case of an accident or theft, but it may not cover all of your potential liability or expenses.

Just as many auto insurance customers choose to buy more protection than the legally-mandated minimum amount of coverage, you may decide you want more protection than the car rental coverage provided by your credit card.

Things to consider when deciding whether credit card rental insurance is enough coverage include the following:

  • How extensive is that coverage? Look at your credit card's benefits manual to see not just whether it includes rental coverage, but also the extent of that coverage. Look for things such as whether coverage is primary or secondary, what the dollar limit is, and what types of expenses are covered.

  • Do you already have a policy that covers car rentals? Your credit card's policy doesn't need to cover everything if your own auto insurance covers rentals. If it does, focus on how well the combination of the two forms of coverage would protect you.

  • How often do you rent a car? If you only rent a car once every few years, it may not be worth making a special effort to get a credit card with rental coverage. However, it's still worth checking your credit cards for any coverage you might already have before you start making travel arrangements like reserving a rental car.

In many cases, having your own car insurance policy and credit card coverage can provide you with a broad enough safety net that you can decline additional coverage from the car rental company with confidence.

Get a Better Car Insurance Coverage

Which Credit Cards Have Primary Coverage?

Not all credit cards offer primary coverage, and some do only in certain situations.

Based on offerings of the largest US credit card issuers, the following is a sampling of the car rental insurance terms of some cards, including whether and when primary coverage applies:

Card Name Type Rental Car Coverage Limit Coverage Primary or Secondary Coverage? Annual Fee

Chase Sapphire Preferred Card

Personal

Actual Cash Value of Rental Car

US and most foreign countries

Primary

$95

Chase Slate Edge

Personal

Actual Cash Value of Rental Car

US and most foreign countries

Secondary in the US, primary abroad

None

Chase Ink Business Unlimited

Business

Actual Cash Value of Rental Car

US and most foreign countries

Primary when rented for business purposes

None

American Express Green Card

Personal

$50,000

US and most foreign countries

Secondary

$150

American Express Business Green Rewards Card

Business

$50,000

US and most foreign countries

Secondary

$95

Capital One Visa Signature

Personal

Actual Cash Value

US and most foreign countries

Secondary

$95

Bank of America Visa Business Card

Business

Actual Cash Value

US and most foreign countries

Primary if rented for business purposes, secondary otherwise

$50 for the company plus $25 per card

The card names are each linked to a web page on the issuer's site where you can find more information. You should check the specific fees and benefits that apply to any credit card offer before you sign up, because these terms are subject to change at any time.

Even if you have a personal car insurance policy that covers rental cars, getting primary coverage from a credit card may be worthwhile.

American Express Add-on Coverage

Sometimes credit cards might provide additional rental insurance as an optional level of service for an additional fee.

For example, American Express provides some basic coverage as standard with some cards, while also offering more extensive coverage under its Premium Car Rental Protection Program.

This entails an extra fee, but that fee is a reasonable flat rate that covers the entire rental period. In contrast, rental car companies charge a daily rate for coverage, making the single fee of the American Express program especially cost-effective for rentals lasting several days.

The Premium Car Rental Protection Program acts as primary insurance coverage on your rental car with a fairly high coverage limit of $100,000 for damage or theft and for death or dismemberment. It also offers coverage for as long as 42 days, which is well beyond the time limit of most credit cards.

If you are looking for more rental car coverage than the standard provided by your credit card, it might be worth looking into whether they provide an optional added level of coverage at a reasonable fee.

Do All Credit Cards Have Rental Car Insurance?

Rental car insurance is not a standard feature of all credit cards. Even among the cards that do offer it, coverage types and limits vary widely.

So, don't just assume that because you rent a car using a credit card that you will automatically have insurance coverage. Check the details of your credit card's benefits to see if you have coverage, and what it entails.

Also, every now and then you should check an updated version of the card's benefits statement to make sure the terms haven't changed.

Credit card insurance and your own policy can work well together to fill any coverage gaps.

Credit Card Car Rental Insurance FAQs

Do I need rental car insurance if I already have my own auto insurance policy?

First, make sure your policy covers rental cars. Even if it does, think about whether you'd like supplemental coverage for things like deductibles and amounts in excess or your coverage limits. If you can get this at no extra charge from a credit card you need anyway, the added coverage can only help.

How can I tell if my auto insurance policy includes rental car coverage?

When you sign up for a credit card, they should send you a benefits manual describing the terms of any perks provided with the card. Better yet, you can often view this kind of thing online before you sign up for a card. Check back and review an updated version from time to time to see if there have been any updates that could affect your rental car coverage. Or simply call the credit card company.

Is it better to use credit card car insurance coverage or my own policy?

If your credit card provides primary coverage at no extra charge, you might as well make use of this rather than make claims against your personal policy. Often, the best answer isn't either/or, but both. Credit card insurance and your own policy can work well together to fill any coverage gaps - and save you the added expense of opting for the coverage offered by the rental car company.

How To Make Sure You Have Car Rental Insurance Coverage

Car rental insurance can be provided in three ways:

  • Through optional coverage offered by the rental company

  • Through credit card car rental insurance

  • Through your own auto insurance policy

Of these, the coverage offered by the rental company is probably the most expensive. You may be better off with car rental coverage through your credit card or your own insurance policy, or both.

Check your credit card terms and your current insurance policy to see what they provide in the way of rental car coverage. Doing this now could save you from having to make a snap decision about opting for coverage at the car rental counter on your next trip.

If your car insurance policy does not provide adequate rental coverage, you can probably find a policy that does for little or no extra expense if you shop around. Just enter your zip code below and you may save money on a better car insurance policy that has the protection you need.

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