You’re sick of winter and already making plans for spring break. At some point, you may need to rent a car at your destination. The rental company will ask if you’d like to tack on full rental car insurance, known as a Collision Damage Waiver (CDW).
A CDW is a piece of coverage that can cost you an average of $20 to $40 per day, almost the same price as renting the car.
You could always wing it and go without rental car insurance. If an accident happens, you’re responsible for making the insurance claims, along with out-of-pocket costs. These costs will potentially send you into debt, something no one wants.
Another option? Your credit cards. They may provide the rental car insurance coverage you need, but there are several things to consider.
Credit card rental car insurance: What you need to know
Rental car insurance coverage through your credit card varies, depending on built-in rules and policies, and individual incidents.
What’s covered by your credit card
If you have an auto insurance policy, your credit card usually provides secondary, or backup, coverage.
If you get into a fender bender, you’ll need to file a claim with your auto insurer. Your credit card should pick up the cost of damages not covered by your auto insurance. These include deductible costs, towing expenses, and other charges.
Your credit card will usually cover any damages to your rental car, but not the cost of damages to other cars. This coverage typically ranges between $25,000 to $50,000, but can be as high as $100,000.
The value of a stolen rental car is also covered by your card issuer, provided it doesn’t exceed the maximum coverage amount. If the car is broken into, your credit card will pay for the cost of repair to any damaged parts. However, they won’t cover the cost of but not your stolen belongings.
Without an auto insurance policy, your credit card will provide primary – not secondary – coverage if you’re traveling overseas. Usually this is only in countries where your insurance coverage may not be effective. All damages or costs would be covered, but check with your carrier first.
What’s not covered by your credit card
Each of the four major credit networks (Visa, Mastercard, American Express, Discover) provide rental car insurance policies, not every card offers the same level of protection. Some countries are also excluded:
- AmEx doesn’t offer car rental insurance in Ireland, Israel, Jamaica, Italy, Australia, and New Zealand.
- Mastercard excludes insurance in Ireland, Israel, and Jamaica.
- The Escape Card by Discover excludes insurance coverage in Ireland, Israel, Jamaica, and New Zealand.
- Visa doesn’t offer insurance protection in Ireland, Northern Ireland, Israel, and Jamaica.
For credit card rental car insurance, certain vehicles aren’t covered:
- Sports or exotic cars above $50,000.
- Antique vehicles over 20 years old (or those not manufactured for over 10 years).
- Vans, trucks, limousines or RVs with an eight or more passenger capacity.
- Motorcycles, mopeds or all-terrain/off-road vehicles.
Credit cards won’t insure accident or incident liability. If you’re involved in an accident where another party sues you, you’re responsible for the expenses. Rental agencies may offer a minimal amount of liability coverage, but it may not be enough.
In addition to liability coverage, rental car agencies may also impose what are called “loss of use fees.” This is to compensate for the money they’ll lose while the car’s being repaired. Your credit card generally won’t compensate you for these fees.
Rental car insurance tips
Thinking of using a credit card for car rental insurance? Adhere to these tips before taking out any coverage:
- If you choose to insure your rental car with your credit card, you must decline the rental agency’s insurance offer.
- To activate insurance, you’ll need to be the primary renter of the vehicle.
- Charge the entire transaction, insurance included, on the same credit card. You won’t be allowed to use your debit card for the rental and a credit card for the insurance.
- Credit card rental car insurance is free of charge. Once you charge a rental to your card, the insurance is complimentary and comes at no initial cost (minus any fees).
- A card that only carries car rental insurance can’t be used to pay for the vehicle rental.
- Don’t go in blindly. Before you rent a car, contact your card provider to inquire about their insurance policies and rules.
- If you’re opening a new credit card account, read the statement of benefits in advance if you think rental car insurance is something you may take advantage of in the future.
- Credit card car insurance normally covers rentals up to a month, though some cards only offer a 15-day policy. AmEx and Discover offer longer terms, up to 42 and 45 days, respectively, if you’re a member of a premium program (AmEx) or using a card for business purposes (Discover).
- Always examine the fine print of an insurance contract. You may not be covered or denied coverage altogether if you drive on roads that are unpaved. Coverage may also be denied if you wait too long to file an insurance claim.
- You may lose coverage if you let someone drive the car who’s not listed on the rental contract.
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