Rental Car Insurance on Your Credit Card: All You Need To Know

Rental cars need insurance, just like any other vehicle. If you get involved in an accident, insurance policies protect you against liability.

Most car rental companies will try to sell you an insurance policy that waives penalties you must pay if you get involved in an accident, but these policies can be expensive. 

In most cases, it’s better to rely on the cover provided by your credit card, as long as you have pre-existing auto, home, and health insurance. This way, you can reduce the overall cost of a rental while still enjoying a low-risk driving experience. 

What Is Credit Card Rental Car Insurance?

This type of insurance is a little different from standard auto policies. Strictly speaking, rental car insurance is not insurance at all; rather a waiver that avoids you paying fees to the rental company in the event of a collision. 

Suppose you refuse to buy the rental company’s policy when you rent the car and then get involved in an accident.

If you do not have credit card rental coverage, you may be liable for the cost of the damage done to the vehicle, as per the terms of the rental policy document. If you have credit card rental car coverage, your credit card company waives any losses you incur due to a collision.

Different Types of Coverage

Credit cards that cover car rental insurance offer different types of coverage, so you’ll need to read the fine print carefully.

Primary Coverage

Credit cards with primary car rental insurance let you make a claim directly from your credit card’s benefits administrator before appealing to other insurance policies you own, such as personal car insurance or homeowners insurance. This means you don’t have to meet the deductible on your other policies, and other insurers will not increase your risk premium. 

It’s worth noting that relatively few credit card providers offer true primary coverage. Such cards are exceedingly rare and, in many cases, difficult to obtain. (We list primary coverage-offering cards below).

Secondary Coverage

If you get involved in a collision while driving your rental vehicle, you must first exhaust your other applicable insurance policies before going to your credit card company.

Most credit card providers will waive the rental agency’s collision fee, and some may reimburse your deductible if you have a pre-existing policy that already covers you. 

Additional Coverage 

You should never assume your credit card and pre-existing insurance policies provide complete coverage as it depends on your existing insurance. You will need to review all your policy documents to check if you have the total amount of cover you need. 

Always check the terms and conditions, and make sure that rental vehicles are included. You may have to take out a bespoke policy if they're not.

Generally, you’ll need:

1. Collision coverage covers both personal and rental vehicles if you cause a crash. Coverage should pay up to the actual cash value of the rental vehicle. Some policies may have lower limits than the car's value, forcing you to pay the remainder out of pocket.
2. Comprehensive coverage protects you against losses out of your control. It may include a tree falling on the rental vehicle while parked or damage from an animal jumping out on the road.
3. Liability coverage covers the costs associated with injuries to passengers and other participants in traffic you may cause while driving your rental vehicle. Note that many policies with low limits are often not enough to cover the total costs of an accident and may leave you financially vulnerable. 

What Is Not Included in Your Credit Card Rental Insurance?

The level of car rental cover that credit cards offer is relatively low. The actual benefit is simply the collision fee waiver in almost all cases. Many other types of insurance are not included in the credit card company’s terms and conditions. 

Long Rental Periods

Credit card companies cover car rentals for conventional business trips, vacations, and other short breaks where you might need a car. They usually don’t cater to longer-term stays, such as going to university in another country. Policies often limit the coverage period to a few weeks or months. 

Expensive Vehicles

To reduce risk, some credit card providers limit the value of the vehicle you can rent. They may prohibit luxury and antique cars, limousines, or large non-standard vehicles, such as pickups or off-roaders. 

Motorcycles And Mopeds

Similarly, many credit card issuers won’t cover you for two-wheeled vehicles. 

Personal Effects Insurance

Personal effects insurance is a type of cover that will reimburse you if goods in your rental vehicle are lost, stolen, or damaged. The majority of credit card issuers do not provide this kind of insurance. If someone breaks into your rental vehicle and steals your possessions, you will have to rely on other forms of insurance to recoup the money. 

Personal Accident Insurance

Personal accident insurance covers medical bills you or your passengers might have to pay after an accident in a rental vehicle. Rental agencies will often try to sell you this separately. However, you may already have coverage via your regular auto insurance or medical insurance.

Before renting a vehicle, check your limits to determine whether they are sufficient for your needs. 

Liability Insurance

Credit card car rental insurance usually doesn’t include liability insurance. If you cause injury to another person or damage property, you may be liable to cover the costs. Bodily injury can include both medical fees and coverage for lost income another person suffers from the crash.

The Bottom Line

Credit card rental car insurance is a helpful credit card perk that lets you avoid expensive rental agency policies. You should only rely on it if you have other policies that offer the full spectrum of insurance. Always check your existing policy documents to make sure that they cover liabilities associated with rental car usage. Safe driving!