How Your Credit Card Covers Rental Car Insurance

Credit cards come with a slew of benefits nowadays. From travel points and access to airline lounges to cash-back on Amazon purchases, the best credit cards know how to sweeten the deal for their cardholders. 

However, one of their most valuable benefits — rental car insurance —  is often hidden in the fine print. This benefit can save you from purchasing expensive coverage at the rental car company desk and risking increased premiums on your own auto insurance, in the event of an accident. Here’s a rundown of how you can take advantage of this little-known credit card perk.

Do I have rental car insurance through my credit card?

Most credit card companies offer some sort of rental car insurance in the form of an Auto Rental Collision Damage Waiver, or CDW. This type of coverage pays for damage to your rental car in the event of an accident caused by a collision with an object or another car.

If you didn’t know your credit card offered such a benefit, you aren’t the only one. “In general, cardholders aren’t always aware of the bevy of great protections they can get by paying with their credit card,” Emily Sherman, associate content writer at CreditCards.com, told Reviews.com. “It’s definitely not the most exciting read, but I advise every new cardholder to thoroughly peruse the guide to benefits you get in the mail when your new card comes in – rather than filing it away and forgetting about perks.” 

What’s the difference between primary and secondary coverage?

Primary coverage is the main insurance for your rental car. This will typically be your personal auto insurance policy, as primary coverage through credit cards is a rarity in the industry.

“Most credit cards come with secondary car rental insurance coverage, meaning it’ll only pay for what your standard car insurance won’t cover,” says Sherman. “While this can save you money if your insurance doesn’t fork over the whole cost, it does create the added headache of filing two claims.”

However, there are some popular credit cards, like the Chase Sapphire Preferred and Chase Sapphire Reserve, that do offer primary rental car insurance. This is great because it means that you only have to file one claim (with the credit card company) and don’t have to risk higher premiums or paying a deductible, which could happen if you file a claim with your regular auto policy.

Secondary coverage can still be valuable, as it may reimburse you for your car insurance deductible and other costs not covered by your personal auto insurance.

What’s covered?

Coverage differs for every credit card, so we recommend consulting the guide to benefits for your specific card. Generally, though, the perk is designed for collision damage.  This is known as a Collision Damage Waiver (CDW) or Loss Damage Waiver (LDW).

Your credit card may cover:

• Physical damage or theft of the covered rental vehicle
• Loss-of-use expenses
• Towing the vehicle to a repair facility

What’s not covered?

Generally, your credit card’s rental car insurance will not cover:

• Bodily injury liability
• Property damage
• Personal injury protection
• Comprehensive
• Medical payments
• Uninsured and underinsured motorists
• Loss of personal belongings

Depending on the terms, your credit card also may not cover:

• Luxury vehicles (e.g., Aston Martin, Rolls Royce)
• Antique vehicles
• Motorcycles
• Pick-up trucks
• Large passenger vans
• Extended rentals (more than a month)
• Rental vehicles in other countries
• Car-sharing services, like ZipCar

We recommend checking your credit card’s guide to benefits for the full list of coverage and exclusions.

How do I activate coverage?

“In almost all cases, your card benefits don’t require activation for you to take advantage of them,” Sherman says. However, to be covered in the first place, you will need to take the following steps:

• Book the rental car on the applicable credit card
• Book the rental car under the name of the primary cardholder or authorized user
• Decline the rental car company’s CDW/LDW coverage

“If you are in an accident in a rental car, simply check your guide to benefits for information about where to send your claim,” Sherman says. “It’ll usually give you a breakdown of which documents need to be included.”

How do I file a claim?

Unless your credit card provides primary coverage, you first need to file a claim with your primary insurance company (i.e., your personal auto policy).  “Be diligent about saving documentation regarding damage assessments, repair costs, and reimbursement,” Sherman says. 

“If at the end of your claim you find your insurance did not cover the entire cost of the damage, you can submit a secondary claim to your credit card issuer. Check your benefits guide for contact information, and be sure to send in copies of all the documentation you’ve collected.”

Those whose credit cards offer primary coverage will only need to file a claim with the credit card issuer. You will need to do so within the time period specified in the guide to benefits (often within 60 to 100 days, but ideally as soon as possible).

Will my credit card cover international travel?

It depends. Some countries are excluded by credit card companies. For example, as of September 2019, MasterCard and Visa exclude rental transactions made in the Republic of Ireland, Northern Ireland, Israel, and Jamaica. American Express excludes Australia, Italy, New Zealand, and any country on the Office of Foreign Assets Control sanctioned country list. 

If you’re planning on renting a car overseas, check what countries are included in your personal auto insurance policy, the guide to benefits from your credit card company, and your international travel insurance policy, if applicable.

When do I need separate rental car insurance?

Rental car insurance isn’t typically required, but it may be a good idea to buy the CDW/LDW coverage at the rental car company if:

• You don’t own a car
• You don’t have a personal auto insurance policy with collision coverage
• You don’t want to risk higher premiums or paying a deductible on your personal auto insurance policy
• You’re renting a car in a country not covered by your auto insurance policy or credit card