Jeff Root

Licensed Insurance Agent

Jeff is a well-known speaker and expert in insurance and financial planning. He has spoken at top insurance conferences around the U.S., including the InsuranceNewsNet Super Conference, the 8% Nation Insurance Wealth Conference, and the Digital Life Insurance Agent Mastermind. He has been featured and quoted in Nerdwallet, Bloomberg, Forbes, U.S. News & Money, USA Today, and other leading fina...

Licensed Insurance Agent

Tim Bain

Licensed Insurance Agent

Tim Bain is a licensed insurance agent with 23 years of experience helping people protect their families and businesses with the best insurance coverage to meet their needs.  His insurance expertise has been featured in several publications, including Investopedia and eFinancial. He also does digital marking and analysis for KPS/3, a communications and marking firm located in Nevada. 

Licensed Insurance Agent

UPDATED: Jun 27, 2023

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UPDATED: Jun 27, 2023Fact Checked

If you travel a lot, you probably find yourself renting vehicles quite often. Even if you’re not a frequent traveler, you may some day need to rent a car for a vacation, business trip or a substitute while your own car is in the shop. Before renting a car, you need to make sure that the vehicle will be protected against an accident. There are three primary ways that a rental car can be insured:

— Through the rental car company

Known as a “collision damage waiver,” this insurance is paid through a security deposit and additional fee added to the cost of the rental. If you return the vehicle without damage, you get your deposit back but lose the additional fees. The damage waiver will generally cost a few dollars a day for the duration of the rental.

— Through your own auto insurance policy

Most insurance policies transfer directly to rental cars that you drive. You don’t have to pay anything extra for this coverage, but you will owe a deductible if the rental car is damaged. You can only protect a rental vehicle using your own insurance if you have full coverage; if you only have a liability policy, you cannot extend coverage to a rental in most states. This does work differently in some states than others, so be sure to check with your insurance company before you rent a vehicle so you’ll know how damages will be handled.

— Through your credit card

Some credit card companies offer rental car insurance as part of its rewards package. The rules will vary from one company to the next. You may or may not owe a deductible, and the credit card company might have a limit to what damages it covers, so you should check with your credit card provider before renting a car to make sure you understand how the protection will work.

If you plan to rent a vehicle for a short time, the cost of the additional insurance may not be a major issue, but a rental you’ll use for several weeks will cost a substantial amount to insure through the rental company. In those cases, using a different type of coverage is ideal.

In a few states, there is no need to buy additional coverages. For example, damage to a rental car in New York is handled through an insurance policy’s liability coverage, not collision. This means you owe no deductible and you don’t need full coverage insurance to take care of a rental car’s damages. In these states, it’s expensive and redundant to take out additional rental car protection.

Depending on where you live and your rental situation, it may make sense to use one type of rental car insurance over another option. Understanding all of your options will help you choose the best way to protect yourself in the event of a claim.

How Credit Card Rental Car Insurance Works

Not all credit cards offer car rental insurance, so you will need to check with the individual card company to make sure. Most major credit cards offer some form of protection, but the coverage may be limited. For example, the credit card may pay for damages to the vehicle you rent but not any other property that you damage while driving the rental car.

In order to use your credit card’s rental coverage, you will need to pay for the rental car with that credit card. This includes both the deposit and the actual rental cost. You will also need to be both the primary cardholder and the renter of the vehicle, so you can’t use another person’s credit card for a car that you rent.

You must also decline the rental company’s protection. In some cases, you may also need to prove that your own car insurance will not cover the loss. Either way, only a single type of insurance can cover your accident, and if you’re found to be covered by multiple insurance companies, they may cancel each other out or deny the claim entirely.

Credit Card Limitations

Although credit cards can offer good car insurance coverage, there are some limitations that you need to know about before you use this option:

— The card may only cover damages to the rental car itself, not any other property involved in the loss. This can cause problems, as your own insurance may not cover the loss if you use your credit card for insurance, so you could be stuck paying for damages out of your own pocket.

— The insurance may only cover the actual cost of repairs, not additional fees. Rental car companies charge processing fees, loss of use costs and other expenses when a claim occurs, and you could be stuck paying for these costs after the claim is settled.

— You may need to file a claim with your insurance company anyway. Some credit cards act as secondary insurance and only pay for damages if your insurance company won’t handle them. This means that you will need to file a claim with your insurer and wait for a denial before the claim can be settled. If the rental car company is sending you a bill, this delay can be very inconvenient.

— There may be addition exclusions depending on where you rent the car, how long you’re in the vehicle, what type of damages will be covered or other things. Some credit cards will only cover losses that happen in the continuous United States, for example, and others cover only collision and theft but will not pay for vandalism or weather-related losses.

