Updated May 25, 2021 | Published Nov 10, 2018 • 6 min read
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Whether traveling for work or for pleasure, do so with confidence. Equip your wallet with a credit card that offers car rental insurance to get the additional support you need when on the road.
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For years, I panicked whenever a car rental agent asked me: “Would you like to add insurance?”
I’d always heard it was a scam… but I also didn’t want to be screwed if something happened. What was the right choice?
Luckily, I finally did the research — and discovered my credit card has my back when it comes to car rental insurance. Now I say “no” with confidence at the rental counter.
5X Ultimate Rewards points per dollar on Lyft rides
3X Ultimate Rewards points per dollar on the first $150,000 spent per year on:
Internet, cable, and phone services
Advertising purchases made with social media sites and search engines
1X Ultimate Rewards point per dollar on all other purchases
100,000 bonus points for spending $15,000 in the first 3 months after account opening
Do You Need Car Rental Insurance?
The first thing to know is there’s not just one type of car rental insurance. An agent will likely offer you an assortment of options. These two are the most important:
Loss or collision damage waiver (LDW or CDW): While not technically “insurance,” this waiver covers the rental car in case of damage, loss, or theft.
Liability: This insurance protects against damage to other people or personal property.
Whether or not you need these depends greatly on the personal auto insurance — and the credit cards — you already have.
1. If you’re a car owner with comprehensive auto insurance, you probably don’t need to purchase either. Your regular plan will usually cover your rental, aside from loss-of-use and other administrative fees.
How a card could help: Certain credit cards offer primary coverage and allow you to bypass your regular insurer completely, avoiding deductibles and premium hikes. Other cards have secondary coverage, which will at least cover whatever your insurance doesn’t.
2. If you’re a car owner with liability insurance only (and not collision), then you’d need to purchase the CDW to protect against the costs of damage.
How a card could help: If you carry liability through your regular insurance, a credit card can cover damages, allowing you to decline the CDW.
3. If you don’t own a car — and therefore don’t have liability or collision insurance, you’d need to purchase both liability and the CDW. While car rental agencies are required to have the minimum liability coverage for their state, it probably wouldn’t be enough to cover a major accident.
How a card could help: The card could cover damages, allowing you to decline the company’s rental collision damage waiver (CDW) or loss damage waiver (LDW). To cover liability, you could purchase the rental agency’s policy or seek out a non-owner insurance policy.
The rental car company may also offer you personal accident and personal effects insurance, which cover medical bills and items within the car. If you have health insurance and homeowner’s, renter’s, or travel insurance, these probably aren’t necessary.
Pay for the entire rental agreement with your credit card.
Be listed as the primary driver.
Decline the rental company’s damage waivers.
Then, if something happens with your rental car, you can file a claim with your credit card. Its benefits will kick in either before or after your regular auto insurance, depending on whether your card’s coverage is “primary” or “secondary.” You’re typically covered for a certain number of consecutive days, up to the cash value of the car.
Primary: Acts as the main insurance on your rental car, so your regular car insurance company won’t even be contacted.
Secondary: Only applies once your regular car insurance has been maxed out.
Clearly, primary coverage is preferable, because it doesn’t involve your own insurance. Which means you won’t risk paying a deductible or increasing your premium.
Though Chase has the most options with primary coverage, its policies vary by card. The Chase Freedom car rental insurance, for example, is secondary, but the Chase Sapphire Preferred car rental insurance is primary. The majority of other credit card companies offer secondary coverage on most of their cards.
It’s worth noting, though, that most secondary insurance policies become primary in two situations:
If you don’t have your own car insurance (but remember it’ll only cover damage, and not liability)
If you’re traveling in a country where your regular car insurance doesn’t work
Get a copy of your card’s policy in print or online (and read it!), and be sure to ask these questions:
Which types of vehicles are covered? Most of the time, trucks and exotic, specialty, and luxury cars aren’t covered by credit card car rental insurance. Neither are peer car rental services like Zipcar. Notable exceptions include Citi and Amex cards, which often cover expensive cars. Chase’s rental coverage may also exclude vehicles with open beds, including pickups, and motorcycles.
Which countries are covered? Many credit card insurance policies exclude certain foreign countries like Ireland, Jamaica, Israel, Italy, Australia, and New Zealand. Citi and Chase cards often don’t have these restrictions.
Is loss of use covered? If a rental vehicle gets damaged or lost, the agency will usually charge for towing and “loss of use” while it’s getting repaired or replaced. Visa cards usually cover these fees; Mastercards vary.
How long am I covered? Most credit cards offer coverage for a rental period of 15–30 days.
