Primary vs. Secondary Auto Insurance Coverage

Last Updated on September 18, 2023

When it comes to rental car insurance, you have primary and secondary coverage. Today, we’re explaining the difference between the two.

After an insurable event – like a car accident – your primary insurance pays for any damage first, up to the limits of your policy. Secondary insurance could cover any remaining expenses.

Keep reading to find out the difference between primary and secondary auto insurance coverage – and how these coverages work.

How Primary and Secondary Car Insurance Work

If you’re renting a car, then you may have primary and secondary car insurance.

Normally, your personal vehicle only has one type of insurance coverage: your personal auto insurance policy.

However, when renting a vehicle, you may have two types of insurance coverage, including primary and secondary coverage.

Typically, when you rent a vehicle, you have the following primary and secondary insurance coverage:

Primary Coverage: Your rental car company already has insurance on every vehicle, and this insurance could be the primary coverage. Alternatively, your personal auto insurance policy (like the GEICO policy covering the minivan you drive every day) could function as primary coverage if you decline the rental car company’s coverage.

Secondary Coverage: Secondary coverage could be your credit card’s rental car insurance or supplemental coverage purchased from the rental car agency.

If you cause an accident with the rental car, then you make a claim through your own insurer or the rental car company’s insurer first. Then, your secondary insurance covers any remaining costs.

How Car Insurance Covers Rental Car Claims

If you’re involved in an accident in a rental car, then you may need to make a claim under primary and secondary insurance coverage:

1. You start by filing a claim under primary insurance. This could be your personal insurance company (like GEICO or State Farm). Or, if you purchased the collision damage waiver (CDW) from the rental car company, then it could be the rental car company’s insurance policy. Alternatively, some premium credit cards come with primary insurance on rental cars, and you make a claim through your credit card first. Depending on the type of primary insurance you have, you may or may not pay a deductible.
2. You make a claim for any remaining expenses through your secondary insurance provider. Your credit card may provide secondary insurance for rental cars for additional expenses from the accident, for example. This insurance could cover damages beyond the limits of your primary coverage. Or, it could cover damages that aren’t covered by primary insurance at all – like loss-of-use fees charged by your rental car company.
3. If there are any remaining expenses, then you could make another insurance claim through any remaining insurers. If your primary insurance was through the rental car company and your secondary insurance was through your credit card, for example, then you could make a claim through your personal insurance policy for any remaining expenses.

How to Get Primary Insurance for a Rental Car

You already have primary insurance for your rental car through your ordinary insurance company. A standard auto insurance policy extends coverage to any cars you rent.

However, you may not want to use your personal insurance policy as primary coverage for a rental car. Using your personal insurance for a rental car could lead to higher insurance premiums for years. You may also need to pay a deductible.

That’s why many drivers buy the collision damage waiver (CDW) from the rental car agency or use their credit card.

Here are the two main ways to get primary insurance for a rental car without relying on your personal policy:

• Buy the collision damage waiver or other insurance from the rental car company. Most rental car companies charge an extra daily fee for a collision damage waiver (CDW) and other additional insurance coverage. These increase the cost of the rental car, but they also help you avoid most costs associated with any accidents or claims.
• Pay for the rental car with your credit card. Virtually all major credit cards offer secondary coverage for rental vehicles. Some higher-end credit cards like Chase Sapphire also offer primary insurance coverage. To qualify, you must decline the rental car company’s collision damage waiver and other insurance options, then pay for the entire rental car using your credit card.

Downsides of Using Personal Insurance for a Rental Car

Your personal insurance policy should extend to a rental car. However, many drivers dislike using their personal policy for a rental car. It could lead to higher premiums after a loss. And it may provide insufficient coverage or require payment of your deductible.

Some of the downsides of using personal insurance as primary coverage for a rental car include the following:

• You may need to pay the deductible after a claim.
• You could lose your safe driving status or accident-free discount.
• You could pay higher insurance rates after an accident or claim.

Advantages of Using Personal Insurance for a Rental Car

Nevertheless, there are some advantages of using your personal insurance policy to cover a rental car. In fact, if you never make a claim, using your personal insurance may be the best option.

Some of the advantages of using personal insurance as primary coverage for a rental car include the following:

• Automatic coverage when renting a vehicle (most personal plans extend automatically to cover rental cars).
• No additional fees required.
• Enjoy the same coverage on your rental car as you have on your ordinary vehicle.
• Avoid using a specific credit card or paying the rental car company’s costly daily insurance fees.

Depending on your budget, needs, and aversion to risk, you may or may not want to use your personal insurance as primary coverage for a rental car.

How Primary and Secondary Drivers Work for Auto Insurance

Primary and secondary car insurance applies mostly to rental cars.

However, your personal insurance company may ask about primary and secondary drivers for your policy.

Your insurance company needs to know the primary driver of your vehicle. This is the person who drives the vehicle most frequently. Any other drivers are considered secondary drivers:

Primary Driver: The primary driver is the person who drives the car most frequently. If you commute to work in a specific vehicle, for example, or drive the vehicle more than 50% of the time, then you’re considered the primary driver. The primary driver’s credit score, driving history, and other factors have a significant influence on the cost of car insurance.

Secondary Driver: The secondary driver is anyone who also drives the same vehicle but drives it less than the primary driver. If your teenage daughter sometimes borrows your car on weekends, for example, then she may be considered a secondary driver. In fact, your insurer may consider any licensed drivers in your household as secondary drivers – regardless of how frequently they drive your vehicle.

Many rental car companies also ask about primary and secondary drivers. Failing to disclose this information to your rental car company or insurer accurately could lead to a denied claim.

Final Word

Primary and secondary auto insurance coverage mostly applies to rental cars.

When renting a vehicle, you have primary coverage (typically from the rental car company or your personal insurance policy) and secondary coverage (from a credit card or other coverage).

After an accident, your secondary coverage covers any expenses remaining after your primary coverage pays out.