Rental car insurance on a credit card: How much protection does it really offer?

Rental car insurance on a credit card may help cover your costs if your rental is in an accident or stolen, but coverage is typically limited.

Many popular credit card brands — including Visa, Mastercard and American Express — offer rental car insurance on some of their cards. But the level of protection you receive varies based on the issuer and whether the policy it offers provides primary or secondary coverage for your rental.

To help you decide whether your credit card’s policy provides the protection you need on a rental car, let’s take a closer look at the types of coverage it may offer, how it works and what expenses aren’t usually covered.

What types of car rental coverage does a credit card provide?

Some credit card companies provide rental car coverage as an added perk for cardholders. The insurance offered on most cards is known as a collision damage waiver and typically helps cover theft or physical damage to the rental vehicle if it’s in an accident.

Rental car insurance on a credit card may also pay for towing costs or loss-of-use expenses incurred by the car rental company. But it may not cover medical bills. So if you or someone else is injured, you may be on the hook for some of those costs if you don’t have adequate liability coverage on your auto insurance policy.

Primary vs. secondary coverage

If your credit card comes with rental car insurance, it’s important to find out whether the coverage is primary or secondary. Primary coverage reimburses you for covered expenses without requiring you to file a claim with your insurance company.

Secondary coverage kicks in only after your own insurance has paid the claim and may provide reimbursement for costs your car insurance policy doesn’t cover, such as your deductible. 

How does rental car insurance on a credit card work?

If your credit card offers rental car coverage and you decide to take advantage of it, there are a few things you should know.

• If you want to use the coverage provided by your credit card, you typically need to decline the rental agency’s collision damage waiver or loss damage waiver coverage when you pick up the vehicle.
• In most cases, you must use the credit card that offers the rental protection to pay for the entire rental.
• Anyone who will be driving the car must be listed on the rental agreement.
• Some credit card issuers limit the amount of time — typically 15 to 31 consecutive days — you can receive coverage while renting a vehicle.
• Certain types of vehicles, such as motorcycles, luxury cars, large vans, limousines and vehicles rented from car sharing or peer-to-peer services, may not be covered.
• You have a limited amount of time to file a claim. Be prepared to provide your rental agreement, paperwork from the car rental company and police report if there is one. The credit card company will review your claim and if it’s approved, you’ll be reimbursed for the covered amount.

What isn’t covered with rental car insurance on a credit card?

Car rental insurance on a credit card can be a nice perk, but it shouldn’t be the only coverage you have. The insurance coverage provided by credit card companies typically isn’t as broad as what car rental companies offer.

Liability insurance

Liability insurance helps cover costs related to injuries and property damage to others if you’re at fault in an accident. Many rental car insurance policies through credit cards don’t offer this type of coverage. The good news is if you have a personal auto insurance policy, it probably provides the liability coverage you need when renting a car. If you don’t own a car but rent cars often, consider purchasing a liability policy designed for non-owners.

Personal accident coverage

This type of rental car insurance helps pay for your and your passengers’ medical bills if you’re in an accident and your insurance claim is approved. But if personal injury protection or medical payments coverage is included in your auto insurance policy, you may already have coverage when you rent a car.

Personal property coverage

If your laptop, phone or other personal items are stolen from your rental vehicle, the insurance provided by your credit card typically won’t pay for replacement — and neither will your auto insurance. But if you have homeowners or renters insurance, those policies generally cover your belongings if something is stolen from your car.

What’s next?

If you have plans to rent a car, review your auto insurance policy before you step up to the rental counter to find out what it does and doesn’t cover when driving a rental. If you can’t find the information you need or have questions, give the insurance company or your insurance agent a call.

Once you know what type of protection your auto insurance policy provides, contact your credit card issuer to find out what it covers. The card’s coverage isn’t likely to be as complete as what your own auto insurance policy provides, so be sure to ask about exclusions. You don’t want to be caught off guard if you’re in an accident or your rental is stolen.

When you know what your auto insurance and credit card policies will cover, you can make an informed decision about whether to accept the coverage offered by the rental car company.