Am I still covered if I use reward points to purchase my rental?
Each issuer has its own terms regarding what qualifies for the rental car coverage that comes with your card.
Certain Chase cards that earn Ultimate Rewards points, for example (like the ones below), allow cardholders to use rewards to cover their rental fee while still receiving insurance. Conversely, some cards may require you to use your card to pay for the rental in full before becoming eligible for insurance. Always check with your issuer to fully understand the terms and conditions (before you get to the rental company).
4 Best Credit Cards With Car Rental Insurance
When it comes to auto rental insurance, certain credit card companies stand out. Our favorite picks are all from Chase.
The following travel rewards cards provide primary insurance coverage, have no country restrictions, offer rental car coverage for up to 31 days, and cover loss-of-use fees. And if you use Ultimate Rewards points to book your rental, you’ll still receive coverage.
Our best offer ever! Earn 100,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,250 when you redeem through Chase Ultimate Rewards®.
Earn 2X points on dining including eligible delivery services, takeout and dining out and travel. Plus, earn 1 point per dollar spent on all other purchases.
Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards®. For example, 100,000 points are worth $1,250 toward travel.
With Pay Yourself Back℠, your points are worth 25% more during the current offer when you redeem them for statement credits against existing purchases in select, rotating categories
Get unlimited deliveries with a $0 delivery fee and reduced service fees on eligible orders over $12 for a minimum of one year with DashPass, DoorDash's subscription service. Activate by 12/31/21.
Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more.
Get up to $60 back on an eligible Peloton Digital or All-Access Membership through 12/31/2021, and get full access to their workout library through the Peloton app, including cardio, running, strength, yoga, and more. Take classes using a phone, tablet, or TV. No fitness equipment is required.
Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $900 toward travel when you redeem through Chase Ultimate Rewards®
$300 Annual Travel Credit as reimbursement for travel purchases charged to your card each account anniversary year. Through December 31, 2021, gas station & grocery store purchases will also count towards earning your Travel Credit
3X points on travel immediately after earning your $300 travel credit. 3X points on dining at restaurants including eligible delivery services, takeout and dining out & 1 point per $1 spent on all other purchases
Get 50% more value when you redeem your points for travel through Chase Ultimate Rewards. For example, 60,000 points are worth $900 toward travel
With Pay Yourself Back℠, your points are worth 50% more during the current offer when you redeem them for statement credits against existing purchases in select, rotating categories
1:1 point transfer to leading airline and hotel loyalty programs
Access to 1,300+ airport lounges worldwide after an easy, one-time enrollment in Priority Pass™ Select and up to $100 application fee credit for Global Entry or TSA Pre✓®
Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more
Introductory bonus: 60,000 bonus points for spending $4,000 in the first 3 months after account opening
Rewards: 10X Ultimate Rewards (UR) points per dollar on Lyft Rides; 3X Ultimate Rewards points per dollar on travel (after the $300 credit is used) and dining; 1X on everything else
Perks: No foreign transaction fees; 50% point bonus when booking through the Ultimate Rewards portal; $300 annual travel credit; Priority Pass Select membership; point transfer to airline and hotel loyalty programs
Introductory bonus: 100,000 bonus points for spending $15,000 in the first 3 months after account opening
Rewards: 5X points per dollar on Lyft rides; 3X points per dollar on the first $150,000 spent annually on travel, shipping, online advertising, internet, cable, and phone services; 1X on everything else
Perks: No foreign transaction fees; 25% point bonus when redeeming for travel through the Ultimate Rewards portal; point transfer to airline and hotel loyalty programs
Credit cards that cover car rental insurance can save you a lot of money, although this is usually seen as a minor benefit compared to more exciting rewards and perks.
Say you rent a car for three days, three times a year. At an estimated cost of $20 per day for insurance, that adds up to $180 per year — about twice as much as the annual fee for the Chase Sapphire Preferred® Card (Review), which comes with a whole slew of other benefits, too.
So when considering which of the best credit cards to apply for, don’t overlook potential savings from car rental benefits!
Lots of other credit cards offer secondary rental car insurance coverage, including picks from major issuers like American Express, Capital One, Chase, Discover, and Wells Fargo. Secondary insurance kicks in after claims are made through your personal insurance. A few of our favorite cards with secondary coverage include:
Susan is a freelance writer who specializes in turning complex financial topics into engaging and accessible articles. She's been writing about personal finance for six years, and was previously the senior writer at The Penny Hoarder and a staff writer at Student Loan Hero. Her personal finance writing has also appeared in publications like MarketWatch and Lifehacker.
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