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Every time you rent a car, you may ask yourself: do I really need to pay for rental car insurance? While most rental car agencies offer damage waivers that start at around $15 a day, you may already have the exact same coverage through your credit card. So wouldn't it be nice to know how your credit card rental insurance perk works.
It pays to understand what your credit card -- and personal auto insurance for that matter -- covers. After all, that damage waiver from the rental agency is steep and may cost more than the car itself.
All four major credit card networks (Visa, MasterCard, American Express, and Discover) offer rental insurance. However, the benefits and requirements vary a great deal.
There is also a difference between primary coverage and secondary coverage. And you will need to understand that as well.
So let's get started on finding out everything you need to know about your credit card and renting a car.
What Your Personal Car Insurance Covers
To begin with, it's important to know what your personal insurance covers.
When you own the vehicle, your insurance usually comes with theft and collision coverage. Most insurers will not cover you for renting a car internationally or if you will use the rental car for business. Otherwise you may be covered be covered when renting cars in the US for personal use.
Even if you have auto insurance, many policies decline to pay some additional fees that rental car companies add to a collision bill. Often this leaves responsible for paying hundreds of dollars and your deductible.
The good news is this is where your credit card comes in to help.
How Credit Card Car Rental Coverage Works
Many cards offer rental car protection. Credit card protection will usually cover you with collision damage and theft.
With most credit cards, this rental car protection is secondary coverage. That means if you have car insurance, you will need to file a claim through them first and pay your deductible and any fees not covered under your policy. (You may also get hit with a premium hike.)
Your credit card provider then steps up and pays the bill for your insurance deductible, towing charges, and miscellaneous costs. This is why credit card insurance is called secondary insurance. It only covers what your primary insurance does not pay for.
There is some good news though. If you are renting a car in a jurisdiction not covered by your auto insurance policy, or you do not have your own car and insurance, then the damage protection offered by your card becomes your primary insurance. In that case, you can file your claim through your card issuer first.
Some Shortfalls in Credit Card Rental Insurance
First, you should know that the insurance offered by your credit card is usually only for vehicle damage. It usually does not cover personal liability or injury. This will be covered by your personal policy probably.
Secondary rental coverage from some issuers may also come with a deductible, usually $500.
You also may not be covered when renting a car in a foreign country. But, if you are, this can be a great benefit. Why? Well, if your personal car insurance isn't effective abroad, a card with secondary coverage in foreign countries should become primary in most cases.
But there is alway a "but" with credit card fine print. There are some countries that are usually excluded from coverage. Most common countries excluded from coverage are Israel, Australia, Ireland, Italy, Jamaica, and New Zealand.
And, if you keep on reading, we will reveal more instances where credit card fine print excludes the very things you thought would be included.
Primary Rental Coverage
Some credit cards offer a much better perk than the average card. This is because they offer primary rental car coverage.
If you have a card with this type of coverage, always use it to rent a car. Why? Because you will not need to report the accident to your personal car insurance. This means there will be a much lower risk of your rates increasing in the event you are in an accident.
There are very few credit cards that offer primary rental coverage:
If you have an American Express card, you do have another option. You can get primary coverage through your credit card by enrolling in Amex's premium rental car protection program.
This program does require you to pay a flat rate of $19.95 to $24.95 per rental (lower fees in California). At those prices, I would say this Amex program is a good deal for any rental over one day.
How to Qualify for Credit Card Rental Coverage
In most cases, you need to meet certain requirements for rental coverage through your credit card. This usually means:
- Charging the full rental cost on your credit card
- The card holder's name matches the name on the rental contract
- You are the primary driver of the rental vehicle
- You must decline the rental agency's loss damage waiver (LDW)*
* Note that some credit card networks allow you to purchase supplemental liability coverage as long as you decline collision insurance.
Additional requirements (such as the type of cars covered and coverage limits) vary by card network.
What to Look for in the Fine Print
Your rental car coverage probably has lengthy fine print with many limitations and restrictions. The following are the most common.
Collision and Theft Only
In most cases, only physical damage to the car caused by theft or collision is covered. Injuries to you or another person are not included but should be covered by your personal auto insurance policy.
For example, all credit card rental car programs cover most private passenger vehicles, minivans, and SUVs, but rarely cover sports and specialty vehicles like motorcycles and trucks.
[Editor's Note: This means you cannot rent a Ferrari for the night and expect to be covered.]
Loss of Personal Items
Most policies exclude coverage for the loss or damage of personal items in the car.
If you are traveling abroad, most credit cards do not cover rental cars in certain countries. The most common excluded countries are Ireland, Australia, Israel, Jamaica, and New Zealand.
Length of Coverage
This insurance is meant to be short term. Most networks do not cover rentals that extend beyond 30 days. Some cover you only for rentals of 14 days or less.
If you want a long-term rental, you may need to break up the car rental period into shorter chunks of time to ensure you are covered.
Be sure to read the fine print for any other exclusions.
For example, some policies do not cover you if you drive on a gravel or unpaved road. And some will not cover you if you wait too long to file your claim or pay for costs that could have been avoided if you filed a claim sooner.
Also, always make sure anyone who may drive the vehicle is on the rental contract!
Rental Car Benefits by Network
Discover, Visa, MasterCard, and American Express all offer rental car coverage beyond what the rental car agency will offer. The benefits, however, vary a great deal.
Visa has one of the best rental car coverage benefits because it's widely available and offered on all of its cards, including standard, Signature, and rewards cards. This is a big difference from the other card networks.
Visa rental coverage covers physical damage, theft, loss of use, and towing.
Still, rental car coverage is limited to 15 consecutive days in the U.S. and 31 consecutive days abroad.
Also beware that Visa's rental benefits do vary by issuing bank.
MasterCard has a similar benefit to Visa. MasterCard rental coverage covers physical damage, theft, loss of use, and towing.
You should know about these key limitations:
- Coverage is limited to rentals of 15 consecutive days or fewer.
- Maximum coverage is $50,000.
- This benefit is only available on Platinum, Gold, World, and World Elite credit cards.
- Rental coverage is not available on all cars.
And, once again, note that rental coverage terms vary by issuing bank!
American Express charges a small premium coverage fee for primary rental coverage. But you can get free secondary coverage up to $50,000 (or $70,000 on the Delta Reserve and Platinum cards). Primary coverage offers a higher limit of $100,000, as well as protection against property damage and injury.
American Express does have the most complicated system. This is because your benefits depend on whether you have a basic Amex card, a Platinum card, or upgrade to premium coverage for a fee.
There are also exemptions for Californians, Floridians, and students.
The basic benefit covers physical damage, theft, towing, storage, and loss of use.
With the Platinum benefit, your coverage pays for some medical expenses for accidental personal injury, personal property damage, and AD&D.
The basic and Platinum benefits exclude full-size SUVs like the Chevy Tahoe, which is important to note.
Discover only offers rental car coverage on a few cards.
Unlike the other networks, Discover does not pay for loss of use fees from the rental agency and collision damage is only offered up to $25,000.
Discover credit cards that currently offer secondary car rental coverage include the Discover Motiva, Discover Open Road, and Discover More - none of which are available to new cardholders.
The upside is that, unlike most networks, Discover does not exclude any country in which Discover is accepted.