What Does Your Credit Card Cover When Renting a Car?
Last Updated on October 16, 2020
Many credit cards come with rental car insurance coverage. You may know your credit card has rental car coverage, but few drivers fully understand how this coverage works.
What does your credit card cover when renting a car? How does credit card rental car insurance work? What’s the best credit card for rental car insurance?
Typically, credit card rental car insurance works as secondary insurance. It’s an extra layer of protection on your rental car. Your ordinary auto insurance policy provides primary coverage, while your credit card provides secondary coverage.
Keep reading to discover everything you need to know about what your credit card covers when renting a car.
How Insurance Covers a Rental Car
Rental car insurance can be confusing. We’ll break down how insurance covers a typical rental car.
First, the customer service agent at the car rental company asks if you want to buy the company’s insurance. For a few extra dollars per day, you get insurance on the vehicle.
Technically, this coverage isn’t really ‘insurance’. The car rental company always has insurance on the vehicle. The vehicle is insured regardless of whether you purchase the company’s coverage or not.
Instead, the rental car’s coverage is a collision damage waiver (CDW). For a few extra dollars, you are waiving the ability for the rental car company (and the rental car company’s insurance company) to come after you if the car is damaged or stolen. When you pay for this collision damage waiver, the car rental company will not ask you to pay a deductible or cover other damage to the vehicle in the event of a claim.
Most drivers can safely decline this collision damage waiver. Most drivers are covered by their own insurance policy. If you have an ordinary car insurance policy on your personal vehicle, then this policy should extend to any vehicle you rent.
Some policies restrict rental periods to under 30 days, but most ordinary personal car insurance policies extend your coverage to any vehicle you rent.
In most cases, your personal auto insurance policy works as primary insurance on the rental vehicle. It’s the first layer of protection if you need to make a claim. If the rental car is damaged or stolen, then you make a claim through your own insurance company, and your insurer provides compensation.
How Credit Card Insurance Covers a Rental Car
When you pay for your rental car with a credit card, you get an extra layer of insurance. Many credit cards come with rental car insurance coverage. Because of this rental car insurance coverage, you get a second layer of insurance above and beyond your personal insurance policy (which is the primary coverage).
Let’s say you make an insurance claim on your personal auto insurance policy after the rental car is stolen. The vehicle is worth $40,000 and you have a $30,000 personal auto insurance limit. Your insurance pays for the first $30,000, and you would normally have to pay the remaining $10,000 out of pocket. However, because you rented the car using your credit card, your credit card rental car insurance acts as secondary coverage, covering any expenses not covered by the primary coverage.
Rental car costs covered by your credit card can include:
Credit cards have specific limits. Most credit cards cover the cash value of the rental car (as a maximum), although some credit cards have a specific limit (say, $75,000).
Some Credit Cards Offer Primary Coverage
Most credit cards offer secondary coverage for rental vehicles. That means your personal auto insurance policy is the primary coverage, and any claim would go through your insurance company first.
However, some credit cards now offer primary coverage. Cards with higher limits and income requirements, for example, come with perks like primary coverage.
Primary rental car coverage is a big deal. If your rental vehicle is damaged or stolen, then you don’t have to involve your own insurance company. You don’t have to pay your insurer a deductible, nor do you have to worry about higher rates in the future. Instead, the claim is handled entirely by your credit card company.
Which Credit Cards Offer Rental Car Coverage?
Most credit cards offer some type of rental car coverage. Visa, Mastercard, American Express, and Discover all provide some type of rental car coverage, although specific options vary between cards.
Rental car coverage varies between cards, but it also varies between banks. One bank might offer additional rental car insurance perks on credit cards, for example, while another bank offers no such perks.
For all of these reasons, it’s crucial to understand your rental car insurance coverage. Check your credit card paperwork or contact your bank to verify coverage. There’s a big difference between secondary coverage and primary coverage for rental cars. Plus, some cardholders have significant rental car insurance perks they did not know about.
Questions to Ask Your Credit Card Company About Rental Car Coverage
Contact your credit card company or your bank (or check your credit card paperwork) to verify rental car coverage. Rental car coverage varies between cards.
