My Credit Card Offers Some Rental Car Coverage. Why Do I Still Need To Involve My Primary Auto Insurance?

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If you’ve ever rented a car before, you know the stress you face at the counter as a service rep talks to you about fees, waivers and potential accidents.

Would you like to buy additional insurance coverage from us? It’s a question you’re sure to face when you rent a car.

Money expert Clark Howard wants you to decline additional insurance coverage from a rental car company. Use your primary auto insurance first. Typically you’re covered for a period of up to 14, 15 or 30 days.

But did you know that your credit card may also help provide you with rental car insurance coverage? It’s a great perk that some cards still offer. Just be clear on what your card does or doesn’t provide before you rely on it too heavily.

If my credit card provides car rental coverage, why would the car rental company insist that you involve your primary auto insurance? That’s what a listener of the Clark Howard Podcast recently asked.

My Credit Card Offers Secondary Car Rental Insurance. Do I Have To Involve My Primary Auto Insurance Now That I’ve Gotten Into an Accident?

My credit card offers rental car insurance. Why does the rental car company say I must involve my primary auto insurance to cover damage from an accident?

That’s what a Clark listener asked on the Aug. 15 podcast episode.

Asked Grant in California: “I recently had a fender bender in a rental vehicle. I purchased the rental with the Costco Visa and waived all the optional rental insurance. I understand that Card covers up to $50,000 in this case.

“The rental car company’s damage recovery unit seems insistent that I involve my primary auto insurance. Since the car I was driving was the only one involved in the incident, and the damage is likely in the thousands rather than the tens of thousands, I’d like to only use the credit card’s benefit.

“Is it perfunctory to involve my auto insurance company?”

Credit Card Rental Insurance: Primary vs. Secondary Coverage

Let’s step back for a minute. Yes, some credit card companies offer car rental insurance. But it’s important to understand that there’s a difference between primary and secondary insurance coverage.

If you get primary coverage from a credit card, in the event of a claim, your credit card would pay first before your personal auto insurance.

Most credit cards that offer car rental insurance are actually offering secondary coverage. That means you still need a primary auto insurance policy in place. And you’ll need to exhaust those benefits before tapping into your secondary coverage.


Bad News for Grant in California Due To Secondary Coverage

Unfortunately, this difference between primary and secondary coverage is why the rental car company is insisting that Grant involve his primary auto insurance policy.

“I’m the one who has to give you pretty bad news. The Costco Visa card from Citi is what’s called secondary coverage,” Clark says. “It covers what your own automobile insurance does not.

“There are [only] a handful of cards that are primary. If you frequently rent cars, I recommend you get those.”

Here are the best credit cards for primary car rental insurance (annual fee in parentheses):

One of the credit cards in Clark’s wallet, the Navy Federal Visa cashRewards Card, offers secondary auto rental insurance.

“If you rent cars infrequently, it’s not usually worth it to get a high annual fee credit card just for an occasional car rental,” Clark says.

“I’d say the tipping point is if you rent cars four or more times a year. Once a quarter. Then it’s worth it to pay the annual fee on a card that is primary coverage instead of secondary. And I’m really, really sorry about your auto insurer having to know about this.”

Another Option for Grant: Pay Out of Pocket

Clark constantly reminds people to set high deductibles for auto and home insurance. Especially if you can afford to do so. It’s the surest way to keep your insurance premiums in check during a time when they’re all going up in price.

Insurers view claims in a negative light — even small ones. So your premiums likely will go up long-term if you need your primary auto insurance to pay out a claim on your rental car.

“So unfortunately you are left with two choices,” Clark says.

“One, if you don’t want to mess up your auto insurance rating and cost moving forward, if the claim is small enough, you can just pay out of pocket to the car rental company. But that may end up being cost-prohibitive.

“Two, you just have to process it through your own automobile insurance. And then the Costco Visa will cover what [your insurance] does not cover. And so you want to inform both. And I wish I had a happier story for you about this.”


Final Thoughts

A small number of credit cards offer car rental insurance. Most of those offer secondary coverage rather than primary. That means your credit card would only help once you’ve exhausted the coverage you get from your primary auto insurance policy.

If you’re planning to rent a car, make sure you understand the coverage that your primary insurance and your credit card offer first.