How Does Credit Card Insurance on a Rental Car Work?

Law Office of John Hamilton

True story: I once slaughtered a deer with a rented Toyota Yaris in the middle of Florida’s Ocala National Forest. The car was effectively totaled — front caved in, airbags deployed — it was barely drivable. The friendly sheriff’s officer who finally spotted me said the same thing everyone else does when I start this story: “I hope you got the insurance.” I had not.

Lucky for me, I rented the car with a credit card, and many credit card companies (mine included) offer insurance on card purchases, including rental cars. So what does credit card insurance cover when it comes to rental cars? And how do you make sure you’re covered?

Your Life, Your Card, Your Insurance

Like many of you, I had heard that buying rental car insurance coverage was a scam. But that’s only true if you’re otherwise covered, like under your car insurance policy. Another place you might be covered is by your credit card agreement.

So if you’d rather not pay $15 – $25 per day for rental car insurance, use your credit card to reserve and pay for the rental car. (NOTE: you have to use the card to reserve the car and put the car in your name. Just having the card in your wallet won’t suffice.) But be aware that not all cards offer rental car insurance, and those that do will often have varying degrees of coverage.

Everywhere You Want to Be Covered

Most cards will have what’s known as secondary rental insurance, which covers any remaining costs not covered by your own auto insurance policy. But some cards offer primary car rental insurance, which covers damages directly and without you having to deal with your car insurance company.

There are some limitations to this coverage: foreign rentals in some countries are excluded, and you have to decline the rental company’s insurance to qualify. But if you’re covered, the credit card company will cover the loss of the vehicle, often without any deductible or added fees.

Having the credit card insurance ended up saving me about $5,000, so you might want to check if your card covers you before declining the rental car company’s coverage.

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