You may book a rental car with a credit card, and your credit card company will offer some level of coverage. Your credit card’s rental car insurance coverage should keep you financially secure in the event of an accident or theft. But before we look at how credit card rental car insurance works, let’s take a look at the basics and what type of coverage you need when renting a car.
What is credit card rental car insurance?
Many credit cards provide car rental insurance, commonly referred to as car rental loss or damage insurance, as a standard feature. It is a perk that provides insurance coverage for the card members, for passengers and any drivers approved under the rental contract – as long as they pay for the rental car using the credit card. Sometimes, some of the best car insurance companies do not provide rental insurance.
Credit card car rental coverage can be beneficial. However, it is vital to understand how your credit card rental car insurance works, what it covers, and how to utilize it so that you can be confident you’ll be covered in the event of an accident or any other issue while driving your rental.
How does credit card rental car insurance function?
If your credit card gives rental car insurance, it will usually kick in when you pay for your rental car with that credit card. If your credit card company does not offer rental car insurance, you can buy it separately.
For the coverage to kick in, you’ll have to decline the insurance given by the rental car company. The specifics of how your credit card rental car insurance works can vary. It ultimately depends on whether your card provides primary or secondary coverage.
Primary coverage: Pays for claims that occur before your personal auto insurance takes effect. Thus, you can avoid paying your deductible. In some cases, you could also avoid a rise in your insurance premiums.
Secondary coverage: This coverage will not kick in until your car insurance has paid the damages first. Then, the rental car coverage on your credit card will refund you for your deductible. If applicable, it will also cover any additional expenditures not covered by your personal car insurance policy. Credit cards that provide secondary coverage are more common than those that provide primary coverage.
But what if you don’t have a personal car insurance policy? In such instances, your secondary coverage will be converted to primary coverage, and you could find yourself reaping even greater benefits from your credit card rental car policy.
What does credit card rental car insurance cover?
It covers damage and theft to your rental. However, the credit card and the credit card issuer often determine the level of coverage. For example, certain credit cards may provide coverage for damaged or stolen personal belongings, while others may not. Furthermore, your credit card insurance may not cover loss-of-use fees, which are the fees that a rental car company may charge you to compensate for lost business while the rental car is undergoing repairs due to the damage you caused.
Several other factors can influence your credit card rental car insurance coverage, including:
- Vehicle type: Exotic cars, antique cars, cargo vans, and limousines may not have the same level of coverage as an economy car or a conventional SUV.
- Location: Some card issuers may deny coverage in certain countries.
- Duration: Most cards may only be offered for a limited period, often between two weeks and a month.
Consult with your credit card provider to find out what is and isn’t covered by your credit card rental car insurance policy.
What to do when filing a claim
If there is any damage to the rental vehicle, you must file a claim with the insurance company. It’s a good idea to first get in touch with your credit card company to determine what steps you’ll need to take. Typically, the credit card provider will need the following to process a claim:
- A copy of the rental company’s damage report.
- Photographs of the damage.
- A repair estimate issued by the rental company.
- A copy of the rental agreement.
If another car or person’s property is damaged or stolen, you’ll most likely need to attach a copy of the police report as well.
Things to keep in mind while renting a car
To be eligible for the complimentary collision damage waiver coverage, you must book and pay for your rental with the credit card that provides the coverage. However, the coverage that is provided by credit cards is quite limited. Vintage cars, recreational vehicles, large passenger vans, limos, trucks, and any motorcycle or scooter are likely to be excluded from coverage under the free collision damage waiver or the loss damage waiver, which your credit card company offers.
Is it legal to drive a rental car without insurance?
In most circumstances, you can drive a rental car without any proof of insurance. The rental car provider insures each car to at least the state’s minimum insurance requirements. Those minimums, however, may be relatively low depending on the state where you are visiting or renting a car.
If you do not use a credit card that includes rental car insurance and your personal car insurance does not cover you, your rental agreement states that you are responsible for any damage you cause while renting the vehicle. Damage to the rental car, liability for any damage to other cars, people, or property, and any other losses to the rental car company will all be billed to you. Hence, getting rental car insurance coverage is always a good idea.
Final thoughts
Many drivers find it unnecessary to get rental car damage and theft insurance because their personal auto insurance policy may cover rental cars. The credit card they used to pay for the rental may also provide adequate coverage. However, if you don’t have either, paying for the rental car agency’s coverage may be worth the extra peace of mind.
