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Rental Car Insurance: Your Credit Card May Have You Covered

Rental car insurance probably isn’t on your mind as you book hotel rooms, study visitor guides, double-check your vacation wardrobe and attend to all the other details of a family getaway. In fact, it probably won’t even cross your mind until you’re standing at the airport car rental counter faced with a multipage rental contract. “Collision damage waiver! What the heck is that?” you’ll ask yourself as the first bead of perspiration trickles down your back.

Even when renting a car costing less than $30,000, you can run up insurance fees totaling $30 or more per day if you opt for all the insurance the rental company offers. For a 7-day trip, that’s roughly $200 less you’ll have to spend on the fun stuff.

You may be able to breathe a sigh of relief. With few exceptions, renting a car requires a credit card. The credit card you use to secure the rental probably covers it for almost any misfortune and the resulting costs. In fact, if you carry full coverage on your personal vehicle, you’re likely covered within your policy’s claim limits after applying deductibles. Don’t take this for granted, however; contact your insurance carrier to determine exactly what your rental car coverage is.

In many cases, the rental insurance protection your credit card provides will serve as a solid backup to the rental coverage of the insurance on your own car. Personal finance website Card Hub recently released a study summarizing and rating a number of credit cards according to their rental car insurance coverage. What they found was that, when it comes to covering rental cars, all credit cards aren’t created equal.

The Study

With an exception or two, Card Hub included all the credit cards offered by the 10 largest issuers. They researched the answers to six questions asked of each card:

  • Which types of vehicles (antique cars, exotic cars and so on) are excluded?
  • What other exclusions (road conditions, tire and rim damage and so forth) are included?
  • What is the quality of coverage (for example, if the deductible of your own car’s insurance is covered)?
  • How is the benefit activated (is it automatic once the car is rented and the supplemental insurance declined)?
  • How are claims filed?
  • How easy is it to receive complete rental coverage information?

Possible answers to each question were assigned points in the form of percentages (5 percent, 10 percent and so on) with a total perfect score of all six questions being 100 percent.

Buyers Beware

There are a few areas in which a notable number of cards offer less protection than you might require:

  • Loss of use — This is a potential cost most of us simply fail to consider. Even if the insurance on your own car covers the damage to a rental, it probably won’t cover what the rental agency charges you for the loss of use of the rental while being repaired. Although 90 percent of credit cards do, 10 percent don’t cover this expense, which could be $100 or more.
  • Tire and rim damage — Roughly 60 percent of the cards don’t cover any, or just some, damage to the tires and rims.
  • Coverage duration — Although the number of days covered for foreign-country rentals may be more, nearly 40 percent of credit cars only cover 15 days of domestic rentals.
  • Country coverage — Roughly 85 percent of credit cards exclude three or more countries for rental insurance coverage. Only Citi and Discover cards provide global coverage.

Same, but Different

Just because two cards are from the same issuer or network doesn’t mean they offer the same rental coverage. Don’t assume that your new Visa card from Chase will provide exactly the same rental car coverage as your previous Visa card from Bank of America. It may not.

According to the study, for example, USAA American Express cards scored a maximum of 20 percent for covering loss of use, as well as covering the deductible on your own insurance, while the Wells Fargo American Express cards scored 12 percent.

Scoring the Networks

Scored collectively, there isn’t much daylight from one credit card network to the next. MasterCard topped the 4-network list with 89.2 percent. Discover was in the basement with 83 percent. Visa (86 percent) and American Express (84.4 percent) rounded out the group.

Scoring the Issuers

Here, Card Hub further broke down cards through bundling by network into bank/network groups. In instances when all cards, regardless of their network and from the same bank/issuer, scored the same, the study lumped them together.

At the top of the list were all Citi cards, with a score of 95.5 percent. Bringing up the rear with a 74 percent score was Bank of America’s Better Balance Rewards cards. All other cards scored somewhere in the 80- to 89-percent range.

What it means to you: If you do a little homework to verify what your normal insurance for your car — along with your credit card of choice — will and will not cover on a rental car before heading to the rental agency, you may be able to save yourself some serious money over the course of the rental period.

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