If you have a credit card or have rented a car in the past, you have probably heard that in many circumstances your credit card issuer will pick up the tab for your rental car insurance. As these types of auto insurance policies are charged by the day and are typically pretty expensive, you can end up saving a lot of money by making use of your credit card when you rent a car. In this article, we will explore how and when to take advantage of the insurance coverage offered by your credit card company and some of the pros and cons of doing so.
Check with your Credit Card Issuer for Details
The first and most important step is to check with your credit card provider to figure out if you have rental car insurance, and if so, what the terms of your agreement are. Low-interest and less-expensive credit cards sometimes won’t offer any form of insurance for car rentals, and you need to know this up front so you don’t end up making a poor decision when you get to the rental counter. With a quick five to ten-minute phone call, your credit card company can inform you of all of the details surrounding auto insurance and how you can take advantage of many different types of coverage that are offered.
It’s also worth stating that you might want to fully read through the fine print of your credit card agreement to find out what your legal and financial obligations are when using your card to obtain rental car insurance.
Use your Credit Card to Pay for the Rental
Without question, all banks and credit card issuers will require that you pay for the rental – in full – using your credit card. Remember that the insurance that they’re offering you is a benefit of using your card and not something the company is doing out of the goodness of their heart. They want you to charge the full cost of the rental to your card in order to collect interest and to make something on the transaction. You will be hard pressed to find a credit card issuer that doesn’t require you to pay for the full cost of the rental in order to get insurance. Using your card to pay a portion of the bill will generally cause you to lose your insurance coverage entirely, so make sure you know the terms of your agreement before renting!
Rental Coverage by Credit Card
All Chase Sapphire Preferred credit cards and any Chase credit cards offering collision damage waiver (CDW) coverage offer primary rental car coverage. That means, if paying with your Chase card at the rental car agency, you won’t have to worry about filing a claim with your car insurance company if something should happen to the rental vehicle. Chase rental car coverage includes:
- Reimbursement for damage or theft of the rental car up to the actual cash value (ACV) of the vehicle
- Valid loss of use charges assessed by the rental car company
- Reasonable towing charges
- Coverage on rental periods of 31 days or fewer for primary cardholders, authorized users, and any additional drivers listed on the car rental agreement
- Certain luxury, antique, and exotic vehicles
- Cargo vans, motorcycles, and recreational vehicles
- Car rentals in certain countries
- Liability coverage
United MileagePlus Club Card
The United MileagePlus Club Card is popular with those who frequently fly on United Airlines. It also works best if you rent vehicles from Hertz. Flyer using the United MileagePlus Club Card enjoy benefits at the airport, including priority check-in, security screening, boarding, and baggage handling, along with access to United Club lounges. When renting a car, you’ll also receive primary CDW rental car coverage:
- Collision damage waiver coverage for rental car periods of 31 days or fewer
- Worldwide primary CDW coverage
- Coverage for loss of use and other damages
American Express credit cards offer secondary CDW coverage, although AmEx credit card users can purchase optional Premium Car Rental Protection for an additional fee. All American Express credit cards offer this feature:
Standard secondary collision damage waiver (CDW) coverage on all rental cars booked with American Express credit card for 30 days or fewer
- Damage or theft of a rental car up to a maximum of $50,000
- Coverage for loss of use, appraisal fees, and towing
- Coverage for primary cardholders, additional drivers listed on the credit card, and additional drivers listed on the rental agreement
- Upgrade to primary CDW coverage by paying extra for Premium Car Rental Protection
- Does not cover vehicles rented in Australia, Ireland, Israel, Italy, Jamaica, and New Zealand, nor does it cover car rentals in OFAC sanctioned countries
- Does not cover liability, uninsured or underinsured motorist, or disability insurance
To qualify for the American Express CDW coverage, you will need to reserve and pay for the entire car rental with a qualifying American Express credit card. You will also need to decline the CDW/LDW coverage offered by the rental company.
Citi Credit Cards
Most Citi credit cards provide secondary CDW coverage for car rentals in the United States. You file your claim with your car insurance company first, then access your Citi car insurance coverage to cover any remaining damages. Coverage includes:
- Worldwide coverage for rental cards
- Damage or theft of the rental car up to an actual cash value (ACV) of $50,000
- Car rental periods of up to 31 days
- Coverage for ‘reasonable’ towing charges
- Rental cars with at least four wheels designed to be driven on public roads
- Coverage for the primary cardholder and any additional drivers listed on the rental agreement
- No liability insurance
- No coverage for loss of use of the rental car
MasterCard rental car coverage varies based on the issuer. Different banks have different rules for rental car coverage. Generally, however, MasterCard rental car coverage includes:
- Secondary CDW coverage for rental cars
- Coverage for rental periods of a maximum of 31 days
- Coverage for the actual cash value of the vehicle, loss of use of the vehicle, and other costs
Most Visa credit cards provide rental car coverage, although specific terms vary widely based on the issuer. Chase’s Visa credit cards, for example, offer particularly generous terms, while other Visa credit cards may not be as generous. Typical coverage includes:
- Secondary CDW coverage for rental car periods of 15 consecutive days in your country of residence
- Coverage for rental car periods of 31 days outside of your country of residence
- Full coverage for the actual cash value of the vehicle, loss of use of the vehicle, and other costs associated with the rental car
- Secondary CDW coverage is not available for rental cars in Ireland, Israel, Jamaica, and Northern Ireland
Since December 2017, Discover credit cards have no longer offered car rental coverage.
Terms can vary widely between credit cards companies. Check your credit card agreement to verify rental car coverage. Additionally, coverage can vary widely depending on the situation. Some credit card companies will refuse to cover certain damages based on the situation, for example, while others provide generous, full coverage.
Watch Out for Coverage Exclusions and Pay for Upgrades
Even if your credit card provider states that you’ll receive full coverage on your rental car insurance, you need to watch out for coverage exclusions that may be built into the terms of your contract and pay for any upgrades that are necessary to provide yourself with adequate protection. For instance, you may have family members along on the trip and want to purchase additional injury insurance which may not be covered by your credit card company. Ask them in advance how to manage situations like this so you don’t run afoul of the terms of your credit card agreement and end up nullifying your rental car insurance by mistake.
In Foreign Lands, Trust the Rental Car Insurance First
Regardless of whether or not your credit card company offers rental car insurance when you’re in a foreign country, it might be a better idea to just stick with the rental car company’s insurance policies. Auto insurance laws vary wildly from country to country, and the last thing you’ll need while on a trip or vacation is to end up dealing with a financial or legal mess due to an accident or some other issue. If you can afford it in your travel budget, purchase whatever policies the rental car company recommends.
There are a couple of tricks you can use to save yourself a bit of cash. First, browse around online and in forum groups to find other travelers who have rented cars in your destination countries and who can share their experience of purchasing auto insurance. Next, read through your credit card company’s policy to find out how the insurance will cover you when you are out of the country. Finally, if you know someone local who can speak the language, have them come with you when you rent your car so that they can ensure you’re not getting ripped off.
Stay on the Right Side of the Law
It probably goes without saying that paying attention to local driving laws – especially if you’re renting a car in a foreign country – is incredibly important. If you’ve decided to make use of your credit card to cover your insurance and you get into some legal trouble you will likely lose your coverage and then end up stuck explaining yourself to the rental agency. This holds especially true if you drive while under the influence of drugs or alcohol and get caught by the local authorities. It just isn’t worth it! Keep your nose clean, obey the local speed limits and you will be fine.
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