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?
How credit card rental car insurance works 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 Credit Card Rental Insurance 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
The more common form of credit card rental insurance is 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, in addition to credit card rental car insurance, you’ll need:
- 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.
- 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.
- 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.
Claiming Credit Card Auto Insurance
Car cover provided by your credit card issuer is usually not as comprehensive as the policy the rental company might offer. Agencies tend to include extras, such as liability coverage if you injure another person, personal accident insurance, and personal effects coverage if someone steals belongings from the vehicle. Therefore, before relying solely on your credit card, you must consider whether you want additional coverage.
So, how do you make a claim if you have an accident in your rental vehicle? It depends on an issuer, as the processes can vary. However, the general pattern is as follows:
- Check the limits and exclusions on your credit card’s coverage for rentals. You may find that some vehicles are covered, while others, such as vans or boats, are not.
- Pay for the rental with a credit card. If you use another means of payment, you will not qualify for cover, even if you have remaining credit on your account.
- Say no when the rental car agency offers you a collision damage waiver policy (since this is likely already included on your credit card). However, consider carefully before rejecting other cover aspects, such as personal belongings protection or liability cover, since you may still need it. Contact your credit card company if the car rental agency insists you take their cover. They may agree to pay the fee for you. They may also negotiate with the rental company on your behalf.
- Pay the full cost of the vehicle and policy.
If you get into an accident, make sure that you file a claim with the credit card company in the allotted time frame. If you are late, you may have to rely on other forms of insurance and lose your deductible.
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.
Credit Cards That Offer Primary Covers
Credit cards that offer primary coverage are a rare breed, but they still exist. Here are some examples:
Chase Sapphire Preferred Card
Chase Sapphire Preferred Card offers coverage limits up to the value of most rental vehicles in exchange for a $95 annual fee.
United Explorer Card
The United Explorer card is similarly generous. It provides the cash value of most rental vehicles as coverage. The first year is free and then $95 per year after that.
Capital One Venture X Rewards Credit Card
Capital One’s Venture X Rewards Credit Card is $395 per year. In exchange, you get a car rental collision waiver of $75,000.
American Express Primary Car Rental Insurance
Payment processing network, American Express, offers automatic secondary rental car coverage on its cards. However, you can obtain primary cover via the optional fee-based add-on service called Premium Car Rental Protection.
To get this coverage through American Express, the card company will charge you a flat fee of around $25 whenever you rent a vehicle. This fee covers you for the hire duration, up to 42 days, which is longer than the typical 15 to 31 days that most cards offer.
In some jurisdictions, Amex will also bundle liability cover. This cover is not available in certain territories, including New Zealand, Jamaica, Italy, Ireland, and Israel.
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!
FAQ
Do credit cards cover CDW?
Credit cards advertising rental car insurance typically only provide a collision damage waiver (CDW). This means that if you get involved in an accident, they will pay the fee charged by the rental agency. However, they will not cover other losses, such as personal belongings stolen from your rental vehicle or the cost of medical care.
What kind of insurance do credit cards offer?
Strictly speaking, credit cards offering car rental insurance don’t actually provide any insurance. Instead, they contribute to waiving fees that you might incur, including insurance policy deductibles.
What is Mastercard rental coverage on a credit card?
Mastercard is a credit card network that processes payments on behalf of issuers. If you want to make a claim and have a Mastercard, you must submit relevant documents within 180 days of the accident to qualify for cover.
Is credit card covered by insurance?
Until a few years ago, credit cards with insurance protection were standard. However, many credit card companies have recently begun winding down their benefits, making credit card rental car insurance rarer than it was in the past.
For years, the clients I worked for were banks. That gave me an insider’s view of how banks and other institutions create financial products and services. Then I entered the world of journalism. Fortunly is the result of our fantastic team’s hard work. I use the knowledge I acquired as a bank copywriter to create valuable content that will help you make the best possible financial decisions.
