Save money by knowing your insurance needs, what your card covers
Personal Finance Writer
Her work appears regularly in Reader’s Digest, Parents, Real Simple and more.
The content on this page is accurate as of the posting date. Please see the bank’s website for the most current version of card offers.
When it comes to renting a car, paying with the
right credit card could save you hundreds of dollars. Yet many Americans have
no idea which credit cards offer protection or the best one to use.
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
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 cards, as of October 2015, offer primary coverage, and should be
your first choice when renting a car in the U.S.:
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
- Be the primary renter of the car.
- Pay for the car in full with the card that provides the
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 to $24.95 ($15.95 to $17.95 for California 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
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, some 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 ThankYou Preferred
and Citi AAdvantage
All Chase cards, including Chase Sapphire
Most Mastercard World and World Elite cards
Discover cards (check to make sure it’s accepted
at your destination)
Diners Club cards
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.
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
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.
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’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
If you’re renting a passenger van, sport-utility truck, pickup truck or luxury car
You may want to pay to enroll in AmEx’s premium
protection. Most credit card coverage doesn’t include those types of vehicles and
limits coverage to vehicles with a retail value under $50,000. However,
AmEx’s program does cover pickup
trucks, vans, sport-utility trucks (Chevy Avalanche, GMC Envoy, etc.) and luxury
vehicles worth more than $50,000, says AmEx spokeswoman Jane DiLeo. The only
exclusions? Automobiles that have been customized or modified; limousines;
off-road vehicles; motorcycles, motorbikes or mopeds; recreational vehicles;
golf or motorized carts; campers; moving trucks or moving vans; and trailers.
If you need
a rental for more than two weeks
Some cards limit their coverage to rentals of less
than 15 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. The following cards offer a maximum of 31 days of coverage:
- All American
- All Discover cards
- Mastercard World and World Elite cards.
Visa extends its coverage for 31 days only if you’re renting outside the U.S.
(although some banks that issue Visa-branded cards may offer more generous
terms.) If you pay for AmEx premium protection, the maximum length of coverage
is 42 days.
paying for your rental with points or miles
You may be out of luck if you want to use your
credit card coverage, says Richard Kerr, who researched rental car protection
for The Points Guy blog. Most card
protection programs require you to put at least one full day of your rental on
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 cardholders,
Kerr says: If you book your car with points using the Chase Ultimate Rewards
portal, you still qualify for the car rental benefits of your Chase card.
If you want
to avoid 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, ‘I 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.”
See related: Renting a car? Know whether your card adds insurance, 9 tips for renting a car with a debit card
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