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 any 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!
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 in to 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 on 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 in to 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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