You should always ask your credit card company about the rental coverage and read the fine print before you rent a vehicle. You can also call your insurance company to inquire about your coverage and how it will apply to a specific type of loss. By reviewing all of the options available to you, you can make the best choice for your individual needs.

Case Studies: Rental Car Insurance Scenarios

Case Study 1: John’s Rental Car Insurance Experience

John, a frequent traveler, recently rented a car for a week-long vacation. He was unsure about whether his credit card would provide rental car insurance. After checking with his credit card company, he discovered that his card did offer coverage for rental cars.

However, he had to pay for the rental using that specific credit card and decline the rental company’s insurance coverage. John was relieved to know that he had coverage for any damages to the rental car during his trip.

Case Study 2: Sarah’s Comprehensive Auto Insurance

Sarah, a resident of California, had comprehensive auto insurance coverage on her personal vehicle. When she rented a car for a business trip, she was pleased to learn that her own insurance policy extended to rental cars. This meant that she didn’t need to purchase additional insurance from the rental car company. Sarah felt confident that she was adequately protected against any potential damages or accidents while driving the rental car.

Case Study 3: Mark’s Credit Card Insurance Limitations

Mark decided to use his credit card’s rental car insurance when he rented a vehicle for a weekend getaway. However, he soon realized that the coverage provided by his credit card was limited. It only covered damages to the rental car itself and did not include other property damage. Unfortunately, Mark accidentally hit another car while parking the rental vehicle, causing damage to the other car.

Since his credit card insurance didn’t cover third-party property damage, Mark had to bear the expenses himself. He learned the importance of understanding the limitations of credit card rental car insurance before relying solely on it.

Frequently Asked Questions

Will my credit card provide rental car insurance?

Some credit cards do offer rental car insurance as a benefit to their cardholders, but not all credit cards provide this coverage. It’s important to check with your credit card issuer to see if your specific card offers rental car insurance.

How do I know if my credit card offers rental car insurance?

You can check with your credit card issuer to see if your specific card offers rental car insurance. You can typically find this information on their website or by calling the customer service number on the back of your card.

What kind of rental car insurance coverage do credit cards typically provide?

The type and amount of rental car insurance coverage that credit cards provide can vary depending on the card issuer and the specific card. Some credit cards offer primary coverage, which means the card’s insurance policy is the first to respond in the event of a covered incident, while others offer secondary coverage, which means the card’s insurance policy only kicks in after any other applicable insurance policies have been exhausted. Credit cards may also offer collision damage waiver (CDW) coverage, which can help cover the cost of repairs if your rental car is damaged in an accident, as well as liability coverage, which can help cover the cost of damages or injuries you cause to other people or their property while driving the rental car.

Are there any restrictions or limitations to credit card rental car insurance coverage?

Yes, there may be restrictions or limitations to credit card rental car insurance coverage. For example, some credit cards may only offer coverage for certain types of rental cars, such as cars rented for personal use but not for business use, or only for rentals within certain countries. Additionally, credit card rental car insurance may not cover certain situations, such as driving off-road, driving under the influence of drugs or alcohol, or driving without a valid license. It’s important to read the terms and conditions of your credit card’s rental car insurance coverage carefully to understand any restrictions or limitations.

Do I need to decline the rental car company’s insurance coverage if I have rental car insurance through my credit card?

It depends on the type of coverage your credit card offers. If your credit card provides primary rental car insurance coverage, you may be able to decline the rental car company’s insurance coverage altogether. However, if your credit card offers secondary coverage, you may need to purchase the rental car company’s insurance coverage in order to have full coverage in the event of an accident or other covered incident. It’s important to check with your credit card issuer and rental car company to understand what types of coverage you have and whether or not you need to purchase additional coverage.

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Jeff Root

Licensed Insurance Agent

Jeff is a well-known speaker and expert in insurance and financial planning. He has spoken at top insurance conferences around the U.S., including the InsuranceNewsNet Super Conference, the 8% Nation Insurance Wealth Conference, and the Digital Life Insurance Agent Mastermind. He has been featured and quoted in Nerdwallet, Bloomberg, Forbes, U.S. News & Money, USA Today, and other leading fina...

Licensed Insurance Agent

Tim Bain

Licensed Insurance Agent

Tim Bain is a licensed insurance agent with 23 years of experience helping people protect their families and businesses with the best insurance coverage to meet their needs.  His insurance expertise has been featured in several publications, including Investopedia and eFinancial. He also does digital marking and analysis for KPS/3, a communications and marking firm located in Nevada. 

Licensed Insurance Agent

Editorial Guidelines: We are a free online resource for anyone interested in learning more about car insurance. Our goal is to be an objective, third-party resource for everything car insurance-related. We update our site regularly, and all content is reviewed by car insurance experts.