Save money by knowing your insurance needs, what your card covers.
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Rental car coverage is often a perk of membership on rewards cards. In most cases, the benefit means you can decline the rental company’s expensive insurance coverage — Collision Damage Waiver (CDW) or Loss Damage Waiver (LDW) — which can cost $10 to $30 a day.
Choosing the right credit card is key. The coverage varies widely, even among cards issued by the same bank. Some cards offer primary coverage, so you don’t have to risk your insurance premiums going up. Others are secondary, meaning they pick up the tab for anything your auto insurance doesn’t cover. Some issuers are more willing to pay fees rental car agencies charge; others are reluctant. And many cards list tricky exclusions in their fine print.
“It’s very confusing, and I’ve heard a lot of horror stories,” says Jonathan Weinberg, founder of AutoSlash.com, an online booking engine for car rentals. “Different credit cards have different rules and exclusions, so it’s really important to call and ask them to send you a copy of the policy.”
Best for U.S. rentals: Cards that offers primary insurance coverage
If there’s one thing travel and auto rental experts agree on, it’s this: Use a card that offers primary coverage if you have one. Then, if you damage or wreck your rental car, you won’t have to file a claim with your auto insurance. “That alone can save you a tremendous amount of money in the long term, because you avoid any chance of your premiums going up from a claim,” Weinberg says.
Fortunately, more cards are offering primary coverage. The following credit cards, as of January 2018, offer primary coverage, and should be your first choice when renting a car in the U.S.:
- Chase Sapphire Preferred and Sapphire Reserve Cards
- United MileagePlus Explorer and MileagePlus Club Cards
- Ritz-Carlton Visa Infinite Card
- J.P. Morgan Reserve Card
Many of the best rewards business cards also offer rental car insurance (Most require that your rental is for business use for the coverage to apply).
How to use you credit card to pay your rental car insurance
For your credit card coverage to kick in, you must:
- Decline the rental company’s collision damage waiver (CDW/LDW).
- Be the primary renter of the car.
- Pay for the car in full with the card that provides the protection.
If you have an American Express card, you can purchase primary coverage by enrolling in the company’s premium rental car protection program. Once enrolled, you pay a flat rate of $19.95 or $24.95 (with a slight discount for California and Florida residents) per rental. The $24.95 program offers slightly more coverage than the $19.95 one.
If you don’t have a card that offers primary insurance, you’ll have to file a claim first with your auto insurer, and your credit card will theoretically pay for anything that’s not covered, including your deductible and fees charged by the rental agency. (If you don’t have auto insurance or you’re traveling overseas, most cards become primary). But there are some fees that may not be covered by either.
Choosing the right card also depends on where you’re going, what type of vehicle you’re renting and how long you plan to keep it. Here are some common “what if” rental car scenarios — and advice on how to get the best coverage from your credit card in each circumstance:
Best cards if renting outside the U.S.
If you’re renting outside the country, even credit cards that offer secondary coverage will step in as your primary insurer. Why? Because most personal auto insurance policies don’t apply once you leave the country.
However, it’s still important to read the fine print, because most issuers have a list of countries where they refuse coverage. The following countries are often excluded: Israel, Ireland, Jamaica, Northern Ireland, Italy, Australia and New Zealand.
The good news? In an attempt to lure high-spending jet setters, a few card issuers have dropped country restrictions altogether. The following cards have no exclusions and should be your first choice if you’re renting in one of the countries mentioned above:
- All Citi cards including Citi Premiere, Citi ThankYou Preferred and Citi AAdvantage
- All Chase cards, including Chase Sapphire Preferred and Reserve
No matter what card you’re using, call your card company before you go and have them email you a copy of your policy and a letter that says you’re covered in that particular country, says Tiffany Funk, who writes about reward travel on the blog One Mile at a Time. Then print them out and bring them with you.
“It’s great that they’re providing this coverage, but the challenge is that rental car providers in other countries don’t know that,” she says. “So you’ll end up in a heated conversation at the rental car desk at 11 at night when you’ve just arrived in a foreign country. If you have a printout, you can just hand it to him.”
