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Guide to credit cards and car rental insurance

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How to get the best rental car insurance with a credit card 

Getting car rental insurance from a credit card company instead of the rental car company is typically much cheaper. You’ll usually pay up to $50 a day for coverage through the rental company, but credit cards that cater to car renters usually don’t charge for insurance.

Using a credit card plan for rental car insurance can also be less expensive in some cases than solely using your own personal car insurance, which can extend to driving rentals. That’s because you won’t have to pay deductibles or face a potential hike in rates after an accident. Also, some personal car insurance policies don’t cover rentals unless you pay extra, which may not be worth it if you don’t rent cars a lot.

Five key considerations when insuring a rental:

  1. Make sure your credit card offers coverage and will cost less than buying through a rental company.
  2. You should buy coverage from the rental company if you don’t have your own personal policy and your card only offers secondary coverage, which means it only pays after your policy is tapped out. Or, buy a non-owner policy from a car insurance company rather than drive uninsured.
  3. Credit card insurance plans for rentals don’t cover other cars you damage -- you have to rely on your own liability insurance or the rental company’s supplemental liability insurance to cover damage to other cars.
  4. If you do opt for the rental car company damage waiver insurance, it will negate your credit card insurance – so you can’t have both. Opt in for your credit card’s coverage if it offers rental coverage and decline insurance from the rental company.
  5. You must charge the entire rental costs on the credit card you are using to cover the car.

It's helpful to remember that basic "rental car insurance" only refers to the rental car you're driving – and not any vehicles you hit – you have to pay more for to cover damage to other cars. You don't want to fall into a false sense of security, thinking you're covered when you really aren't. While utilizing a credit card is an excellent way to get coverage for your rental car, no credit card rental insurance plans include basic liability, which pays for damage to the other car outright.

But the liability portion of your personal car insurance policy, which is required in nearly all states, pays for damage you cause to other cars. You can, however, also purchase supplemental liability coverage from a rental company, which we explain below, along with other common offerings.

Jump ahead:

What rental car insurance generally covers

When you're at the rental counter, you are usually offered four types of insurance. Regardless of how you insure your rental, you need to know the basics. Here’s what’s covered by the different types of rental car insurance, what they cost if bought from the rental company and if you need them, depending on your own personal car insurance coverage.

Collision damage waiver (CDW)

  • What it covers: Also called loss damage waiver (LDW). If your rental car is stolen or damaged , you're covered. But everyone's hospital bills aren't. Expect to pay your rental car company approximately $10 to $20 a day, depending on what car company you're renting from.
  • Do you need it? If you have collision coverage and comprehensive insurance on your own policy, you don’t need CDW, as these coverages typically also pay for damage to rental cars you drive.
  • Good to know: You will have to pay your deductible if you file a claim and your rates may increase as result.

Supplemental liability protection

  • What it covers: The people you injure are covered and this also pays for the wreckage of their car, typically up to $1 million. Expect to pay your rental car company around $7 to $14 a day.
  • Do you need it? If you don’t have your own car insurance policy, you should definitely purchase supplemental liability. If you do have liability, it will cover injuries and damage to others, but only up to your limits.
  • Good to know: If you have only your state-mandated minimum liability insurance levels, even a minor accident could exceed your pay out, so supplemental liability might be a good idea.

Personal accident insurance

  • What it covers: Your hospital bills are covered as are any passengers in your car. It also includes ambulance and death benefits. This is pretty cheap, comparatively speaking, around $1 to $5 a day.
  • Do you need it? No, you don’t need this if you have health insurance.
  • Good to know: Additionally, personal accident insurance is redundant if you already have personal injury protection or MedPay through your personal car insurance policy.

Personal effects coverage

  • What it covers: This pays for items stolen from the car. It typically costs $1 to $4 a day.
  • Do you need it? If you have home or renters insurance, this coverage is largely redundant, so you won’t need it.
  • Good to know: If you want to be reimbursed for personal property stolen from your rental by filing a home or renters insurance claim, you will have to file a police report and pay a deductible.

Renting a car with a credit card: Why is primary coverage important?

Primary coverage refers to the insurer that you're going to file a claim with. This is the company that will shoulder all or most of the financial burden that comes with an accident.

Many credit cards offer rental insurance, but often they're giving you secondary coverage. That means it only kicks in after your own personal car insurance company pays out for the claim up to the limits of your policy. With secondary insurance, the credit card picks up the rest of (or some of) the money that your own car insurance won't pay.

