Credit cards are so versatile. They let you leave your cash at home and give you the option of paying your balance in installments. Many cards also offer a variety of rewards, one being the rental car insurance benefit. This benefit can save you money every time you rent a car because it provides a free collision damage waiver that would normally cost you $15 to $25 a day.
Overview of Benefits
Credit card rental car insurance usually covers physical damage, towing, theft, and loss of use (the cost of renting a different car if the first rental comes out of service). Some cards also cover specified medical expenses, the expenses associated with accidental personal injury, accidental death and dismemberment, and loss of personal property. It is normally secondary insurance – it supplements your primary automobile insurance. To obtain coverage, simply use the credit card offering the benefit to reserve and pay for the rental car and decline the rental company’s collision damage waiver (CDW). The nice thing about using the credit card CDW coverage is that, should you have an accident, you won’t have to file a claim with your primary insurer, thereby avoiding a rate hike. Also, a CDW usually has no deductible, whereas your regular insurance probably has one, and it might have a higher deductible for rental cars.
The rental agency might also offer you liability insurance not covered by your card, which you might want to take if you don’t have your own.
As we shall see, it’s important to understand the precise benefits you receive from your credit card. Some statistics are revealing:
- There is a 17 percent chance that your card will penalize you for driving the rental on a gravel or dirt road. If your card falls into this category, you’ll want to drive on pavement only.
- About 39 percent of cards cover domestic-only rentals, usually for no more than 15 days
- Tire and rim damage is not covered by 57 percent of cards offering rental benefits
- Many cards do not cover trucks, large vans, or full-size SUVs, so check the fine print for exclusions
Benefits by Network
The rental car benefits available from your credit card can vary by card network and individual issuer. The following is a summary of the benefits offered by the major networks, but it’s important for you to research the exact benefits offered by your card.
All Visa cards offer secondary credit card rental car insurance benefits, with coverage of 15 consecutive days in the U.S. and 31 days abroad. Coverage includes theft, physical damage, towing, and loss of use, but excludes property damage, liability, injury, diminished value, damage to other vehicles, tire wear and tear, and taxes. You must decline the rental agency’s insurance. All authorized drivers are covered, but certain types of vehicles are excluded, including motorcycles, exotics, expensive vehicles, pickups, trucks, antiques, RVs, ATVs, full-size vans (8 or more seats) and limousines. Visa doesn’t specify maximum coverage or maximum loss of use. You must file a claim within 45 days to preserve coverage.
Only the top cards (Platinum, Gold, World and World Elite) offer car rental insurance. Your rental is insured for up to 15 consecutive days, and you must decline rental insurance. Secondary coverage extends to vehicles costing $50,000 or less, and includes theft, towing, loss of use and physical damage. However, injury, property damage, diminished value, liability, tire wear and tear, taxes, and damage to other vehicles, are excluded. All authorized drivers are covered, but certain types of vehicles are excluded, such as pickups, trucks, limousines, motorcycles, RVs, ATVs, exotics, antiques, and full-size SUVs and vans. Maximum coverage is $50,000, but maximum loss of use is unspecified. You must file a claim within 30 days.
American Express offers free secondary insurance, but you can also purchase extended primary insurance for a nominal fee. We’ll discuss the basic American Express card here, but Platinum and Premium cards offer richer benefits. The rental period is 30 consecutive days. You must decline full coverage from the rental agency, but may accept a partial CDW. The vehicle value must be less than $50,000 ($75,000 on Platinum cards).
The basic card covers storage, loss of use, towing, theft, and physical damage, although Platinum and Premium cards also cover certain medical expenses for accidental personal injury, loss of personal property and accidental death and dismemberment. All American Express cards exclude liability, injury, diminished value, property damage, wear and tear, and taxes. All authorized drivers, and Premium card owners can purchase primary insurance. Expensive cars, pickups, trucks, limousines, motorcycles, RVs, ATVs, exotics, antiques, off-road vehicles, commercial vehicles, and full-size SUVs and vans are excluded. You must file within 60 days. California and Florida have unique coverage limits.
Discover cards limit CDW coverage to $25,000 and don’t cover loss of use fees. The Escape by Discover Card offers slightly better benefits. The rental period covered is 31 days, and you must decline rental insurance. Coverage is secondary and covers all authorized drivers. The vehicle’s value must be less than $50,000. The insurance covers collision, but the Escape Card also covers theft, towing, and physical damage. Excluded losses include liability, theft, non-collision damage, injury, taxes, loss of use, wear and tear, and damage to other vehicles. Vehicles excluded include exotic, antique or expensive cars, mini-buses, off-road vehicles, motorcycles, pickups, trucks and RVs. The claim-filing period is 90 days (30 days for the Escape Card).
Antique Cars: Vehicles 20 years or older, or out of production for at least 10 years.
Diminished value: The depreciation of the rental car’s resale value. This is small unless you seriously damage the car.
Fully utilized: Refers to a rental company having 80 percent of its inventory rented out. Some cards don’t cover losses when the rental company’s inventory is not fully utilized.
Loss of use: How much it costs to rent a second car if the first one isn’t working.
Vans: Typically, vans that seat more than eight are not covered. Some CDWs also exclude cargo vans and certain SUVs.