The question arises every time you rent a car: Do I really need rental car insurance?
Many rental agencies offer damage waivers for about $15 to $25 a day, selling peace of mind along with expanded coverage. But these waivers are often no better than the coverage you already have with your favorite credit card.
Depending on where you rent, the rental company’s liability for injury or property damage may be anywhere from $25,000 to $50,000. This could still leave a big bill for you to pay, but your credit card may also step in — sort of. All four major card networks offer rental insurance, but vary substantially in benefits and requirements.
In some cases, car-rental customers may want to purchase full coverage from the car-rental company to avoid the hassle of making a claim or reporting an accident to their primary insurer and the credit card issuer. Make sure you’re comfortable with that process before relying on your credit card’s secondary coverage.
You can also get primary coverage for your car rentals with these two credit cards:
The Chase Sapphire Preferred® Card is one of the Nerds’ favorite travel cards, so it helps that it offers primary rental car insurance at no extra cost. You’ll earn 2 Ultimate Rewards points per dollar spent on travel and dining and 1 point per dollar spent on everything else. Plus, the card has one of the most valuable sign-up bonuses on the market: Earn 50,000 bonus points when you spend $4,000 on purchases in the first 3 months from account opening. That's $625 in travel when you redeem through Chase Ultimate Rewards®.
It has an Introductory annual fee of $0 the first year, then $95 after that, and doesn’t charge a foreign transaction fee.United MileagePlus® Explorer Card might be the right choice for you. It offers 2 miles on every dollar spent on United flights and 1 point on all other purchases, plus a decent sign-up bonus: Start with 30,000 bonus miles after you spend $1,000 on purchases in the first 3 months from account opening.
The United MileagePlus® Explorer Card has a Introductory annual fee of $0 the first year, then $95 after that, and no foreign transaction fees. You’ll also get your first checked bag fee waived with cardmembership.
What to know about credit card rental coverage
Before we review the rental car insurance benefits offered by each network, you should know that:
- Generally, your credit card offers secondary rental insurance. This means that it will only pay for the cost of certain damages not covered by your regular car insurance policy.
- As the cardholder, you must book the rental car with your credit card under your name to receive coverage. Only carrying a card that offers rental car insurance isn’t sufficient.
- Typically, you must refuse the coverage offered by the rental car agency to receive rental car insurance benefits from your credit card. We’ll discuss exceptions to this general rule below.
- This article applies to consumer credit cards. While many business credit cards offer rental car insurance, coverage levels could be substantially different from the benefits described below.
- Cards in the same network may have varying levels of coverage. Some issuers don’t offer rental car insurance at all, while others set terms that differ from the network standard. Call your bank or check your card’s benefits statement to learn more about your specific card’s benefits.
Nerd note: Much of the information discussed in this article is a compilation of resources available online. However, some of it was obtained through phone calls to customer service hotlines. It’s important to contact your card’s issuer to verify its coverage policy before you rent a vehicle. Here are some important terms to know before you call:
- Loss of use: The cost of renting another car while the original is out of commission.
- Fully utilized: Generally, this term describes when 80% of a rental company’s cars are in use. A card network may cover loss of use only if the auto rental company’s fleet is “fully utilized.”
- Diminished value: The amount that the rental car’s resale value decreases. This cost is usually relatively small, unless you manage to significantly damage the car without totaling it.
- Antique cars: Usually defined as a car made at least 20 years ago or one that has been out of production for 10 years. All networks exclude coverage of such vehicles.
- Vans: As a general rule, personal-use vans that seat eight people or fewer are covered. However, some waivers specifically exclude certain SUVs, and almost all exclude cargo vans.
Benefits by network
Visa, MasterCard, American Express and Discover all provide rental car insurance above and beyond what your primary insurer and rental company will offer. Here’s a quick overview of each network’s benefits and limitations:
Visa: Visa is often touted for its excellent rental car insurance benefits, mostly because it’s widely available for cardholders. Unlike many other networks, it offers rental car insurance on all of its cards — standard, Signature, rewards, the works. However, it limits its rental car coverage period to only 15 consecutive days domestically and 31 consecutive days abroad.
MasterCard: Its benefits are similar to Visa’s. However, rental car insurance is not offered on all cards, and it limits its coverage period on all rental cars to 15 consecutive days or fewer. According to customer service, it’s available only on Platinum, Gold, World and World Elite cards.
American Express: American Express is the only network to offer premium coverage for a small fee. It offers free secondary coverage up to $50,000 ($75,000 on The Platinum Card® from American Express and the Delta Reserve Credit Card), but will offer primary coverage with a higher limit and protection against injury and property damage if you choose it.
Discover: Discover’s coverage is limited to a handful of cards. Unlike the other three networks, Discover doesn’t cover loss of use fees, only collision damage up to a $25,000.
