What does credit card rental car insurance cover?

Most of us have been there, standing in line at the rental car counter when the agent asks whether you’d like to purchase insurance. You hesitate, wondering if saving $25 a day is worth the risk, but then you remember that your credit card covers you – or does it?

“It’s not widely known that many credit cards offer supplemental car insurance that can make the car rental insurance unnecessary,” says John Ulzheimer, credit expert and author and president of The Ulzheimer Group.

In fact, three of the major credit card networks – Visa, Mastercard and American Express – all offer some form of auto rental insurance through cards on their network. The specifics of that coverage, however, are determined by the issuing bank of the specific cards.

That’s why it’s so important to read the fine print of your credit card agreement as well as to contact your issuer to ask questions. Not all cards cover every type of vehicle, and even when they do, the coverage could be limited by location, length of rental, whether you have personal car insurance and other factors.

Types of rental car insurance

When it comes to rental car insurance, there are several key terms to understand:

Primary insurance:  This is the first line of insurance defense and, for most people in most rental circumstances, will be your personal auto insurance. If you’re in a crash in your rental car, in most cases you’ll file with your personal insurance company first. In fact, this alone often makes the insurance sold by the rental agency an unnecessary expense.

Secondary insurance: This kicks in after your primary insurance is exhausted and is what most credit cards offer. This can cover any costs left over after your primary insurance has handled your claim and could include some big expenses such as your primary insurance’s deductible or towing charges.

Collision damage waiver (CDW): Also sometimes called a loss damage waiver (LDW), this coverage is specifically to cover the damage to your rental car or the rental agency’s loss of use while the car is repaired or replaced.This is generally what you’ll need to decline at the rental counter in order to be covered by your credit card’s insurance. Your coverage will be either primary or secondary coverage depending on your card’s specific benefits. What this isn’t is coverage for injuries or lawsuits resulting from a crash. Most people are covered for those through their personal auto insurance.

“The coverage offered by car rental companies is considered primary because it does not require that you have a separate personal car insurance policy,” says Ashlee Tilford, a former managing editor for CarInsurance.com.

But, by paying for your rental with your card and declining the rental agency’s coverage, you could be covered by either primary or secondary insurance, depending on your credit card’s benefits. 

Primary insurance through your credit card is ideal (more on that below), but even secondary insurance could save you a lot of money. Secondary coverage is limited, but can fill the gaps not covered by your personal auto insurance. If there’s theft or damage to the rental car, for instance, you would first file a claim with your personal auto insurance provider. After this, you can file a claim with your credit card company, which may cover your deductible and associated fees for the damage, such as towing charges and loss-of-use fees the rental company charges because a vehicle in their fleet is out of commission.

But before you decide to depend on that credit card insurance and decline insurance from the rental car agency, call your credit card company and get information in writing about what’s covered and what isn’t.

“If you’re at the rental counter, it’s too late to figure out if you should accept or decline insurance coverage,” says Ulzheimer.

What doesn’t credit card auto rental insurance cover?

A variety of exclusions and limitations exist when it comes to credit card rental vehicle insurance. Here’s a look at some key exclusions:

Type of car you can rent. Certain vehicles are generally excluded, including trucks, motorcycles, full-size vans and luxury cars. Exclusions do vary, so it’s important to check your specific card.

Country of rental. There are certain countries where the insurance doesn’t apply or, depending on where you’re renting, the type of coverage could differ.

Coverage caps. The amount covered isn’t unlimited, but the same is true for your primary personal policy as well. Make sure to understand the limits of the costs. For instance, some American Express cardholders are eligible for up to $50,000 in coverage, while the company’s higher-tier cards offer $75,000 in coverage.

Personal items. Credit card insurance doesn’t cover loss or theft of personal items, though that could be covered under your personal auto, home or renter’s insurance.

Road conditions. There are sometimes limits if the accident occurs during certain road conditions, such as on dirt or gravel.

Personal injury, liability and property damage. Importantly, credit card companies typically offer collision damage waiver coverage, either on a primary or secondary basis; however, that doesn’t cover any injuries to you or the occupants of another vehicle. It also doesn’t cover property damage to another vehicle or property other than the rental car.

Length of eligibility. There is often a cap on how long you can rent the vehicle in order to be eligible for the insurance, with 15 or 30 days being common limits.

 ➤  SEE MORE:Does credit card car rental insurance apply to non-traditional car rental services?

What if you’re traveling overseas?

Many credit cards, especially travel rewards cards and small business cards, offer either primary or secondary coverage for international rentals when you decline the coverage at the rental counter. In fact, there isn’t room here to list all the cards that offer at least some insurance on rental vehicles almost anywhere in the world.

It’s a good thing that coverage kicks in when renting overseas as most personal auto insurance doesn’t cover auto rentals made while abroad.

There are a few places, however, that even credit card auto rental insurance doesn’t cover for one reason or another. Some countries are deemed too risky by some credit card issuers to cover possible damage. And some countries have laws that require the driver, not a third party, to purchase collision insurance.

