Rental Car Insurance: Rental Company vs. Credit Card
Is your credit card’s rental car insurance enough?
Does your credit card offer rental car insurance? Great—but it might not cover what you think it does.
It’s important to know how the rental car insurance from your credit card, your car insurance, and the rental company all differ from each other. That way, you can avoid any unwelcome financial surprises when you’re cruising around in a rented ride.
What Your Car Insurance Covers
Generally speaking, if you have car insurance, it extends to rental cars, too. This isn’t a rule, though, so it’s worth checking with your insurer before renting a car.
It’s also important to think about which types of car insurance coverage you have. Just because you have car insurance, for example, doesn’t mean everything car-related will be covered. Generally, car insurance encompasses four main types of coverage:
- Liability: Covers damage you cause to other people and their property.
- Personal injury protection (or PIP): Covers you and your passenger’s medical bills in an accident.
- Collision: Covers damage from an accident.
- Comprehensive: Covers your non-collision costs, like hail damage or theft.
When you’re thinking about renting a car, it’s a good idea to make sure you have coverage for all of these areas.
If you get into a car accident, your medical bills can also be covered by your health insurance. If your personal belongings—like laptops or cameras—are stolen from your car, that could be covered by your renters or homeowners insurance.
Benefits of Credit Card Car Rental Insurance
Getting a good car rental insurance credit card can be especially useful for people who travel a lot, and here’s why:
Many travel credit cards offer rental car insurance as an included benefit for cardholders. Check your card’s guide to benefits for details on limits and coverages.
There’s No Deductible
Surprisingly, most of what people refer to as “credit card rental car insurance” isn’t insurance. It’s a Collision Damage Waiver (CDW) or a Loss Damage Waiver (LDW), and it means that if the car is damaged or stolen, you won’t be on the hook to replace or repair it. These costs will be “waived” entirely, and therefore you don’t have to worry about paying any deductibles.
Certain Visa, Mastercard, and American Express cards offer complimentary insurance, while Discover does not. Your coverage may vary depending on which credit card you have, so check the benefits guide that comes with your card to verify what’s covered and what’s not.
Drawbacks of Credit Card Car Rental Insurance
Rental car coverage from your credit card issuer is a free and valuable perk, but it’s not the be-all-end-all of coverage. Here are some of the downsides to consider:
You Need to Do Some Things to Get It
To make sure you’re covered by credit card rental car insurance, you’ll need to do each of these three things, in most cases:
- You’ll need to be the primary renter listed on the car rental contract
- You’ll need to pay with the credit card that offers the coverage
- You’ll need to decline the optional coverage from the rental company
Most Credit Card Rental Car Insurance Isn’t Primary Coverage
Most credit card rental car insurance you see these days is only secondary coverage. This means that you’ll be required to file a claim with your primary insurance company first. Only then will the secondary coverage kick in and cover any expenses you had to pay out of pocket, such as a deductible or certain charges your insurance company doesn’t cover.
If you don’t have car insurance, these policies generally become primary coverage that kicks in right away in the event of damage or a wreck.
Your Coverage May Have Limits
It’s easy to be lulled into a false sense of security. “Rental car insurance” sounds comprehensive, right? If that’s all you rely on—and don’t check whether you’re covered in the other areas too—you may be on the hook for more than you bargained for.
Additionally, credit card rental car insurance might not cover you if you travel to certain countries, for long periods of time, or for certain types of cars. They might also be invalidated if you do certain things, like drive on dirt roads or cause an accident by speeding.
Some of the common types of exclusions you may see include:
- Rentals in Jamaica and Israel
- Expensive or antique cars
- Recreational vehicles
- U.S. rentals of more than 15 days
- Damage caused while driving under the influence
- Damage incurred while you’re driving without a valid license
Not Offered With Every Credit Card
Even though it’s fairly common to see “rental car insurance” listed as a benefit on your card’s Guide to Benefits, it doesn’t come with all credit cards. For example, it’s common for secured cards not to offer CDW. Notably, Discover—one of the largest credit card issuers around—doesn’t offer rental car insurance with any of its cards.
Benefits of Rental Company Car Rental Insurance
When you’re filling out the paperwork to get the keys to your rental car, the agent will often try to upsell you on optional rental car insurance. Here are some of the reasons why you may want to consider it:
If You Don’t Have All the Coverage Types You Need, You Can Get Them Now
Not everyone has car insurance. If you’re relying on just the rental car coverage from your credit card, you’re covered against damages to the rental car. But as we’ve stated, that’s only a part of the full picture.
You also need coverage for liability and personal injury (if you don’t have health insurance, that is). Otherwise, you run the risk of being sued for any injuries you cause to other people, or damage to other people’s property. If you don’t currently have these things, now’s a good time to purchase them.
You Can Avoid Filing a Claim With Your Insurance
Buying rental company insurance can also be handy if you want to avoid filing a claim and paying a deductible through your auto insurance company. You’ll need to read the fine print carefully, of course, to make sure there isn’t a deductible. Generally speaking, the Collision Damage Waiver releases you from having to pay anything at all, including a deductible.
Drawbacks of Rental Company Car Rental Insurance
It’s important to be aware of the downsides when it comes to your car rental insurance.
You’re Often Upsold on Insurance You Don’t Need
Let’s face it—insurance is a tricky and often boring subject. It’s easy to sign up for optional rental car insurance when you’re at the counter because the agent tends to try to convince you to buy their policies.
If you already have car insurance, chances are you’re already covered for most if not all of what your rental company offers.
Buying insurance from a car rental company can cost between $20 and $50 a day, on average. Paying for insurance on a multi-day or multi-week could make the rental too expensive.
Is It Worth It to Buy Rental Company Insurance?
If you don’t have enough insurance through your auto insurer, it can be a good idea to consider buying additional coverage through the rental company.
For example, if you don’t have PIP on your auto insurance policy or health insurance, you may want to add PIP via the rental car company. The average bodily injury claim in 2018 was $15,785, according to the Insurance Information Institute—quite a hefty medical bill you’ll face if you don’t have insurance for it.
Here are the four biggest ideas to keep in mind:
- Identify gaps in your coverage Make sure you’re covered for liability, personal injury, comprehensive, and collision. Check with your existing insurance policies for situations that may not be covered.
- Fill in those gaps with other products If you’re missing coverage in these four key areas, consider supplementing with rental car insurance from either your credit card or a rental car company.
- Read the fine print Make sure you understand exactly what each rental car coverage type does and does not cover, and what you need to do to qualify for that coverage.
- Credit card rental car insurance isn’t enough on its own This coverage usually only kicks in after your own insurance pays out. It also only covers you against damages to the car—and that’s a small part of making sure you’re fully covered.