Demystifying Credit Card Rental Car Insurance

Credit cards offer rental car insurance as a complimentary benefit. Instead of paying extra for insurance through the rental car company, you can use your credit card's coverage, potentially saving you money. Since the insurance coverage is tied to your credit card, you don't need to worry about purchasing additional insurance at the rental counter. It saves time and streamlines the rental process.

Car rental insurance doesn’t have to be difficult to navigate. Let’s demystify your card’s rental car insurance benefits.

What credit card rental car insurance covers

If your travel credit card offers rental car insurance, that most likely means it offers a collision damage waiver (CDW) or a loss damage waiver (LDW). As the name implies, a CDW or LDW is a specific type of car insurance that covers up to the cost of the vehicle if it’s stolen or if the car is damaged in a collision.

That can come in handy, but it’s equally important to know what that form of insurance doesn’t cover. Here are some other forms of auto insurance that credit card rental car insurance doesn’t include:

• Liability coverage: A CDW covers damage to the vehicle itself, but you’ll want two forms of liability coverage, too: Property damage liability covers damages you might cause to property while driving; while bodily injury liability covers injuries to people if you cause an accident. (You may be able to purchase daily liability protection through your rental car company.)

• Medical payments coverage: This covers medical expenses, such as ambulance or hospital bills if you or your passengers get hurt in a car accident.

• Uninsured or underinsured coverage: This form of coverage helps protect you if you’re hit by a driver who doesn’t have insurance or doesn’t have enough insurance to cover the damages.

Common exclusions

• Personal accident insurance and personal property coverage. (Your rental car company may offer a policy for this.)

• Certain countries may be excluded from credit card rental car insurance policies: Ireland, Jamaica, Australia, and Cuba are common exceptions, but check your policy.

• Certain vehicles, like luxury cars or RVs, may not be eligible for coverage.

Primary vs. secondary coverage

If you want to use your card’s rental car insurance, one of the most important things to check first is if your card offers primary or secondary coverage. This is a big deal because this determines whether your credit card’s rental car insurance kicks in before or after your personal auto insurance policy.

Primary coverage would take priority over your personal auto insurance. Since the credit card rental car insurance kicks in first, you’d file a claim with that insurance company first. You may not need to file a claim with your personal auto insurance at all, which means avoiding a deductible or a potential premium increase on your personal policy.

Secondary coverage on credit card rental car insurance means that your personal auto insurance policy takes priority. You will have to first file a claim through your own car insurance before any of the credit card's insurance benefits kick in. Secondary insurance only reimburses you for costs not covered by your other insurance policies.

How to use your card’s rental car insurance protections

Just because your card offers protection doesn’t mean it’s active, you’ll need to do the following to use this benefit:

1. Identify a card with primary coverage.

2. Charge the full amount of your rental car reservation with the card whose insurance you want to use.

3. Ensure that the cardholder is the primary driver on the reservation.

4. Decline the rental car company’s insurance.

Read your credit card's policy carefully

It's crucial to read the terms and conditions of your credit card's rental car insurance policy carefully. Coverage may vary depending on the card issuer, the type of card you have, and the specific rental agreement. Make sure you understand any limitations, exclusions, and requirements, such as using the credit card to pay for the rental and declining the rental company's insurance coverage. If you have any doubts or questions about the coverage provided by your credit card, it's best to contact your credit card issuer directly for clarification.