The reason a credit card with primary coverage is highly coveted among consumers is that you don't have to make a claim with your own auto insurance. Think about it. If you go to your auto insurer and say, "Hey, I rented a car this weekend, and I crashed it," your insurer may pay for the whole thing without complaining, but you're probably still going to see your auto insurance premiums increase. A CarInsurance.com analysis of rates from six insurers in 10 ZIP codes in each state shows that rates jump $350, on average, after one accident claim costing more than $1,000. That’s because now in your insurance company's eyes, you are now a risky driver.

But if you have a credit card that offers primary coverage for rental cars, and you crash, your credit card company will pay for the damages. That's it. Your personal car insurance rates will remain the same. So if something does go wrong with a rental car, it is generally always better to have a credit card offering primary coverage rather than secondary coverage.

What credit cards provide primary coverage for rental cars?

Before we offer up a list of the best credit cards that offer primary coverage for rental cars, there's one very important thing to remember: These cards offer pretty similar primary coverage for rental cars. So don't sweat the details, and instead think about the big picture. You might find a credit card with great rental car insurance, but be sure to ask yourself if the annual fee is acceptable, and if you like how the rewards are doled out. In other words, make sure your other credit card needs are met, while you're looking for rental car insurance.

Still, the cream of the crop of credit cards offer primary coverage on rental cars, so no matter what you focus on, the credit card as a whole, or its rental coverage, you're not likely to choose a dud. These credit cards have primary coverage for rental cars:

Chase Sapphire Preferred Card

  • Worth mentioning: Rent your car with this card, and you'll earn double points; you also get "reasonable" towing costs paid for, if your vehicle isn't able to move on its own.

United MileagePlus Explorer and United MileagePlus Club

  • Worth mentioning: Coverage is worldwide. This is worth mentioning because some cards exclude some countries, even ones you wouldn't think would be excluded, like Italy, Australia and Ireland.

Fairmont Visa Signature Card

  • Worth mentioning: Double points for renting cars, and it covers most cars in the U.S. and abroad.

J.P. Morgan Palladium

  • Worth mentioning: Generally, you can get primary coverage worldwide with this credit card, though its brochure states that some high risk countries may be excluded.

Ritz Carlton Visa Signature

  • Worth mentioning: Many credit cards don't specify a limit to how much they'll cover you; they simply make it clear it'll cover the cost of damage to the car. This card states that it provides reimbursement up to $75,000 for theft and collision damage for rental cars in the U.S. and abroad. So you should be in great shape, provided you don't rent a car worth more than $75,000.

All American Express cards

  • Worth mentioning: American Express card holders automatically have secondary coverage up to $50,000 on your rental car, but you should take a look at American Express's product, "Premium Car Rental Protection." You can opt-in for its primary coverage, and if you do, every time you rent a car, you're automatically charged $19.95 or $24.95, depending on what type of primary coverage you select (there are slightly different prices for California and Florida residents). Unless you're only renting for a day, it will likely be far cheaper than the insurance your rental car will offer, and you'll be covered up to $100,000 for damage or theft.

Rental insurance through your credit card

Not all credit cards are alike, but they are very similar when it comes to covering your rental car with them. Keep the following in mind, no matter what credit card you're depending on, when covering your rental car.

  • Have on-hand the contact number of your credit card company. Find the number of the benefit administrator or car rental loss division for your credit card company before you go on your trip. That way it’s on hand if you need to report an accident.
  • Rent the car with your credit card! If you go to the trouble of getting a credit card with primary coverage, but you end up renting the car with one of your other four credit cards, and then you have an accident, you won't be covered.
  • You need to be the primary driver. This may sound obvious, but if you have a spouse or a boyfriend or girlfriend, it's easy to imagine one of you renting the car, with the other planning on being the main driver. But as a general rule, the person who is the primary driver needs to have his or her name on the credit card that pays for the rental car.
  • Not all types of cars will be covered. Credit card companies typically won’t insure rentals that are exotic or fall into the super luxury category, for example an Aston Martin or a Ferrari. Same goes with antique cars, so if you were planning on renting a Model T Ford, call your credit card’s customer service staff to find out what car models are excluded before deciding on coverage options.
  • Many business rewards credit cards have car rental insurance coverage. The caveat, however, is that you need to be driving the car for business to be covered for an accident and not on vacation with the family.
  • There's a limit to how long you're covered. Anyone taking a two-week vacation is likely fine, but if you're ambitious with your R&R, you may have a problem. A lot of credit cards have 15-day limits to their coverage, if you're traveling within the United States. If you're overseas, you may have as many as 31 days of coverage. So if you're planning a lengthy vacation overseas, or maybe you're moving overseas and will need to rent a car for a while, you'll want to talk to your credit card issuer. You may, however, dodge this limitation - by simply renting a different car after 31 days.
  • Read the rest of the fine print. You can't blame a credit card company for stating that it won't pay for the damage if the customers drink heavily and then drives and causes an accident, or, say, uses the vehicle for off-road exploration that damages the car. But, still, it may surprise you what's covered and what's not. You may wind up getting a credit card that will insure you if your rental car is stolen, but not if your luggage is stolen from the car.

