Credit card holders can often take advantage of a significant perk when renting a car: complimentary insurance coverage. This benefit, typically not offered by debit cards, can result in substantial savings. I’ve personally saved hundreds of dollars annually thanks to this perk, despite only renting a car once a year.
Utilizing this benefit is straightforward. When renting a car, I simply decline the often-expensive insurance offered by the rental company, as my personal car insurance provides primary coverage, and my credit card offers secondary coverage. Of course, benefits can vary by card company and even among cards offered by the same company, so it’s always a good idea to be familiar with the exact coverage offered by your particular card.
This strategy has worked well for me with major rental companies, however, when searching for a rental car for a recent trip, one of the things I immediately noticed was that rental car prices have gone through the roof since the last time I rented. In fact, car rental costs rose 35% between May 2019 and May 2024 according to the Bureau of Labor Statistics.
This led me to consider other rental car options, including peer-to-peer carsharing companies like Turo, Zipcar, Getaround and Car Shair. Such services are like Airbnb for cars as they allow you to rent directly from individual car owners and are known to offer attractive rates (though you may get a car that is several years old). Such companies have been growing in popularity in the last few years. From 2021 to 2023, for example, Turo’s net revenues grew nearly 88% to $879.6 million last year.
I quickly realized that one potential stumbling block in this approach, however, was insurance coverage, which can add significantly to the overall cost of a rental. According to MarketWatch.com, insurance prices quoted by rental agencies range from $31 to $60 per day.
Despite my credit card expertise, I was uncertain if my card covered these companies, let alone the specifics. My budget constraints led me to the research shared in this article. I hope it addresses your basic questions about credit card benefits when renting from peer-to-peer or local agencies.
Does credit card insurance cover peer-to-peer car rentals?
I am big proponent of peer-to-peer lending (P2P), which basically cuts banks out of the lending process and allows consumers to loan money directly to other consumers at typically lower rates. Peer-to-peer car rentals have similar cost-saving benefits except when it comes to insurance.
Credit card expert Jason Steele explains that, unfortunately, most major card issuers that offer complimentary rental car insurance often exclude coverage for peer-to-peer services such as Turo. He further notes that such companies technically aren’t car rental firms. Basically, card issuers view this industry as being car sharing service as opposed to car renting.
Beverly Harzog, credit expert and podcast host of “Your Personal Economy,” offers some encouragement to consumers by adding that although this exclusion exists, enhancements to benefits are certainly possible going forward. There is no doubt that as this industry continues to grow, it will be on the radar of card issuers, particularly given how competitive the card industry is.
She adds that, “for now, know what your card covers in terms of rentals.” If you’re unclear about coverage, simply call your issuer and ask and/or refer to your cardholder agreement.
BONUS TIP!
Be sure to review the coverage offered by peer-to-peer companies before you pay as coverage varies by company. Turo, for example, offers a liability policy that functions as secondary insurance if you have your own personal car insurance.
Does credit card insurance cover local or regional car rental services?
While a few major players dominate the car rental market, local and regional agencies have experienced strong growth in the past several years.
The good news for cardholders is that most cards provide free secondary coverage for these types of firms. Steele points out that, when it comes to these types of car rental companies, “you should receive the same rewards and benefits that you would when renting from a larger car rental company.” He further recommends choosing a card that offers primary rental car insurance (as opposed to the secondary coverage that the vast majority of cards offer), as well as strong rewards. For instance, card_name offers bonus rewards on car rentals and includes primary rental coverage for no additional fee.
While you’re likely to get complimentary coverage, Harzog cautions that you should always verify benefits directly with your card issuer. On a related note, before you decline coverage offered by the rental company, it’s a good idea to confirm with your personal car insurance company that they provide primary coverage at no additional charge. If they don’t, consider other options, including buying primary insurance from the car rental company. Even though it will likely be expensive, it may be better than only having secondary coverage through your card.
BONUS TIP!
It’s helpful to read the terms and conditions to fully understand limits and caps on coverage. As an illustration, the specific benefits of the Sapphire Reserve® card states:
“Decline the rental company’s collision insurance and charge the entire rental cost to your Chase card. Coverage is primary and provides reimbursement up to $75,000 for theft and collision damage for rental cars.”
Are there benefits to using a credit card for peer-to-peer rentals or at smaller car rental companies?
You might wonder if using your credit card for these rentals offers additional advantages, like reward points or bonuses. The good news is that you don’t need a premium travel card (with annual fees) to enjoy rewards.
Steele suggests that the benefits extend beyond simply declining expensive rental company insurance. He asserts that rewards can be earned from nearly any rewards credit card, even those not specifically designed for travel. Typically, users earn at least one point per dollar spent, with the potential for even greater rewards.
He further notes that reward points are not limited to regional or local agencies. He claims that some cards offer additional bonuses for peer-to-peer rentals and that there are reports that Turo rentals receive those bonuses.
BONUS TIP!
When searching for the best rates, consider local agencies as well. I found a great deal with a highly-rated company that had only one location nearby. I simply searched for local car rental companies online and booked within minutes.
Final thoughts
It’s widely known that using a credit card for car rentals at smaller agencies or peer-to-peer companies is safer and more convenient than using a debit card or cash (this also applies to major agencies). Less known are the additional benefits, as outlined above, of using a credit card at the time of rental.
Despite these obvious advantages, you should still be a savvy consumer and exercise caution. Steele, who loves using reward cards, advises that you should do your research before renting a car.
“There are many exclusions and exceptions that you need to be familiar with,” he says. “It’s no fun, but all renters who rely on this coverage should read their cardholder guide to benefits to learn what’s included and what’s excluded. You don’t want to learn the hard way that you’re not covered.”
Harzog shares this sentiment and while she acknowledges that you can save big bucks by using a card for a rental, she urges that you weigh your options and that you know ahead of time how much you can afford to pay for a specific trip. Credit card rewards are rarely worth it if you must carry a balance on a card. Interest rates will almost always outweigh any savings you may receive from using a credit card.
