How Does Car Rental Insurance With A Credit Card Work
When you rent a car, the car rental company will insure it themselves for the legal minimum amount. Depending on the state or country where youre renting the car, this may be a much lower amount than you expect and may not cover any and all potential damage.
In the rental agreement that youll sign when renting a car, you agree to be responsible for any damage to the car during the rental period, and in some cases, regardless of whether you are at fault. Car rental insurance is a popular credit card benefit and can help ensure that you are not on the hook for hundreds or thousands of dollars in damage.
Car rental insurance is a credit card benefit that helps ensure youre not on the hook for damage to a rental car.
If you have paid for the car rental with a credit card that offers car rental coverage, then the credit card company will get involved if theres damage that requires an insurance claim.
If your credit card offers primary car rental insurance, then the credit card insurance company will handle all claims. If your credit card only offers secondary insurance, then it will only apply after your own personal liability coverage or other insurance providers are contacted.
Is There A Difference Between Cdw And Ldw
Yes, there is an important difference between Collision Damage Waiver and Loss Damage Waiver . These are two different insurance policies that cover different things.
Collision Damage Waiver covers damage to the rental car through an accident during the rental period. Loss Damage Waiver provides liability insurance if your rental car is stolen during the time you are renting the car.
In some countries, LDW and CDW are packaged together, and in many cases, the credit cards mentioned in this article cover both LDW and CDW. You should understand the difference between the two, and which is covered by your credit card.
Its also important to understand that neither LDW nor CDW provides liability coverage if you damage another car or injure someone else while driving your rental car.
Loss Or Damage Already Covered By Your Own Auto Insurance
Before leaning on your credit card for rental car protection, find out whether it offers primary or secondary coverage. To do this, ask your issuer.
The coverage on credit cards typically isnt primary insurance, says Neil Abrams, president of Abrams Consulting Group, a global consulting and research firm specializing in ground transportation and car rentals. Its secondary insurance, which means your own insurance stands in front of your credit card insurance.”
Even so, this coverage can be valuable. If your card offers secondary coverage through an auto rental collision damage waiver, or CDW, it may pick up the bill for certain costs that arent covered, such as your auto insurance deductible. And if you dont have auto insurance, or are driving in a country where your auto insurance doesnt cover you, your cards policy may become primary. For many, thats reason enough to skip the expensive coverage sold at the counter.
Even if you want more protection, buying primary coverage separately at the rental car agency or through a third party company such as Allianz Travel or Bonzah isnt your only option. You could also use a . Chase, for example, offers primary coverage on many of its credit cards. With American Express cards, you can generally pay extra for primary coverage thats much cheaper than the policies you can buy at a rental car agency. Terms apply.
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What Credit Card Rental Car Insurance Does Cover
Most credit cards offer excellent collision and damage insurance that will cover you for the cost of the rental car in the event itâs stolen, vandalized, lost or damaged â even if an accident is your fault.
Get in a fender bender? Suddenly find your parking spot is empty because someone broke into your car? In either of those cases, youâd be insured for the rental car by your credit card.
In general, making use of the insurance on your credit card will save you from having to buy the optional collision/damage/loss waiver insurance from the rental agency and still provide the coverage you need for the vehicle.
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The Vacationers Final Thoughts
From lounge access to concierge services, travel rewards credit cards can provide lots of benefits that are nice to have. But for travelers, a credit cards Loss Damage Waiver policy may be one of the most valuable benefits offered. Once you understand exactly what this benefit is, and how it works, you can avoid paying for overpriced insurance from the car rental company, while limiting your risk of loss when renting a car. For further reading, see our guide on the best travel insurance companies and other tips on protecting your trip.
Editorial Disclosure: Opinions expressed here are the authors alone, not those of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved, or otherwise endorsed by any of the entities included within the post.
By Phil Dengler
In addition to being a co-founder of The Vacationer, Phil Dengler is also the head of editorial and marketing. Previously, he ran a popular holiday deals website where he was a trusted source for all things Black Friday. With The Vacationer, Phil combines his knowledge of deals with his love of travel to help you plan the perfect vacation.
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Claiming Credit Card Auto Insurance
Car cover provided by your credit card issuer is usually not as comprehensive as the policy the rental company might offer. Agencies tend to include extras, such as liability coverage if you injure another person, personal accident insurance, and personal effects coverage if someone steals belongings from the vehicle. Therefore, before relying solely on your credit card, you must consider whether you want additional coverage.
