Rent a car and one of the first questions the agent will ask is whether you want to purchase insurance coverage. If you own one of the several credit cards on the market that offer auto insurance coverage as a perk, you may want to decline this additional expense at the rental checkout counter.
"It's not widely known that many credit cards offer supplemental car insurance that can make the car rental insurance unnecessary," says John Ulzheimer, president of consumer education at SmartCredit.com. To most efficiently take advantage of credit card auto insurance benefits, he advises educating yourself before you travel as to what your credit card offers. "If you're at the rental counter, it's too late to figure out if you should accept or decline insurance coverage," he says.
CardRatings.com recently completed a survey of common issuers who provide rental car insurance to show you the type of coverage as well as any exclusions. The findings show that most major credit card companies have products that feature no-cost rental car collision and theft protection, with some networks offering superior coverage.
"American Express constitutes the apex when it comes to benefits like car insurance," says Ulzheimer, "But Discover, Chase and Visa also offer superior products in this area."
How credit card insurance coverage works
"Most credit cards offer what's known as secondary coverage. They pay what your personal auto insurance company doesn't, and they may pay your collision deductible as well," says Des Toups, managing editor for CarInsurance.com. "Many credit card companies will also reimburse you for the loss-of-use fees the car rental company will charge you, as well as any towing expenses."
In order to be eligible for insurance offered by your credit card when renting a vehicle, the card must belong to you and you must use it to pay for the entire rental fee of the vehicle. Signing a Collision Damage Waiver (CDW) at the time of rental is also necessary, which means you decline the insurance coverage offered by the car rental company.
Limitations and exclusions
A variety of exclusions and limitations exist when it comes to credit card auto insurance, with one of the major ones being the type of car you can rent. Certain vehicles are generally excluded, including trucks, motorcycles, full-size vans and luxury cars. Exclusions do vary, so it's important to check your specific card. There are also exclusions for certain countries where the insurance doesn't apply. And there is always a cap on how much coverage for which you're eligible. For instance, some American Express cardholders can receive up to $50,000, while the company's higher-tier cards offer $75,000 in coverage.
Also keep in mind that unlike your personal auto insurance, credit card insurance doesn't cover loss or theft of personal items. Some insurance companies also don't provide coverage if the accident occurs during certain road conditions, such as on dirt or gravel. And there is a cap on how long you can rent the vehicle in order to be eligible for the insurance -- which is usually limited to 15 to 30 days.
A handful of cards go above and beyond their network
Chase JP Morgan Select, JP Morgan Palladium and all Diners Club cards offer primary auto rental coverage. This means that if you have an accident or experience theft, the credit card issuer coverage kicks in immediately. You may not have to use coverage from your primary auto insurer, which is significant because it allows you to avoid the possibility of a rate hike due to a claim.
American Express offers all of its cardholders an attractive alternative: cardmembers have the opportunity to purchase primary coverage for $24.95 per rental period.
Credit card auto insurance works similar to your auto insurance in terms of the ramifications of making a claim. "If you wreck a rental car, it's the same as if you had damaged your own car," says Toups. "Your rates can go up, and you may have to pay an accident surcharge."
If you don't have personal auto insurance, it's important to do your homework before signing the rental car company's insurance waiver, warns Toups. "You won't magically be covered for a collision in a rental car if you don't have collision coverage on your own car," he says. "You're on the hook for a new car that usually costs at least $20,000 -- and the rental agency is absolutely, positively going to come after you for it. They'll usually also ask for loss-of-use fees, to make up for the money lost while the rental car is being repaired."
Here are the details of the CardRatings.com credit card auto insurance survey.
|Payment Network||Eligible Cards||Amount of coverage||Coverage||Vehicle Exclusions||Country Exclusions|
|American Express||Green, Blue, Gold, Optima, Platinum and Centurion||Eligible vehicles valued up to $50,000 for Green, Blue, Gold and Optima cardholders and vehicles valued up to $75,000 for Platinum and Centurion cardholders||Theft or damage for all cardholders, with additional coverage for Platinum and Centurion cardholders: Excess Medical Expenses, Accidental Death and Dismemberment and Excess Personal Property.||No coverage for pick-up trucks, full sized SUVs, luxury vans, any exotic sports casr and any type of cargo van, truck or U-haul type vehicles. Centurion users do get coverage for SUV's with manufacturer's suggested retail price of $75,000 or less.||Worldwide coverage except for vehicles rented in Australia, Ireland, Isreal, Italy, Jamaica and New Zealand.|
|Visa||Visa Standard Credit, Visa Rewards Credit, and Visa Premium Rewards||For all cards reimburses up to the cash value of most eligible rental vehicles as they were originally manufactured. Most autos, sports utility vehicles and minivans are eligible.||Collision and theft coverage; reimbursement of loss of use charges from rental company and reasonable towing fees.||Expensive, exotic and antique autos that are more than 20 years old or not manufactured in the last 10 years; certain vans; trucks; motorcycles, limousines and recreational vehicles. Vans, except those designed to transport a maximum of 8 people.||Worldwide coverage except Israel, Jamaica, the Republic of Ireland and Northern Ireland.|
|Mastercard||MasterCard Gold, Platinum, World and World Elite||Up to $50,000 per incident||Physical damage and theft to rental vehicle; reasonable charges for loss of use chared by rental agency; reasonable towing costs.||Trucks, most vans, recreational vehicles, trailers, motorcycles, antique vehicles older than 20 years or not manufactured in the last 10 years, any vehicle exceeding $50,000 suggested retail price||Republic of Ireland, Northern Ireland, Israel and Jamaica.|
|Discover||Discover More, Discover Open Road, Miles by Discover and Discover Motiva||Actual cash value of the car, with a maximum reimbursement of $25,000||Collision only-damage caused by colliding with another object. Replacement or repair of the vehicle.||Exotic vehicles with a replacement value that exceeds $50,000, including antique vehicles 25 years old or older or not manufactured within the last 10 year, trucks, campers, recreational vehicles and mini buses.||No country specific exclusions|