Visa and MasterCard
Both Visa and MasterCard emphasize that their terms vary by issuing bank. Again, check with your particular card’s issuer before renting your vehicle.
|Offered on||All cards||Gold, Platinum, World and World Elite|
|Rental period||15 consecutive days domestic/31 abroad||15 consecutive days|
|Must decline rental insurance?||Yes||Yes|
|Vehicle value||Not specified||$50,000 or less|
|Includes||Physical damage, theft, loss of use*, towing||Physical damage, theft, loss of use*, towing|
|Excludes||Injury, liability, property damage, taxes, damage to other vehicles, diminished value, tire wear and tear|
|Primary or Secondary?||Secondary||Secondary|
|Drivers covered||All authorized drivers|
|Vehicles excluded||Expensive, exotic or antique cars, trucks, pickups, RVs, motorcycles, ATV’s, limousines and certain vans|
|Excluded countries||Ireland, Northern Ireland, Israel, Jamaica||Maybe Italy, New Zealand, Australia, Ireland, Israel, Jamaica (Contact your vehicle rental agency before traveling)|
|Excluded SUVs/vans||Vans with more than 8 seats||Sport utility trucks (i.e. Chevy Avalanche, GMC Envoy, etc.), full-size vans|
|Max coverage||Not specified||$50,000|
|Max loss of use*||Not specified||Not specified|
|Report/file claim within||45 days||30 days|
|Source||Visa||MasterCard benefits and a call to customer service|
*To be compensated for loss of use, the rental company must prove that the fleet is “fully utilized.” Most rental agencies won’t bother, so your chances of getting this benefit aren’t very high.
American Express has various exemptions for students, Californians and Floridians, see below for the details.
|Benefit||American Express Basic||American Express Platinum||American Express Premium|
|Offered on||All cards||The Platinum Card® from American Express and other Platinum-branded AmEx cards, Delta Reserve Credit Card||All cardholders can purchase|
|Rental period||30 consecutive days from the same rental company, or 30 consecutive days out of a 45-day period within the same geographic location (75-mile radius) from any rental company||30 consecutive days from the same rental company, or 30 consecutive days out of a 45-day period within the same geographic location (75-mile radius) from any rental company||42 days (30 in Washington State)|
|Must decline rental insurance?||Decline full coverage, can accept partial collision damage waiver|
|Vehicle value||<$50,000||<$75,000||Not specified|
|Includes||Physical damage, theft, towing, storage, loss of use||Physical damage, theft, towing, storage, loss of use, certain medical expenses for accidental personal injury, AD&D, personal property||Physical damage, theft, towing, storage, loss of use, certain medical expenses for accidental personal injury, AD&D, personal property|
|Excludes||Injury, liability, property damage, diminished value, taxes, wear and tear|
|Primary or secondary?||Secondary||Secondary||Primary (accidental personal injury and personal property benefits are secondary)|
|Drivers Covered||All authorized drivers|
|Vehicles excluded||Expensive, exotic or antique cars, trucks, pickups, cargo vans, custom vans, full-size vans, vehicles used for commercial purposes, antique cars, off-road vehicles, RVs, motorcycles, etc.||Trucks, pickups, cube vans, box trucks, leased vehicles, customized vehicles, antique cars, limousines, off-road vehicles, motorcycles, RVs, etc.|
|Excluded countries||Ireland, Israel, Jamaica, Australia, Italy, New Zealand|
|Excluded SUVs/vans||Full-size sports utility vehicles (i.e. Chevy/GMC Suburban, Tahoe and Yukon, etc.), vans with more than 8 seats||N/A|
|Max car coverage||$50,000||$75,000||$24.95 plan: $100,000|
|Max medical expenses per person||N/A||$5,000||$24.95 plan: $15,000 per person,
Accidental death and dismemberment: $100,000
|Max personal property damage or theft||N/A||$1,000/person, max $2,000||$24.95 plan: $5,000/person, $10,000 max|
|Max loss of use||Not specified|
|Report/file claim within||As soon as reasonably possible/60 days|
American Express Exemptions
Students: A Personal, Gold or Rewards Plus Gold cardholders who are enrolled in an accredited four-year college or graduate program in the United States, and are receiving student benefits provided by card membership, are ineligible.
California: Maximum coverage costs $17.95 for:
- $100,000 car damage
- $250,000 accidental death and dismemberment
- $15,000/person medical expenses
- $5,000/person property damage, maximum $10,000 overall
Florida: Property damage is capped at $15,000 per person, $25,000 overall.
|Offered on||Discover® Motiva Card, Discover® Open Road Card, Discover® More® Card||Escape by Discover® Card|
|Rental period||31 days, 45 for employees using business credit card||31 days|
|Must decline rental insurance?||Yes||Yes|
|Includes||Collision or upset only||Physical damage, theft, towing|
|Excludes||Theft, any damage not due to a collision, injury, liability, property damage, taxes, damages to other vehicles, wear and tear, loss of use||Injury, liability, property damage, taxes, damage to other vehicles, diminished value, tire wear and tear|
|Primary or secondary?||Secondary||Primary (under certain conditions)|
|Drivers covered||All authorized drivers|
|Vehicles excluded||Expensive, exotic or antique cars, trucks, pickups, RVs, motorcycles, off-road vehicles, mini-buses|
|Excluded countries||Valid in any country that accepts Discover||Ireland, Israel, Jamaica, Australia, Italy, New Zealand|
|Exclude SUVs with more than||Doesn’t specify seat exclusions, but doesn’t cover all vehicles||Sports utility trucks, vans with more than 9 seats|
|Max loss of use||N/A||N/A|
|Report/file claim within||File claim in 90 days||30 days|
Image via iStock.