Car insurance when renting a credit card

Today’s bonus cards are full of hidden perks that could save you $1,000. And you may not even be aware of some of these goodies unless you delve into your card benefits guide (which you’ve probably reworked).

One such advantage is the rental car coverage. Yeah; if you rent a car using the correct credit card, your card issuer will actually insure part of the rent for you!

But what are the limits? How can you make sure you are insured? And why this particular bonus path more valuable than you think?

What is car insurance when renting a credit card?

Most travel bonus cards — and even some regular bonus cards — come with a Collision Damage Waiver (CDW), also known as car rental coverage.

CDW is essentially free limited comprehensive coverage for your rental car. It usually covers theft, damage, towing, and loss of use by the car rental company (i.e., their monetary loss due to being unable to rent the car during repairs).

Connected: FROMcomprehensive car insurance against accidents

How does credit card car rental coverage work?

Usually when you book a rental car through Budget, Hertz, etc., at some point – online or in person – you will be asked what kind of insurance you need.

They will then charge you between $10 and $60 per day for each type of insurance, so the amount can add up quickly.

What they will not tell you what your regular insurance is already covers most of these.

• Liability coverage – Unless you’re renting a sports/luxury car that costs a lot more than your everyday driver, your regular auto insurance limits should cover your rental just fine.
• Accident insurance – This covers your medical bills in the event of an accident with your rental car. Again, if your current auto insurance has Personal Injury Protection Equipment (PIP)or your health insurance has already covered you, you may miss out.
• Coverage for personal items – PAC covers items stolen from a rental car, such as a laptop bag. Your home or renter’s insurance will usually already cover this; check your policy for coverage related to “non-residential property” or alternatively just keep valuables away from your car!
• Collision Damage Disclaimer (CDW) – Finally, we get to CDW, which covers theft and damage to your rental. This this is what your credit card company can cover for free.

The business may charge $20 a day for CDW, so at this point, you should definitely check to see if your credit card already covers you.

To find out, refer to your Card Benefits Guide and look for terms such as “automatic” and “waiver”. For reference, here is one of Chase Sapphire prefers card.

Then, before you yell “Yahtzee!”, let’s first determine if you have a primary or secondary coating.

Primary and secondary coating

Your card’s Benefits Guide will clearly state whether you have basic or additional car rental coverage.

• Elementary means your credit card insurance is triggered before your regular car insurance.
• Average means that your existing auto insurance policy takes effect the firstand your credit card insurance will simply pay off the remaining difference (usually just your deductible).
  

Say, for example, you have an active car policy with full coverage and a $1,500 deductible. You slide off an icy road in South Dakota and the poor Kia Soul you rented ends up in car heaven.

• In Initial Coverage, your credit card company will cover the car’s Actual Cash Value (ACV), so you don’t have to pay anything out of your own pocket.
• In secondary coverage, your insurance company steps in first by covering ACV. minus your $1,500 deductible. You must then file a second claim with your credit card company to cover the $1,500.
  

Primary coverage not only saves you the tedium of keeping track of two requirements; it also allows you to completely opt out of dealing with your regular auto insurance company.

This is more serious than it looks because filing a claim with your usual service provider will generally cause them to increase your auto insurance premiumseven if it wasn’t your fault.

How can I use my credit card when renting a car?

Check your Benefits Guide to be sure, but 99% of the time, all you have to do is:

1. Pay the rent in full with a card that includes CDW.
2. Reject CDW rental agencies.

The car rental company may still insist that you buy them coating. If so, simply call your card company at the number on the back of your card to confirm that you will be covered.

Then, if your car is stolen or damaged, call your credit card company. No your insurance.

I know it sounds weird to call Chase and say, “Hey, I hit a pole,” but remember, the whole point of primary coverage is that it allows you to avoid filing a claim with your supplier.

If you have secondary coverage, you will first you need to file a claim with your insurance company, and then call the company that issued the credit card.

What does credit card car rental coverage include?

