I’ll gladly admit it, I hate the rental car counter. There is something about the way they pitch the rental car insurance that makes my skin crawl.
“What level of coverage are you going with today, Mr. Kurtz?” “I am declining everything, my credit card covers me…”
Look, I get it, they are just doing their job. Likewise, when a police officer gives you a ticket they are also doing their job..
Credit card companies offer a diverse range of rental car coverage. It is important to know what coverage your card offers so that you can make the best decisions at the rental car counter. Many rental car companies require a credit card in order to rent a vehicle so it is important to know which card to use. (especially if you don’t want to pay $15 a day for their coverage)
Backing up for just a moment, yes, many travel credit cards will provide either primary or secondary rental car coverage as long as you pay for the rental in full with said credit card. Some cards have different levels of coverage in the United States vs traveling abroad.
Some terms to know about. CDW and LDW, Collision Damage Waiver and Loss Damage Waiver. These are the two main coverages offered by the rental company and/or your credit card company. CDW is coverage to protect you if something should happen to the vehicle. LDW is payment to the insurance company while the vehicle is out of commission being repaired. Need another reason to hate the rental car companies? (I don’t). They charge YOU every day that the vehicle cannot be rented. This is why it is important to see if your credit card offers these two coverages so that you can waive them at the rental counter and save money.
NOTE: Credit cards and the rental companies generally DO NOT cover 3rd party liabilities, which is damage you do to other vehicles or property. This is why you still need to make sure your personal insurance transfers to rentals. There are companies that sell 3rd party liability insurance if you do not have it already. More on that in a bit.
–‘Primary‘ coverage will pay out for damages before your personal car insurance has to kick in.
–‘Secondary‘ coverage is coverage that will pay out for damages that exceed the policy limits of your personal car insurance.
What would be the benefit of primary coverage if I have car insurance already?
For starters, not having to pay your deductible if damage occurs to the rental is nice. That saves you $500-$1000 depending on your deductible. Additionally, not involving your insurance company is usually a good thing. So no deductible and no risk of increased premiums, that is sweet! Keep in mind, rental car coverage from a credit card ONLY covers (at the most) damage to the rental car. It does not cover for damages to other vehicles or property. It is best to call your insurance company and credit card to double check your coverage if you are unsure.
Why would I care about having secondary coverage if I have personal full coverage insurance already? Secondary coverage is great because it picks up where your personal insurance leaves off. Some cards with secondary rental coverage will cover your deductible and towing, whereas your insurer may not, but you will want to read the fine print for yourself.
What cards offer primary rental car insurance?
These cards offer primary rental car coverage (most other credit cards offer secondary coverage);
-Chase Sapphire Preferred
-United MileagePlus Club
-United Mileage Plus Explorer
-Fairmont Visa Signature
-Chase Ritz Carlton
–These cards are your best bet if you are renting a car and want to waive coverage from the rental company.
What do I need to do for the credit card benefits to kick in?
1. You must be the primary renter on the rental agreement
2. You must decline the collision damage waiver and loss damage waiver offered by the rental company
3. You must pay for the rental car in full with the credit card
Are there exclusions?
Yes there are a couple of common exclusions. (You will want to read the fine print terms to verify for yourself)
1. Not all vehicles are covered. Most excluded vehicles are: Sports Cars, Trucks, SUVs, ATVs etc.
2. There are limitations on rental length, typically 15-30 days max
3. Not all countries are covered, however most are. Commonly excluded are; Ireland, Israel, Jamaica, Italy, Australia and New Zealand
4. Payout limits. Most cards limit their payout at $50,000. Again read your card’s terms to be sure.
5. Some coverages become void if you travel on gravel roads or other off payment scenarios, a good thing to keep in mind. Don’t take your Corolla on a safari.
Remember, credit cards and even the standard coverage offered by the rental company DO NOT cover your damages to other vehicles or property. This is known as “3rd party liability” coverage. If you damage other vehicles or property while renting you will need to file a claim with your insurance provider. If you rent abroad you can purchase liability coverage since your insurer may not cover you outside the country. Be sure to see if your insurance provider conveys to rental vehicles and if that coverage transfers out of the country.
I would recommend the Chase Sapphire card if you are going to rent vehicles frequently. It has a great sign up bonus and primary rental car coverage. Strong choice!