Questions to ask include:
- Do I have primary or secondary coverage? Some credit cards come with primary coverage, which means you file a claim through your credit card first (not your insurance company). Most credit cards come with secondary coverage, which means you file a claim through your own insurance company first, and your credit card covers any remaining costs.
- What do I have to do for my credit card to cover the rental car? Most credit cards require you to pay for the rental using your credit card for coverage to apply. Additionally, the driver at the time of the accident must be listed on the rental agreement.
- What does my credit card cover? Most credit cards cover collision damage waiver or loss damage waiver protection, which is the coverage offered at the counter. Some credit cards also cover additional costs like towing, administrative fees, loss of use, and other expenses incurred by the rental car company after a rental car is damaged or stolen.
- What does my credit card not cover? Most credit cards do not cover liability or injuries you cause while driving the rental car. The credit card should cover damage to the vehicle, although it may not cover personal injury expenses – say, if another driver requires medical treatment after you cause an accident.
- Does my credit card insurance cover all rental vehicles? Most credit cards cover standard rental cars and SUVs. However, some credit cards do not cover moving trucks, motorcycles, trucks, or large vans. Mastercard’s rental car coverage does not cover vehicles meant for more than nine passengers, for example.
- Does my credit card rental car insurance cover rentals from all companies? Most credit cards cover rentals from all major insurance companies. However, many credit cards restrict rentals from non-traditional rental car companies – like ZipCar or other peer-to-peer car rental platforms.
- How long does the coverage last? Most credit card rental car coverage covers car rentals of 15 to 31 consecutive days. Beyond that, you may not be covered.
- Does my insurance cover all countries? Most credit card car rental insurance coverage covers domestic rentals within the United States, although rules vary for other countries. Some credit cards only cover car rentals in certain countries, for example. Others limit international coverage.
Top 10 Credit Cards for Rental Car Insurance
Rental car insurance coverage varies widely between credit cards. Some credit card companies offer powerful rental car insurance coverage. Others only offer basic coverage or secondary coverage, limiting their usefulness.
We’ve listed the top 10 best credit cards for rental car insurance below.
- Chase Sapphire Preferred Card: Primary coverage, an annual fee of $95, covers cash value (CDW/LDW) of most rental vehicles.
- Chase Sapphire Reserve Card: Primary coverage, an annual fee of $550, covers up to $75,000 (CDW/LDW) of most rental vehicles.
- United Explorer Card: Primary coverage, an annual fee of $95 ($0 for the first year), covers the cash value of most rental vehicles.
- United Club Infinite Card: Primary coverage, an annual fee of $525, covers the cash value of most rental vehicles.
- Wells Fargo Propel American Express card: Secondary car rental coverage with no annual fee, earn 3X bonus points on travel expenses, and rental cars.
- Capital One Secured Mastercard: Secondary car rental coverage, no annual fee, covers damage and theft of rental vehicles, loss of use charges, and towing charges.
- Chase Freedom Unlimited: Secondary car rental coverage (in the United States) or primary coverage (for international rentals), no annual fee, earn unlimited 1.%% cashback on all purchases (including car rentals).
- Ink Business Preferred Credit Card: Primary car rental coverage (when renting a car for business purposes), up to 3X rewards rate on car rentals, no extra fee for issuing the card to employees.
- Any American Express Credit Card: All American Express credit cards come with secondary car rental insurance, although you can pay an extra fee (per rental) for primary coverage via the Premium Car Rental Protection program, which covers longer rental periods (up to 42 consecutive days), additional rental costs (up to $100,000), and other benefits for $12.25 to $35 per rental.
- Capital One VentureOne Rewards Credit Card: Secondary coverage, no annual fee, earn 1.25 miles per $1 spent.
Final Word on Credit Cards and Rental Car Insurance
Many people decline car insurance for their rental car because it duplicates coverage they already have. Typically, your personal auto insurance policy provides the primary layer of protection for any rental car, while your credit card provides secondary insurance.
If you pay for your rental car using your credit card, and if you already have a personal insurance policy, then you should not need to purchase the rental car company’s coverage. You should be covered if the vehicle is damaged or stolen.
Review your personal auto insurance policy and your credit card coverage to verify you are covered when renting a vehicle.