Countries sometimes excluded from credit card auto insurance coverage include Australia, Jamaica, New Zealand, Italy, Israel and Ireland among a few others.

Make sure you understand any exclusions by your specific card’s policy before depending on this coverage.

A word of warning for the uninsured

If you don’t have personal auto insurance, it’s important to do your homework before signing the rental car company’s insurance waiver or depending on your credit card’s auto rental insurance benefit.

Additionally, if you aren’t covered by a personal car insurance policy, remember that what your credit card insurance offers doesn’t typically include liability or injury coverage, nor does it cover property damage or loss costs.

“If you do not drive a vehicle otherwise and don’t have a car insurance policy, the coverage offered by rental car companies is a wise choice,” Tilford said, adding that a credit card company’s supplemental coverage could be helpful as well.

How does I use my credit card’s auto rental insurance?

In most cases, the insurance is simply included without any special steps provided you do the following:

1. Pay for your rental on the appropriate card.  Be aware that you cannot pay for your rental with one card but use the  auto rental insurance benefit on another.
2. Decline the rental agency’s insurance. You’ll typically be asked whether you’d like to purchase supplemental insurance when you pick up your rental. Decline the offered coverage in order to take advantage of your credit card’s benefit.

Before you travel, here’s what to ask about credit card auto rental insurance

Several days or weeks before your rental, contact your credit card customer service line and make sure you understand the answers to the following questions:

Is this primary or secondary coverage?

The answer to this question might depend upon where you’re renting, the type of vehicle, and if you’re paying for it with a small business credit card, if your rental is for business or personal use. Make sure you’re clear with the customer service rep about your specific situation so they can provide accurate information.

What is the coverage for international rentals?

Once you know whether you’re eligible for primary or secondary coverage when overseas, the next step is to make certain the coverage extends to your specific travel destination, so have your list of travel destinations ready to go.

What vehicles aren’t covered?

If you’re planning to rent a luxury or specialty vehicle – even a van or truck could be considered a specialty rental – it may not be covered. Furthermore, some popular vehicle models such as BMW or Mercedes-Benz could be considered luxury vehicles and be exempt from coverage.

How long will the rental be covered?

Most credit card insurance only covers rentals for a limited period of time, often 15 or 31 days maximum. International rentals and those eligible for primary insurance often enjoy longer eligibility periods.

What isn’t covered?

Do you have coverage for the rental agency’s loss-of-use fee? What about towing in the event of a collision? In nearly all cases, credit card coverage is limited to a collision damage waiver situation, meaning there isn’t coverage for personal injury, liability or property damage. It also won’t cover things like ambulance trips or medical bills in the event of a crash.

What if you don’t have personal auto insurance?

It’s possible the coverage through your credit card will be better if you don’t have personal auto insurance, defaulting to primary when it would otherwise be secondary. Still, it’s important to know for sure.

How do you file a claim?

Your credit card issuer will be able to tell you what documents to submit. If in doubt, document it. More information will be better than less in the event of an incident that results in a claim. In general, keep copies of your rental agreement; photos of the damage; a police report, if applicable; and repair estimates. There will inevitably be a lot of paperwork, but that paperwork could mean the difference between you paying hundreds or thousands of dollars out-of-pocket vs. taking advantage of your credit card’s benefit.

What credit cards offer primary auto rental insurance?

Chase credit cards

Chase cards have, in recent years, become the front-runners when it comes to primary auto rental insurance through your credit card, with most business cards and travel rewards cards offering primary coverage. In fact, even a few cards marketed as “cash-back cards” (such as Chase Freedom Unlimited®) offer primary coverage for cars rented abroad – it’s secondary coverage for rentals in the United States. Remember, primary coverage means you’ll be covered against theft and collision damage without needing to report the incident to your own auto insurance company. Here’s a look at some popular Chase cards that offer primary auto rental coverage:

*Terms and exclusions apply; always check your guide to benefits or contact your credit card issuer before your trip for information and documentation

Information related to Chase Freedom Flex^SM, Marriott Bonvoy Boundless®, Marriott Bonvoy Bold® and The World of Hyatt Credit Card has been collected independently by CardRatings and was neither reviewed nor provided by the card issuer

American Express credit cards

When it comes to other issuers, American Express is likely the next best option if you’re looking for primary auto insurance through your credit card, though it isn’t included as a complimentary benefit.

Instead, American Express offers all of its cardholders an alternative: Card members have the opportunity to purchase primary coverage for up to $24.95 per rental period, depending on the coverage level you select and your state of residence. This offers maximum coverage at an incredible savings, given that car rental agencies commonly charge $25 or more per day.

Capital One credit cards

Eligible Capital One cards, including the travel cards CardNamediscontinued and CardNamediscontinued among others, feature secondary insurance within your country of residence. So, in general, rentals in the United States include secondary coverage, while rentals abroad enjoy primary coverage.

This is just a sampling of cards that offer auto rental insurance among the benefits. As with any credit card benefit, make sure you call your issuer and request full details in order to fully take advantage of this potentially money-saving perk.