So, how do you make a claim if you have an accident in your rental vehicle? It depends on an issuer, as the processes can vary. However, the general pattern is as follows:
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Do You Really Need Car Rental And Excess Insurance
Car insurance can save you a lot of money in the long run and can be required by law, although rental companies have to work some form of third party liability insurance into your initial costs. However, car rental excess insurance isnt mandatory. You might decide not to get excess insurance at all, as long as you dont mind potentially paying a sizeable deductible if you get into an accident.
What Is Not Covered By Credit Card Car Rental Insurance
Most credit cards do not offer any third-party liability coverage or protection for personal injury and damage. For example, if the other partys vehicle is damaged or they are injured, this is not usually covered by your credit card car rental insurance.
If you own a personal car that is insured, your third-party liability coverage may already cover you in a rental car.
A minimum level of third-party liability also comes with all rental cars in Canada by law. The minimum amount starts at $200,000 and maybe up to $1,000,000 depending on the province and/or car rental company.
This minimum coverage is already factored into your car rental and does not require an additional fee.
If you are driving a rental car outside of Canada, the minimum liability insurance coverage at your location may vary wildly and be so minimal that it potentially exposes you to significant out-of-pocket costs.
In this case, it becomes especially important to ensure that you have personal third-party liability coverage in place.
Other exclusions or limitations that may apply include:
- Some countries may be excluded from coverage e.g. may be limited to North America.
- Not all vehicles are covered e.g. trucks, pick-up trucks, off-road vehicles, trailers, motorcycles, recreational vehicles, mini-buses, antique cars or exotic cars, and very expensive vehicles exceeding a defined manufacturers suggested retail price at the time of loss or damage.
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Will My Credit Card Cover Me Anywhere In The World
For the most part, yes. In researching the insurance policies of the cards listed below none provided actual country exclusions. However, certain countries like Ireland, Italy, Jamaica and some others have mandatory laws that renters must have CDW coverage from the rental car company regardless of your credit card coverage. In those cases your credit card should cover the deductible if the policy you get from the rental car company has one. If there are travel advisories and/or sanctions in place from the Government of Canada for certain countries those may affect your coverage.
The Best Credit Cards For Car Rental Insurance Benefits
Most consumer credit cards offer some form of rental car coverage as a benefit. However, Worters says that the benefits can vary widely depending on the issuer and the card, which is why its important to review your policys details. Below are a few of our picks for the best car rental insurance depending on your needs.
Note: Our selections for the best coverage focus on travel cards that offer primary coverage to let you file any claims directly with the credit card company rather than having to go through your personal auto insurance.
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Ink Business Unlimited Credit Card
If you rent a car for business often, this is the card to consider. Ink is the only business credit card suite that offers primary rental car coverage in the U.S. for the value of the car, and this particular one carries no annual fee.
Also, if you like cash back but dont want to have to remember how many points you get for which purchase category, this is your set it and forget it cash back card because youll get 1.5% cash back on every purchase with no limit on the amount. The intro bonus is also decent, at $750 cash back after spending $7,500 on purchases within the first three months.
Which Credit Card Is Best For Rental Car Insurance
The best credit card for car rental insurance is usually going to be the one that you already have. Unless youre already planning on getting a new credit card, its unlikely that youll want to get a credit card only for the rental car insurance benefit.
Additionally, if youre planning on a trip soon, you may not get your card in time to use it, though it is sometimes possible to get a credit card the same day that you apply.
Having said all that, if you already have multiple credit cards and are wondering which of your cards is best for rental car insurance, our pick is the Chase Sapphire Preferred® Card. It offers primary rental car coverage among many other useful benefits, including great rewards and earning potential.
If you are looking to apply for a new card for a trip thats a few months away, consider the Chase Sapphire Preferred® Card or one of the other cards on this list.
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A Note About American Express Credit Cards That Offer Auto Rental Coverage
There are plenty of American Express cards that offer secondary auto rental coverage, including The Platinum Card® from American Express and the American Express® Gold Card. While secondary coverage can also be helpful if you have a personal auto insurance policy you prefer to use for car rental agreements, we thought it was useful to mention an American Express program that lets you purchase primary rental car coverage for extended periods of time.
