If you only use a credit card for one thing, it should be renting a car. First, it can be extremely difficult, or even impossible to rent a car without a credit card. But more importantly, most credit cards will offer you rental car insurance that can protect you if your car is damaged and save you the cost of an expensive optional plan.
But just having a credit card isn’t good enough. You need to know what kind of insurance your card offers, what it covers and what it doesn’t.
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The basics of rental car insurance through your credit card
Most major credit cards offer some form of rental car insurance. However, a notable exception is the Discover card which eliminated this and other benefits in February of 2018. Technically, this kind of coverage is called a collision damage waiver, and it only covers damage to the vehicle you rented, not to third-parties. Third-party coverage is often a part of your personal car insurance policy or the optional coverage sold by rental car companies.
There are two types of rental car insurance that you can get from your credit card, primary and secondary. Primary rental car insurance will cover you without having to file a claim with your personal car insurance policy. However, most cards offer secondary insurance, which will pay out a benefit only after you’ve filed a claim with any other policies you might have, such as your personal car insurance. But if you don’t have personal car insurance, or if you are renting outside of the United States where your personal coverage won’t apply, then your credit card’s coverage is effectively primary.
What about exclusions?
The biggest problem with rental car insurance is all the possible reasons why you may not have coverage. First, you have to always decline the optional insurance being sold by the rental car company. They may give you the hard sell, but I find that politely repeating the word “decline” seems to be effective. You also have to pay for the entire rental car with your credit card. You are allowed to use a coupon, but you can’t prepay for the base fare with points or miles from any source. However, you are covered when you use credit cards like the Capital One Venture that allows you to redeem your rewards for a statement credit towards travel purchases like rental cars.
Next, you have to worry about excluded types of vehicle. Most rental car policies that come with credit cards will exclude antiques, exotic sports cars and large trucks. But also excluded can be more common vehicles like pickup trucks and full-size vans. Some policies also have territorial exclusions that fail to provide coverage in certain countries, but this is becoming less common. Finally, you need to be sure you don’t violate any other terms, like using your rental for commercial purposes or for activity that’s illegal or in violation of the rental car contract. For example, most rental car contracts specifically forbid driving on any unpaved roads. So you are not covered if you are in an accident on a dirt or gravel surface.
Credit cards that offer primary rental car insurance
Chase is one of the only issuers that offers primary rental car insurance on its travel rewards cards. Eligible cards include the Chase Sapphire Preferred® and Chase Sapphire Reserve®, United Explorer Card, United Club Infinite Card and The Ritz-Carlton™ Credit Card. For business rentals only, you’ll receive primary coverage from the Ink Business Preferred Credit Card, Marriott Bonvoy™ Premier Credit Card, United Business Card and the United Club Business Credit Card.
The American Express Premium Rental Car Protection option
A great option that’s not widely known is the American Express’s Premium Rental Car Protection policy, which is optional on all American Express credit and charge cards. To enable it, you must first call American Express and opt-in, then it will be added to every car you rent with your card.
This coverage has a flat fee of $19.95 or $24.95 per rental period, not per day (and somewhat less for Florida and California residents). This means it’s relatively costly for short rentals, but a bargain for longer rentals, up to 42 consecutive days. Coverage is primary and applies to vehicles that are much more expensive than the standard policies that come with most credit cards. I always opt in for this coverage when renting a luxury vehicle or renting for longer periods, especially in foreign countries.
Credit cards aren’t for everyone. But even if you are the type of person who avoids credit cards for your regular spending, you should strongly consider using a credit card just to rent a car. Just pay your entire statement balance in full, and you won’t have any interest charges. And by understanding how a credit card’s rental car insurance works, and which cards offer the best coverage, you can make the right decisions the next time your travel plans call for a rental car.