Credit card car rental coverage – whether primary or secondary – will typically cover the following for you and your other authorized rental drivers:

• Damage up to the actual cash value of your rental car, including accidents (you hit another driver) and incidents (hail, run over, etc.).
• Theft to actual cash value.
• Administrative and towing fees.
• Compensation for loss of use, this is the amount of money a car rental company loses when they are unable to rent a car during a repair. This is especially nice to have since it’s not covered by a regular auto insurance policy.

What does the credit card cover when renting a car Hfrom Include?

Credit card rental coverage usually not include:

• Damage to another driver’s car.
• Someone’s medical bills.
• Damage due to negligence, such as drunk driving, speeding, or off-roading.
• Theft due to negligence, such as leaving your car running while you run back to AirBnb.

Coverage also generally does not apply to:

• Exotic or expensive cars (ferrari, lamborghini, even corvettes).
• Classic cars (2002 or older) or cars that have not been produced for more than 10 years.
• Vans, motorcycles, ATVs.
• Rentals lasting more than 31 days.
• Cars rented from non-rental agencies (Turo, Zipcar, Getaround, etc.).

Yes, the last one is nonsense. I’m a big fan of Turo, but since they’re not officially registered as a commercial car rental agency, free credit card CDWs don’t apply.

However, why is car rental insurance such a low-key awesome perk?

Credit card rental coverage may not always apply – but when it does, you’ll get some serious savings and stress relief.

• Right off the bat, you save on the CDW cost, which can be 25-40% off the base car rental cost (~$15-$30+) per day.
• In the event of a covered incident, you save on the deductible you would have paid your regular auto insurance company ($500, maybe $1000+).
• Finally, you save on rate hikes, which Zebra averages $36 for a six-month policy.
  

So let’s say your card has basic coverage and you go on a seven-day trip in a Hertz Toyota Camry.

• If you didn’t get into an accident, you just saved $20 x 7 = $140 on CDW.
• if you are do had an accident, you just saved $140 + $1,000 deductible + $72 per year bonus increase = $1,212.

Talk about a valuable perk!

How do I check if my credit card has rental car insurance?

Just Google”[your credit card’s name] Benefits Guide”, download the PDF and search for “Car Rental Collision Damage Disclaimer” (or some combination of these keywords or “CDW”).

Again, trip reward cards usually have primary coverage, while many regular reward cards may only have secondary coverage (or no coverage at all).

Be sure to read the terms and conditions carefully. For example, Chase covers a little BMW and not others; so if you’re planning to ride Highway 1 in the shiny new M240i, be sure to give them a call to confirm coverage.

If you find that your card not If you have any car rental coverage (for example, Citi Cards stopped all car rental coverage in 2019), you might want to consider switching to a suitable travel rewards card before your next big trip.

Best Credit Cards for Car Rental Coverage

Card	Coatings	Covered Rental Length	* Countries released	Best for
Chase Sapphire Preferred® Card	Theft Damage Administration Towing Compensation for loss of use	Up to 31 days domestic and international	Not listed – call Chase to confirm before travel	General travel rewards
Ink Business Preferred® Credit Card	Theft Damage Administration Towing Compensation for loss of use	Rent for business up to 31 days domestically and abroad	Not listed – call Chase to confirm before travel	Small business owners
Capital One Venture X Rewards Credit Card	Theft Damage Loss of use Administrative fees Towing	Up to 15 days within the country, up to 31 days abroad	Israel, Jamaica, Ireland and Northern Ireland	Frequent rental car drivers
Pursuit of Unlimited Freedom®	Theft Damage Administration Towing Compensation for loss of use	Up to 31 days domestic and international	Not listed – call Chase to confirm before travel	No annual commissions
American Express® Gold Card	Theft Damage Administration Towing Compensation for loss of use	Up to 30 days domestically and abroad	Australia, Italy and New Zealand	Long list of perks and benefits

*card rental car insurance is not valid in these countries