With American Express Premium Auto Rental Protection, you can pay a flat fee for up to 42 consecutive days of primary auto rental coverage. Two different levels of protection are offered, but the highest level comes with up to $100,000 in coverage against damage or theft, $100,000 in coverage against accidental death or dismemberment, $15,000 in secondary medical expenses per person and up to $5,000 in secondary coverage per person for personal property. Terms apply.
This coverage also works worldwide, except for in Australia, Ireland, Israel, Italy, Jamaica and New Zealand.
Terms apply to American Express offers. See the card application for more details.
How Does Coverage Vary For International Rentals
Rentals in some countries may be excluded. For example, standard Visa and Mastercard coverage excludes rentals in Israel, Jamaica and Ireland. American Express wont cover in Italy, Australia and New Zealand. Aside from excluded countries, the good news is that if your personal auto policy doesnt cover you outside the United States, your secondary credit card coverage could become primary coverage automatically.
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Rental Cars In Certain Countries
Although you can generally rely on your cards auto rental CDW outside of the United States, some countries are excluded from these policies. Consider:
Visa: Coverage excludes theft or damage from rental transactions that originated in Israel, Jamaica, the Republic of Ireland, or Northern Ireland, according to terms. Its also not available where its prohibited by law or violates the territory terms of the auto rental agreement or prohibited by individual merchants.
Mastercard: Coverage excludes vehicles rented in Republic of Ireland, Northern Ireland, Israel, Jamaica, according to the terms. Its also not valid in countries where its prohibited by that countrys law or its terms are in conflict with the laws of that country.
American Express: Coverage excludes rental vehicles rented in Australia, Italy, New Zealand and any country on the sanctioned country list, according to the terms.
If youre renting a car outside of your cards coverage area, factor that into your budget. You might have to purchase protection separately through the rental car agency or a third party company.
Save On Car Rental Insurance
These credit cards can help you save money when you rent a car.
Remember to check your coverage details before arriving at the rental car company so you can make the right decisions when asked about whether or not you want to pay for Collision Damage/Loss Damage waivers.
If you choose to go with the coverage provided by your credit card, you should rent the car in your name and pay all the rental costs using the appropriate card.
If you need to report or make a claim, do so immediately if possible to avoid any problems.
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Primary And Secondary Rental Car Insurance Explained
- Primary coverage: You can file a claim directly to your credit card rental insurance. You don’t need to file with any other insurance policy you have, such as auto insurance or travel insurance.
- Secondary coverage: If you have any other insurance policy that would cover the incident, you need to file a claim with that insurance provider first. Secondary coverage only kicks in for eligible expenses that aren’t already covered by your other insurance.
Primary coverage is helpful because it allows you to file a single claim, whereas secondary coverage often requires filing multiple claims to different insurance providers. It can also help you avoid paying a deductible or seeing your insurance rates increase. If you want primary rental car coverage, Chase credit cards are a good place to start, as several of them offer it.
Secondary coverage is much more common among credit cards with rental car insurance. Although it’s not as good as primary insurance coverage, it’s enough for some consumers. Of the major card issuers, American Express is one that offers rental car insurance on many of its cards.
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Best Credit Cards For Car Rental Insurance
The United Explorer Card offers primary rental car coverage, a generous initial bonus offer and plenty of perks that make applying for the card a no-brainer if you fly with United.
Rewards: 2 miles per dollar on dining including eligible delivery services, hotel stays and United purchases and 1 mile per dollar on all other eligible purchases.
Bonus Offer: 60,000 bonus miles after spending $3,000 on purchases in the first 3 months the account is open
Annual Fee: $0 Intro for First Year, then $95
Benefits and Drawbacks: The United Explorer Card doesnt come with quite as many travel benefits as the Infinite version, but youll only pay an annual fee of $0 Intro for First Year, then $95.
If you are approved, youll be eligible for a bonus of 60,000 bonus miles after spending $3,000 on purchases in the first 3 months the account is open. Youll earn 2 miles per dollar on dining including eligible delivery services, hotel stays and United purchases and 1 mile per dollar on all other eligible purchases.
Cardholder benefits include primary auto rental coverage that is good for most rental agreements in the U.S. and abroad for up to the cash value of the vehicle when you pay for your rental with your card. Youll also get up to a $100 credit toward Global Entry or TSA PreCheck, a first checked bag free when you use your card to purchase your ticket, 25% off in-flight United purchases of food and beverage or wifi, and two United Club one-time passes on your account anniversary.
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