Most of us have been there, standing in line at the rental car counter when the agent asks whether you'd like to purchase insurance. You hesitate, wondering if saving $25 a day is worth the risk, but then you remember that your credit card covers you - or does it?
It's always important to read the fine print. Not all cards cover every type of vehicle, and even when they do the coverage is limited. Here's what you should know before you waive the rental car company's insurance.
Types of Rental Car Insurance
When it comes to rental car insurance, there are two types of coverage: primary and secondary. If you have full or liability coverage on your personal car, in most cases this will extend to your rental car, but you'll have to pay your policy's collision deductible if you've waived the rental company's insurance.
Most credit cards offer secondary coverage; it's limited but can fill the gaps not covered by your primary insurance. If there's theft or damage to the rental car, you must first file a claim with your auto insurance provider. After this, you can file a claim with your credit card company, which may cover your deductible and associated fees for the damage, such as towing charges and loss-of-use fees the rental company charges because a vehicle in their fleet is out of commission.
But before you decline insurance from the rental car agency, call your credit card company and get information in writing about what's covered and what isn't, the Insurance Information Institute advises. Most credit card companies have policies that outline how long you can rent the car, the types of cars covered, their maximum liability and if you must decline the rental car company's insurance to qualify for their coverage. If you're traveling internationally, it's also important to find out what countries are on your credit card company's exclusion list, as secondary coverage will not apply in these locations.
If this all sounds confusing, here's what we found in the fine print of three major credit cards – the American Express® Gold Card, Chase Sapphire Preferred® and the Capital One® Platinum Mastercard. Take a look to get an idea of the various ways you may or may not be covered by your card.
American Express® Gold Card
What's covered: All American Express cards come with secondary coverage for rental cars, but benefits can vary. Generally, American Express's coverage applies for the first 30 days of the rental and you must charge the rental car purchase on the card to qualify for coverage. (American Express is a CardRatings advertiser).
To activate coverage for the American Express® Gold Card, you must decline the full collision damage waiver or only pay for the partial waiver the rental company offers. You must rent the car in your name and use the card to pay for the purchase.
In the event of an accident or theft, American Express will reimburse card members for the lesser among repair costs, the wholesale book value of the car after depreciation or a total loss, or the car's invoice price minus the aforementioned costs. The company also provides reimbursement for towing, storage and loss-of-use charges, but American Express® requires rental companies to provide proof of the latter.
What isn't covered: Damage to another driver's car or personal injury to anyone involved in the accident. The American Express® Gold Card also doesn't cover any car with an MSRP above $50,000. Exotic cars, full-sized SUVs, antique cars, cargo vehicles, full-sized and custom vans, pick-ups, off-road vehicles and trucks aren't covered either, and neither are rentals made in Australia, Ireland, Israel, Italy, Jamaica or New Zealand. And if you rent a car from a ride-sharing company (Zipcar, for example), these rentals are excluded from coverage, too.
Length of coverage: No more than 30 days
Other important things to know: Unlike most credit cards, American Express offers primary coverage for a flat-rate fee per vehicle of up to $24.95 for as much as 42 days of consecutive coverage (if you're in Washington state, the 30-day rule still applies). Its premium car rental protection provides up to $100,000 of primary coverage for damage or theft, up to $100,000 of coverage for accidental death, up to $15,000 of coverage for secondary medical expenses per person and up to $5,000 for secondary personal property coverage (not the same as liability coverage).
Chase Sapphire Preferred® Card
What's covered: Unlike most credit cards, the Chase Sapphire Preferred® Card now offers primary coverage. You must use your card to pay for the rental car purchase and you must completely decline the collision damage waiver or any form of insurance the rental car company offers.
Chase reimburses up to the cash value of the vehicle within the U.S. and most foreign countries (Chase's benefits guide doesn't specify which countries are excluded).
What isn't covered: High-end luxury vehicles (i.e. a Bentley or Maserati), antique or exotic cars, open cargo vans, trucks and motorcycles. Chase also doesn't cover any injuries as result of a collision or the loss or theft of any personal items left in the vehicle.
Length of coverage: No more than 31 days
Other important things to know: Chase urges card members to file a claim within 20 days, but its policy states the company will not cover any losses reported more than 60 days after the actual incident. It also may be a hassle to file your claim. As one New York Times reporter recounted after getting a flat tire on his rental car, Chase required onerous documentation, including an itemized list of services rendered - not just a receipt. "Upon filing, you'll need copies of things you didn't even know existed, let alone were in your possession… You'll occasionally get the feeling that benefits administrators are making you jump through hoops to wear you down, knowing that many people will give up on their claims if the process is difficult enough. Some of these items can be comically difficult, or impossible, to obtain," reporter Lucas Peterson wrote.
Capital One® Platinum Credit Card
What's covered: Capital One offers secondary coverage. You must pay for the rental car purchase with your card, charge at least one full day of rental charges (discounts don't apply) and decline the collision damage waiver.
The company will cover theft or damage to any vehicle with an MSRP below $50,000, loss-of-use charges (up to $500) and towing charges. Like the American Express® Gold Card, Capital One will pay the lesser of repair costs for the vehicle, its market value minus depreciation and salvage costs or up to $50,000.
What isn't covered: SUVs, cargo vans, trucks, pick-ups and antique cars. Personal items left in the car, personal injury or personal liability. Ireland, Northern Ireland, Israel and Jamaica also are excluded from coverage.
Length of coverage: No more than 15 days
Other important things to know: If you take the vehicle off-road, coverage will not apply.
When it comes to car rental insurance, you're likely protected if you have full collision coverage from your primary insurer and secondary coverage from your credit card. Still, you should read the fine print. If you travel a lot, consider getting a card like Chase Sapphire Preferred® that offers primary coverage or get the premium rental protection American Express offers.
Bottom line: you don't have to pay for duplicate coverage, but it doesn't hurt to get everything in writing from your credit card company before you get to the rental car counter.