How many times have you stood at a rental car counter being asked if you want to opt-in for rental car insurance coverage for an additional fee? There is that moment of decision: Do you pay hundreds of extra dollars to ensure you're off the hook if anything happens? Does your auto insurance policy cover a rental car? But did you know your credit card may be the answer?
When you think about your credit card, you probably mostly think about its interest rate and the flexibility it gives you to make large purchases. You may also think about some of the perks offered by being a cardholder with a specific credit card issuer, such as a percentage of cashback that gets matched in your first year of use or travel benefits like airline miles. While travel rewards and a percentage of cash back at the gas station are some of the selling points of many of the credit card offers you receive in the mail, they're not the only sorts of perks provided by your credit card company. Some of the best perks your credit card offer you have nothing to do with introductory APR rates.
Many credit cards provide additional coverage for rental cars and any damage that may occur on your rental vehicle. This can make your decision much more straightforward when you find yourself at the rental counter being asked about insurance. But before you go ahead and decline rental car insurance through the rental car company, it's a good idea to know what is and isn't covered by your credit card company on rental vehicles.
What does your credit card rental car coverage include?
The first thing you need to realize about any additional coverage supplied by your credit card company when it comes to rentals is additional coverage. Also known as secondary coverage, this protection kicks in after the primary insurance from your auto insurer has completed its coverage. You might be thinking this kind of coverage is unnecessary and gets added to your existing car insurance policy but if your rental car is stolen or has physical damage to it, you can often turn to your credit card's protection first or even use it for reimbursement for your insurance deductible. As such, secondary coverage can be pretty valuable in the cases that it gets used.
Some credit card companies offer rental protection that is primary coverage. This means you can often use your credit card protection before involving your car insurance policy. In some situations, you may not have to talk to your auto insurer to use that policy's insurance coverage. This means you can keep your liability insurance at the same rate since your auto insurer won't be alerted to the accident in your rental.
The benefit of rental coverage through your credit card
For the most part, the rental company's secondary coverage is no different from the rental coverage provided by your credit card company. That being said, calling it insurance coverage is a bit of a misnomer since you aren't purchasing an insurance policy on your rental car. Keep in mind that the rental agency already has its vehicle insured. As such, when you are buying coverage from a rental business, you are buying a waiver — like a collision damage waiver or loss damage waiver. This means you won't be on the hook financially if something happens to the rental vehicle while it's in your care.
While adding that waiver to your rental agreement sounds helpful, most drivers who already have coverage through their auto insurer shouldn't need to get this extra protection from the rental counter. Like other types of insurance (such as travel insurance), this sort of coverage often doesn't even come into play because your rental periods are so short, meaning that you'll wind up overpaying for your rental. Especially at a time when rental vehicles are in high demand thanks to the COVID-19 pandemic, it's best to save money where you can.
Credit card companies offering coverage for rental cars and damage
While most major credit card companies offer coverage for rental cars, not every company (or card) is created equally. One issuer or bank may have different terms and conditions even if the card — Visa, MasterCard, American Express, or Discover — is the same type. Here's a quick overview of some of the best credit card companies offering coverage for rentals, as well as what makes them so great.
If you're one of the millions of people living in the United States who bank with Chase, the likelihood is high that you have a credit card with them, too. Two of the most popular Chase credit cards — the Chase Sapphire Preferred and the Chase Sapphire Reserve — offer rental car and damage coverage. Here's what you need to know about the ins and outs of each card.
Chase Sapphire Preferred
If you have the Chase Sapphire Preferred card, you're in luck! They offer primary coverage and an auto rental damage collision waiver, meaning that you can decline the rental agency's coverage in confidence. According to Chase's website, "Coverage is primary and provides reimbursement up to the actual cash value of the vehicle for theft and collision damage for most rental cars in the U.S. and abroad." You'll want to make sure to charge the entire rental cost to your credit card to get this protection.
Chase Sapphire Reserve
Many people view the Chase Sapphire Reserve as one of the best travel credit cards, in part because of generous perks like a $300 annual travel credit, airport lounge access, and triple points on travel and dining worldwide. Another major perk of this card is its auto rental damage collision waiver, which is quite similar to the Chase Sapphire Preferred card. According to Chase's website, "Coverage is primary and provides reimbursement up to $75,000 for theft and collision damage for rental cars in the U.S. and abroad."
