The last thing you want to worry about on vacation is getting into an accident and having to foot a bill for several thousand dollars. Luckily, many credit card issuers offer an auto-rental collision damage waiver (CDW) as an ancillary perk.
Before you rely on it for your next trip, though, you should understand how credit card car rental insurance works. It’s not the same as the policy you carry for your main vehicle, and might not cover what you think. For example, injuries and property damage aren’t generally covered, only losses related to the rental car. Even then, depending on the policy, you might have to file a claim with your own car insurance company first.
Here’s what you need to know about how credit card car rental insurance works, and which cards have the most comprehensive coverage.
Primary vs. Secondary Car Rental Coverage
Most car rental insurance policies are actually secondary—meaning your own car insurance will be billed first. That’s not ideal, since you’d need to file a claim with your insurance company, which could increase your rate.
The best type of rental car coverage is a primary policy, which means there’s no need to file a claim with your own insurance company for a covered incident (typically if the rental car is damaged or stolen). Since the transaction doesn’t involve your insurance company, it’s unlikely that the rate for your personal auto insurance would be raised.
Types of Coverage
One of the downsides of car rental insurance from credit card issuers is that it’s not all-inclusive.
You can get four types of car insurance through your own car insurance company: liability (for property damage); personal injury protection (for your and your passengers’ medical bills); collision (for damage from an accident); and comprehensive (for damage from non-collision sources).
But when you use the CDW with your credit card, it generally only covers two types of losses: car damage or theft. Depending on whether it’s primary or secondary coverage, it could cover just the deductible on your primary insurance (secondary coverage), or the entire cost of the car, up to the coverage limit (primary coverage).
That’s an important factor when you consider that the average bodily injury claim from car accidents was $18,417 in 2019, according to the Insurance Information Institute.
You can rely on a CDW policy for most car damage claims, but to be fully protected against liability and medical claims, make sure they’re covered by your personal car insurance policy.
Additional Coverage Features
Knowing the nitty-gritty details might help you down the road if you need to use your policy. Here are some of the finer points to look out for in a rental car insurance policy:
Loss of Use
Some car rental insurance comes with a “loss of use” policy. If the rental company needs to repair or replace its rental car because of damage or theft, it can’t earn money from the vehicle until it’s back in operation. In that case, the company can actually come after you for the lost money. It’s similar to how you can sue someone for lost wages if they cause you harm that prevents you from working.
“Loss of use” is a nice feature to look for if you’re shopping around for a good credit card for car rental insurance. For example, the Hilton Honors American Express Aspire card and Chase Sapphire cards come with a policy that covers loss of use.
Most policies restrict coverage in certain countries. For example, Israel, Ireland, and Jamaica are commonly excluded from car rental insurance policies. If you intend to rent a car while traveling abroad, you should know whether your car rental insurance policy covers you outside the U.S. A number of Chase cards, for example, have no country exclusions.
Types of Vehicles
Many CDW policies specifically exclude certain types of vehicles; trucks, motorcycles, large vans, campers, and luxury cars are all commonly left out. If you stick with common car rental models like the Nissan Altima, Chevy Cruze, or Toyota Camry, you probably won’t run into any issues.
Long-Lasting Rental Coverage
Most car rental insurance policies only apply to rentals of a month or less. If you rent cars for longer than a month, you may be able to split up your rental periods by returning the car for a day to stay under the limit, and then re-renting.
Otherwise, you may want to look for a car rental insurance policy that covers longer-term rentals. Amex’s Premium Rental Car Protection policies, available for purchase if you have an Amex card, cover you for up to 42 days.
Best Cards for Car Rental Insurance
The credit cards with the best car rental coverage will have primary car rental insurance policies (or primary rental insurance available) and offer more comprehensive coverage than their peers. Here are some clear standouts you might be interested in, especially if you travel a lot.
Best for Business Travelers
- Chase Ink Business Preferred ($95 annual fee): This card and the Chase Ink Business Cash card provide primary rental insurance coverage up to the full value of the vehicle for business-related rentals up to 31 days. But if you travel for business frequently, you might prefer this card because it offers a 25% bonus when you redeem points through the Chase Ultimate Rewards portal.
- Chase Ink Business Cash ($0 annual fee): This card offers the same rental car coverage as the Business Preferred version plus 5% cash back on up to $25,000 worth of purchases at office-supply stores and on internet, phone, and cable bills.
Best for Leisure Travelers
- Chase Sapphire Reserve ($550 annual fee): Provides loss-of-use coverage plus primary coverage on up to $75,000 of damage due to theft or collision, as well as a 50% points bonus when you redeem rewards points for car rentals and other travel through the Ultimate Rewards portal.
- United Explorer Card ($95 annual fee): For a modest annual fee, this card provides primary coverage up to the full value of the covered vehicle with no country-based exclusions for up to 31 days.
- Hilton Honors American Express Aspire Card ($450 annual fee): This card is one of the few we could find that comes closest to covering medical payments, although it only pays out between $5,000 and $200,000 for accidental injuries, dismemberment, or death. It also covers loss of use plus $1,000 towards loss of personal property. (Primary coverage is available for $12.25-$24.95 per policy.)
- The Platinum Card from American Express ($550 annual fee): This card offers the same car rental insurance benefits as the Hilton Honors card, and it comes with all of the other premium benefits you’d expect from one of the ritziest travel cards. (Primary coverage is available for $12.25-$24.95 per policy.)
All American Express cards—even the luxury ones—come with secondary coverage. But you have the option to purchase a primary coverage policy for $12.25-$24.95, depending on where you live and the amount of coverage you want. You sign up in advance, so when you do rent a car, the cost of the policy is automatically charged to your card.
Some card issuers, including Discover, don’t offer car rental insurance with any of their cards.
Car rental insurance benefits may vary for the same card, depending on the card processor, such as Visa or Mastercard. Check the benefits guide to confirm coverage details for cards you own or are considering.
How To Make Sure You’re Covered
Car rental insurance isn’t automatic. The details may vary by policy, but in general, to qualify you’ll need to do three things:
- List your name as the primary driver
- Decline the rental car company’s optional insurance
- Pay for the rental with the credit card that has the CDW policy you’d like to use
If you ever do need to file a claim, call the benefits administrator for your card. You can contact them by calling the number on the back of your credit card. They’ll walk you through the process of filing a claim.