Renting a car on vacation or a business trip can save you time, guarantee transportation and offer unlimited opportunities for adventure. Before you head out on the open road, you’ll be asked if you want to insure your rental for an average daily cost of $7–25 (or higher based on your preferences).
The answer depends on what credit card you’ve got in your wallet and your auto insurance policy. Car rental companies offer several coverage options, including collision damage waiver (CDW), liability insurance and personal accident and effects coverage.
To help you decide what coverages you may need, you’ll need to know what types of insurance are available, what happens if you decline it and whether your credit card offers rental car insurance.
- Your liability or full coverage auto policy covers rental car accidents and damages and is primary. Your credit card can be used as secondary coverage and pick up what your primary insurance doesn’t cover.
- You must charge the entire rental cost to a credit card to use the benefit.
- Customers who purchase rental insurance coverage at the rental counter typically choose a collision damage waiver (CDW).
What are the different types of rental car insurance?
When you pick up your vehicle, the rental agent will quickly review the car insurance they offer. Generally, most companies provide damage waivers, personal effects coverage, supplemental liability and roadside assistance protection. Customers who purchase rental insurance coverage options often go for the CDW.
What you’ll be offered at the rental counter:
- Collision Damage Waiver (CDW): This collision damage protection — also known as a loss damage waiver (LDW) — covers vehicle damages caused by accidents, theft, weather, fire and vandalism. It also covers the cost of repairs. If your auto policy has this coverage, you likely don’t need to add it for a rental car. But if you use your credit card’s insurance coverage, you should turn down this option.
- Liability insurance: The state’s required minimum coverage will cover medical expenses and damages to another person’s vehicle and person if you’re found at fault in an accident. You may also consider skipping this coverage if you have insurance.
- Personal accident: If you are in an accident, this coverage protects you and your passengers from medical costs.
- Personal effects: Should your items be stolen from the rental car during your trip, this additional coverage can cover costs of items from $600 per person or a max of $1,800 total.
- Roadside assistance: When a tire goes flat, your battery dies, or the car runs out of gas, the rental company will dispatch a provider to help you handle these situations. You may also have this coverage benefit with your insurance company or a third-party provider like AAA.
Since your primary auto insurance policy covers most of these options, reviewing your credit card’s benefits is essential, as you may have secondary coverage options available. Between these two, you may be able to skip the additional coverage with the rental car company.
- Primary insurance coverage
In most states, drivers must carry liability insurance for their vehicles. You may have full coverage (liability plus collision and comprehensive insurance coverages), further protecting you and other drivers’ damages and medical expenses on the road. If you are in an accident while driving your rental, you will first file a claim with your insurance company and collect the other driver’s insurance information.
- Credit card insurance coverage
Many credit cards’ rental coverages extend to accident and vandalism damage or theft of the rental. They may not include damages to other vehicles or property, including medical costs. Since your credit card coverage is secondary, it will begin once your primary insurance limits are exhausted.
Should I decline the rental car agency insurance?
Before you decline rental car agency insurance, determine if your credit card includes rental car insurance. There are several key factors you must first consider to be eligible for your card’s coverage.
- Understand your card’s coverage benefit. Your credit card company often has rental insurance coverages listed under their member’s benefits section of your terms. You can request a copy of this or contact your insurance company to discuss your coverage options.
- Pay for the entire rental car reservation with your credit card. Your credit card company has specific coverage terms. You must pay for the whole reservation on your credit card to ensure you receive benefits.
- Decline the rental company’s CDW. Once you pay for the rental with your credit card, you can utilize the coverage benefits. You must decline the rental insurance’s coverage and third-party offers, which typically are options when you make an online reservation.
- Get a letter of eligibility. Some rental car companies may require proof of credit card coverage eligibility. When you discuss the terms of your benefits with your credit card company, you can request a letter of eligibility.
- Review coverage for all drivers. While a rental car company will allow extra drivers on the contract (for a fee), you must also ensure they’re covered by your auto insurance policy and the credit card company’s coverage benefit.
You must have an insurance coverage plan in place before you travel. If you discover when digging into the benefit details that you have enough coverage for accidents, medical costs, deductibles and other drivers, declining rental car insurance coverage may be a good idea. It will save you money, too.
But if you don’t have primary car insurance because you don’t own a vehicle or use public transportation, purchasing rental car insurance could be a great option, as is a non-owner car insurance policy if you rent cars frequently.
FAQ: Credit cards and rental car insurance
Understanding your credit card’s rental car insurance benefit ensures your vehicle is covered during your vacation or business trip. Learn more about credit card rental car insurance here.
What is excluded from rental car insurance?
Car rental insurance often includes significant incidents — theft, accidents and natural disasters. Outliers involved in an accident or claim – such as towing, rental period length and road conditions – can impact coverage allowance.
Some additional standard exclusions include:
- Coverage limitations. Like auto insurance coverage limitations, your car rental insurance coverage will be capped. For example, general cardholders may see an allowance of up to $50,000 in coverage, while cards for elite members offer $75,000-100,000.
- Personal injuries and items. Typically, personal items that are stolen or lost are not covered through credit card rental insurance. There are also personal injury or property damages limitations that your card’s plan will not cover.
- Vehicle type. Trucks, motorcycles, full-sized vans and luxury cars are often excluded from coverage. Your card benefits will detail these as they vary from issuer to issuer.
Does rental car insurance work for international rentals?
Some credit card rental car insurance coverage extends to rentals abroad. You must contact your issuer to determine if your card’s coverage is available in the countries you plan to travel to. You can also review your primary auto policy’s coverage guidelines for international rentals and inquire about adding on a short-term supplement to ensure you are protected during your travels.
What if I don’t have personal car insurance?
You can use your credit card’s rental car insurance if you don’t have personal car insurance. You must know your card’s coverage to determine if it provides sufficient coverage for your needs. You can also purchase the rental car company’s CDW if you plan on having the rental for a short period (less than 30 days).
Resources & Methodology
Sources
- Bank of America. “Auto Rental Collision Damage Waiver and Emergency Assistance Services.” Accessed March 2023.
- Capital One. “Visa and Mastercard benefits.” Accessed March 2023.
- Chase Credit Cards. “Auto Rental Collision Damage Waiver.” Accessed March 2023.
- Costco Anywhere Visa Card®. “Does my Costco Anywhere Visa® Card By Citi include rental car insurance?.” Accessed March 2023.
- District of Columbia Department of Insurance (DISB). “Things to know about car insurance and rental insurance before starting your road trip.” Accessed March 2023.
- Enterprise Rent-A-Car. “Rental car insurance and other protection products (US).” Accessed March 2023.
- Hertz. “Hertz optional protection plans.” Accessed March 2023.
- Insurance Information Institute. “Protect yourself while renting without wasting money.” Accessed March 2023.
- Wells Fargo Credit Cards. “Wells Fargo Visa Consumer Credit Card.” Accessed March 2023.
Methodology
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The CarInsurance.com editorial team bases its reporting on data it commissioned Quadrant Information Services to gather on average auto insurance rates for more than 34K ZIP codes across the United States. Typically, averages are based on rates for a single, 40-year-old male, with no violations who commutes 12 miles to work each day and has a full-coverage policy with limits of 100/300/100 and a $500 deductible for collision and comprehensive coverage.
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