American Express offers coverage on a lot of their cards, but the Platinum Card and Gold Card are two of the most popular American Express cards.
Platinum Card® from American Express
For Platinum Card benefits, American Express cardholders can file for "losses related to accidental death or dismemberment, accidental injury, and damage to car rental personal property as a direct result or of a car rental accident or theft of car rental personal property from a rental vehicle."
American Express® Gold Card
The Gold Card from American Express also offers coverage for rental cars, although not to the extent that the Platinum Card does. For Gold Card benefits, "you can be covered for damage to or theft of a rental vehicle in a covered territory."
Capital One is another credit card company that offers a variety of credit cards with car rental protection. Here are two of their most popular cards with this kind of coverage.
The Platinum MasterCard from Capital One offers coverage if you pay for the total rental purchase using your Capital One credit card and don't opt in to the rental agency's coverage. According to their benefits guide, the secondary coverage you receive on your rental when these terms are met includes, "Physical damage and theft of the vehicle, reasonable loss of use charges imposed by the vehicle rental company for the time the rental vehicle is out of service, and towing charges to the nearest collision repair facility."
Capital One Quicksilver
The Quicksilver card from Capital One is another top-rated card with consumers, and part of that reason also has to do with the inclusion of an Auto Rental Collision Damage Waiver with the card. Quicksilver's protection is aimed explicitly at theft and damages of the rental vehicle. It is provided as a secondary benefit to reimburse any charges you need to pay as part of your auto insurance deductible.
When it comes to this kind of rental protection, most credit card companies are quick to let you know that the perk is a free as a benefit of being a cardholder. But not every credit card comes without an annual fee. Especially for higher-end cards with better protection and other desirable perks, you may be looking at a yearly fee of up to $500 or $600 in some cases.
Just because your credit card offers rental coverage doesn't necessarily mean it's going to apply in every situation. The last thing you want to have happened to you with a rented vehicle is to need to use your coverage only to discover that it won't apply in your scenario. As such, there are a few different things to look for in your credit card's terms and conditions. If you don't feel like reading through a lengthy document, call your credit card provider with the following questions handy.
How do you make sure your coverage applies?
For your credit card protection to apply, you'll need to ensure that you're reserving your rental car and paying for it with the credit card that carries protection. Additionally, you'll want to make sure that you're the driver listed on the rental agreement.
What isn't covered by rental car and damage coverage through your credit card?
Not every insurance claim will be covered under your credit card's protection. While your credit card's rental insurance will usually apply to damage to the vehicle itself, damage to personal property like yards or mailboxes, as well as injury liability, are generally claims that will need to go through your auto insurer.
Which coverage is better, primary or secondary?
If you're lucky enough that your credit card offers primary coverage, you're in luck as this is the better of the two options. Being able to circumnavigate your auto insurance policy could be quite valuable if it keeps your premium from going up after an accident; however, most credit cards offer secondary coverage. Secondary coverage is still pretty helpful when it comes to reimbursing your deductible, though, so be grateful for what you have! Especially if you have additional costs not covered by your policy, secondary coverage can be a welcome relief — mainly because dealing with insurance claims on a rented car can be enough of a headache in the first place.
Are all cars covered?
No. You'll want to take a look to see if any vehicle types are excluded from your specific coverage since some credit card companies don't let rental protection apply to motorcycles, vans, and even sports cars. Again, this varies from credit card issuer to credit card issuer, so make sure to reach out to them ahead of time before you count yourself lucky getting upgraded to a Ferrari.
Credit card companies offer a host of perks to each users, including rental car coverage. Generally speaking, this allows you to decline the insurance protection the rental agency offers you at the counter when you use your eligible credit card for the total rental purchase. Reach out to your credit card company to see what is and isn't protected.
If you don't have coverage, shopping around to see if you qualify a new card from Chase, Capital One or American Express could be a great way to set yourself up for success before your next vacation.
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