Credit cards with secondary coverage for rental cars

While getting a credit card with primary coverage is ideal, don't write off the credit cards that offer secondary coverage. For one thing, generally, these cards do offer primary coverage if you're renting a car overseas, since your personal insurance probably won't cover you, and secondly, a little extra insurance coverage never hurt anyone.

As a general rule, this is the type of coverage that you'll find if you have a Visa, MasterCard, American Express or Discover card.

  • Visa: You get secondary rental car coverage on all Visa Standard Credit, Visa Rewards Credit, Visa Premium Rewards, Visa Signature® and Visa Signature Preferred cards. It's sufficient insurance, but there are plenty of exclusions, which is typical. For instance, if something is stolen from your car, you aren't covered.
  • MasterCard: According to its website, many of the cards have secondary coverage up to $50,000 an incident, but not all of them. They also don't cover theft. Check with the company regarding your particular card.
  • American Express: As noted, its Premium Car Rental Protection program is worth looking at, but the free secondary coverage goes up to $50,000. And its customer service with rental car coverage has a stellar reputation.
  • Discover: The cards that have coverage offer collision damage up to $25,000.

How to file a claim with rental insurance from your credit card

If you use a card with primary coverage, you don’t have to file a claim with your insurance company. And the credit card company – or its third-party company used for filing claims – will deal with processing the claim with the rental agency once you report the incident.

You should notify the police after the accident, and then contact the credit card benefit administrator, or, in some cases it will have a car rental damage and loss division.

You will likely have to send copies of your rental agreement and, naturally, provide details about the accident.

If you use a card with secondary coverage...

It’s a bit more complicated. You have to file a claim with your insurer, and also supply your credit card company with all the paperwork needed for them to calculate and pay their share. Credit card companies have their own guidelines for filing claims, but typically, this is the claims process for those with secondary coverage:

If you have an accident or the car is stolen, call the benefit administrator for your credit card company right away to report the incident and to have them send you a claim form. There usually is a toll-free number on the card or website.

Next, you will need to ask the rental agency for the following:

  • A copy of the accident report and a claim document that shows costs you’re liable for and any money the rental company paid toward the claim, if any
  • A copy of the rental agreement
  • A copy of the repair estimate and itemized repair bill
  • Two photos of the car
  • The police report if one was issued
  • Fleet utilization log

Send to the benefit administrator the completed claim form from the credit card company, all the documents listed above and the ones listed below:

  • A copy of your driver’s license
  • Your completed and signed rental CDW form
  • A copy of your credit card bill showing you charged the car on the card
  • A statement from your car insurance company showing what costs you’re responsible for and any money it paid toward the claim
  • A copy of your policy declarations page

Tips for filing car rental car insurance claims

  • File your paperwork as quickly as you can: Many credit card issuers have a 45-day deadline from the date of the accident to accept claims.
  • Get an extension if you experience delays: If the rental agency is slow to send you the necessary paperwork, contact your card issuer and notify it of the delay. In some cases, it will contact the rental company on your behalf, or, give you an extension on the deadline.
  • Beware of “loss-of-use” contingencies: Sometimes rental companies will charge you a “loss-of-use" fee, to compensate for potential money that could have been earned if the car wasn’t damaged, and, therefore available to rent out. Whether you get stuck with this charge depends on the guidelines of your car insurance company and your credit card company -- some cover this cost, but some don’t.

Even if it is covered, it can be challenging to get reimbursed. Some credit card companies and car insurers will ask that you submit a copy of the rental agency’s “fleet utilization log,” which shows what cars are operating and which ones are being repaired. The premise is that they can use this to prove that other cars were available while the one in the accident was being fixed, to negate there was a “loss.” However, rental companies may be hesitant to supply this document, claiming it contains "trade secrets," which then can mean the card issuer and insurer may refuse to pay you for this charge. Be persistent in having your insurer or credit card company obtain the log from the rental agency.

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