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rental-car-signThe 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 after you spend $4, 000 on purchases in the first 3 months from account opening. That's $625 toward travel when you redeem through Chase Ultimate Rewards®.

It has an $0 for the first year, then $95 after that, and doesn’t charge a foreign transaction fee.

If you’re a loyal United flyer and often rent cars, the 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 $0 for 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.

Benefit Visa MasterCard
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
Vehicle value Not specified $50, 000 or less
Includes 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
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 $50, 000
Max loss of use*
Report/file claim within 45 days 30 days
Source

*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.



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