In some countries, that kind of documentation is required. In others, like Italy, the insurance is included in the cost of your rental so you don’t have to worry about it. And in a few countries, the company may require you to pay no matter how much you insist that you already have coverage. “In Mexico, some companies entice you with a super low teaser rate of just a few dollars a day,” Weinberg says. “Then you get down there and they require you to take their insurance for $20 a day or they won’t give you a car. Some companies say you need a letter from the Mexican Board of Insurance in order not to take it, and who has that? It’s a big source of frustration for us and our customers.”
And one last piece of advice if you’re renting abroad: Choose a card with no foreign transaction fees.
If you don’t have personal auto insurance
If you have no car insurance at all (like many New York City residents, for example), then any credit card that offers rental car coverage will become your primary collision coverage, says Daraius Dubash, founder of reward travel blog MillionMileSecrets.com. You can decline the rental agency’s collision damage waiver (CDW) or loss damage waiver (LDW), but that doesn’t mean you’re off the hook.
You still need liability insurance to protect you from claims related to damage caused by your rental car, and no credit cards offer that, Dubash says. Rental companies provide the minimum amount of coverage required in each state, but it’s not much in the event of a serious accident. “If you damage someone’s property or injure someone, your credit card insurance will not protect you,” Dubash says. “If you have credit card coverage but no car insurance, that’s a case when I would buy the rental car company’s liability insurance (but not their collision or loss insurance).”
If you rent frequently, you may also want to look into a “nonowner” liability package sold by some insurance companies to those who don’t own a car.
If you’re renting a passenger van, sport-utility truck, pickup truck or luxury car
Most credit card coverage doesn’t include those types of vehicles and limits coverage to vehicles with a retail value under $50,000. There are a few exceptions, however.
Both Chase Sapphire cards (Preferred and Reserve) cover passenger vans as long as they are designed to transport 8 people or less as well as “selected models” of BMW, Mercedes-Benz, Cadillac and Lincoln cars.
Citi AAdvantage cards, meanwhile, cover up to $100,000 in damage to “any motor vehicle with at least four wheels that is designed to be driven on public roads,” according to their terms and conditions.
And AmEx’s premium protection program will get you coverage for pickup trucks, vans, sport-utility trucks (Chevy Avalanche, GMC Envoy, etc.) and luxury vehicles worth more than $50,000, according to its terms and conditions. The only exclusions? Automobiles that have been customized or modified; limousines; antique cars, off-road vehicles; motorcycles, motorbikes or mopeds; recreational vehicles; golf or motorized carts; campers; moving trucks or moving vans; and trailers.
If you’re not sure about a specific vehicle, it’s always best to call your card’s benefits administrator.
If you need a rental for more than two weeks
The coverage included on many cards is limited to rentals of 14 consecutive days. So if you need a car for longer than that, either go back after two weeks and rent a different car, or use a card that offers extended coverage.
American Express cards offer 30 days of coverage, and if you pay for the company’s premium protection, you can get coverage for 42 days (unless you live in Washington state, where 30 days is the max).
Many Citi cards, as well as the Chase Sapphire Preferred and Reserve cards, offer a maximum of 31 days of coverage.
Also, Visa extends its coverage for 31 days if you’re renting outside the U.S. (although some banks that issue Visa-branded cards may offer more generous terms.)
If you’re paying for your rental with points or miles
You should check to make sure you are covered if you plan to pay for any part of your rental with points or miles. Some card protection programs require you to pay for at least one full day of your rental with your card. So you will either have to rely on your personal auto insurance or purchase the agency’s CDW coverage.
However, there is an exception for Chase cardholdersDubash says: If you book your car with points using the Chase Ultimate Rewards portal and use points from your Chase Sapphire Preferred or Reserve card, you still qualify for the car rental benefits of your card. Citi has a similar exception that covers your vehicle if you used ThankYou Points for the booking.
If you want to avoid the hassle
Before you turn down the rental agency’s CDW, there’s a trade-off to consider, Dubash says: Using your credit card insurance will take more time away from your trip if you have an incident. So, for example, you may want to spring for the rental company’s CDW if you’re renting a car for just two days in a foreign country you’ve never visited. “Then, you can just hand over the keys and say, \u2018I paid for your insurance. You guys deal with it,’” he says. “But if you’re using credit card insurance, you are going to have to get an accident report, compile documentation and fill out a bunch of paperwork — and that will really cut into your time on your trip.”