Is the rental car insurance that comes with your credit card sufficient?
Is insurance for rental cars included with your credit card package? Wonderful, but you should be aware that it might not include everything you believe it does. Is that so?
It is essential that you have a solid understanding of the differences between the auto rental insurance that comes with your credit card, the auto insurance that you already have, and the coverage provided by the rental company. When you're driving around in a rented ride, doing so this way will allow you to steer clear of any unwelcome financial surprises.
What Exactly Does Your Auto Insurance Cover?
If you already have auto insurance, your coverage should also extend to rental cars, as a general rule. However, since this is not always the case, it is important to check with your insurance provider before you rent a car.
You must give some thought to the various forms of auto insurance coverage you possess. For instance, just because you have auto insurance does not mean that anything and everything that is connected to your vehicle will be covered. In most cases, auto insurance will include the following four primary types of coverage:
- It covers injuries and property damage you cause to other people as a result of your actions.
- Personal injury protection, also known as PIP, is insurance that pays for medical care for you and your passengers in the event of an accident.
- Covers expenses incurred as a result of a collision.
- Comprehensive insurance protects you against losses that aren't caused by a collision, such as those caused by theft or hail.
When you are considering renting a car, it is a good idea to check that you are covered in all of these areas first.
In the event that you are involved in a car crash, your health insurance policy may pay for some or all of your medical expenses. Theft of your personal belongings, such as laptop computers or cameras, from your vehicle, might be covered by the renters' or homeowners' insurance policy that you have.
The Advantages of Using Your Credit Card for Rental Car Insurance
People who travel quite a bit may find it especially beneficial to obtain a credit card that provides insurance for car rentals, and here are some of the reasons why:
It is at no cost to you
A wide range of travel credit cards includes insurance for rental cars as one of the benefits for cardholders. Check the benefits guide with your card for more information on the coverages and limits it provides.
There is no deduction to be made
Surprisingly, what the majority of people refer to as "credit card rental car insurance" is not insurance; rather, it is secondary coverage and a benefit associated with insurance. It's called a Collision Damage Waiver (CDW) or a Loss Damage Waiver (LDW), and it ensures that you won't be responsible for paying to replace or repair the vehicle in the event that it's stolen or involved in an accident. Because these costs will be "waived" entirely, you won't have to worry about making any payments toward your deductible.
While some credit cards issued by Visa, Mastercard, and American Express come with complimentary insurance coverage, Discover does not offer this perk. Check the benefits guide that comes with your credit card to determine what is and is not covered by your card's insurance. Your coverage may differ depending on the credit card that you have, so it is important to check this guide.
The Disadvantages of Using Your Credit Card for Rental Car Insurance
Your credit card issuer's insurance for rental cars is a free and valuable perk, but it is not the only type of coverage available to you. Consider the following negative aspects of the situation:
You Will Need to Take Certain Steps in Order to Obtain It
In most cases, you will need to do each of the following three things in order to be covered by the insurance that comes with your credit card when renting a car:
- You must be the primary renter listed on the automobile rental contract in order to use the vehicle.
- You will need to make the payment with the credit card that comes with the protection plan.
- You will need to tell the rental company that you do not want the optional coverage they offer.
The Rental Car Insurance that Comes with Most Credit Cards Is Not Primary Coverage
The majority of the car rental insurance offered by credit cards these days only provides secondary coverage. This indicates that you will be required to submit a claim with your primary insurance company before filing with any other insurance companies. When this occurs, and only then will the secondary coverage kicks in and cover any out-of-pocket expenses you incurred, such as a deductible or certain charges that your insurance company does not cover.
Because of this, the coverage provided by the vast majority of credit cards does not include the liability insurance that is typically necessary in order to operate a motor vehicle.
These policies will typically become your primary coverage if you do not have auto insurance. They will begin paying out claims as soon as a collision or other type of damage occurs.
The card may place restrictions on your coverage
It is very simple to fool oneself into believing they are safe when they are not. The phrase "rental car insurance" sounds very inclusive. If you only rely on that and don't check to see if you're protected in the other areas as well, you could end up being responsible for more than you originally anticipated having to pay.
In addition, the insurance that comes with your credit card may not cover you if you rent a car in particular countries, for extended periods of time, or for particular makes and models of vehicles. If you do certain things, such as drive on dirt roads or cause an accident by speeding, it's possible that the credit card company will void your coverage as well.
The following are some examples of common kinds of exclusions that you might come across:
- Vacation accommodations in Jamaica, the Republic of Ireland, Northern Ireland, and Israel
- Expensive or antique cars
- Trucks
- Motorcycles
- Vehicles for leisure or recreation
- rentals in the United States that are longer than 15 days
- Losses incurred as a result of driving under the influence of alcohol or drugs
- costs associated with the fact that you were driving without a license that was valid
The Service Is Not Included With All Credit Cards
Even though it's not uncommon to see "rental car insurance" listed as a benefit on your card's Guide to Benefits, not all credit cards include this perk in their standard package of perks. For instance, it is typical for secured credit cards do not offer CDW coverage. It is important to note that Discover, which is one of the most prominent credit card issuers in the world, does not include rental car insurance with any of its credit cards.
The Advantages of Using a Rental Company Car Rental Insurance
When you are filling out the paperwork to get the keys to your rental car, the agent will typically try to upsell you on optional rental car insurance. This is done so that the agent is able to make more money. The following are some of the reasons why you may want to give it some thought:
You Can Get All of the Different Types of Coverage That You Need Right Now, Even if You Don't Have Some of Them Yet
There are people out there who do not have car insurance. If you are relying solely on the rental car coverage offered by your credit card, you do not need to worry about being responsible for any damages to the rental car. However, as we've established, this is only one aspect of the bigger picture.
It would be in your best interest if you also had protection against legal responsibility. In the event that you do not comply, you expose yourself to the possibility of being sued for any injuries or property damage that you cause to third parties. In the event that you do not have health insurance, you should also consider purchasing personal injury protection. It would be wise to make the purchase of these items right now if you do not already possess them.
It Is Possible for You to Avoid Submitting a Claim to Your Insurance
The Collision Damage Waiver, in general, absolves you of the obligation to pay anything at all, including a deductible, in the event of a car accident. You will need to make sure there is not a deductible by carefully reading the small print in the policy. Purchasing insurance from the rental company can also be helpful if you want to avoid filing a claim with your auto insurance provider and paying a deductible as a result of the claim.
The Disadvantages of Using a Rental Company Car Rental Insurance
When it comes to the insurance for your rented car, it is essential that you are aware of the potential drawbacks.
You will frequently be upsold on insurance policies that are unnecessary for you
Let's face it: insurance is a complicated and, most of the time, uninteresting topic. When you're at the counter picking up your rental car, the agent will typically try to persuade you to purchase one of their insurance policies, making it simple to sign up for the optional insurance coverage.
If you already have auto insurance, there is a good chance that you are already covered for most of what the rental company provides, if not all of it.
Cost
On average, purchasing insurance from a car rental company can set you back anywhere between $20 and $50 per day. If you pay for insurance over a longer period of time, such as several days or weeks, the rental might become unaffordable.
Does It Make Financial Sense to Invest Your Money in Buying Rental Company Insurance?
If you do not have sufficient insurance through your auto insurer, it is a good idea to consider purchasing additional coverage through the rental company. You can do this if you are renting a vehicle.
You might want to add personal injury protection (PIP) through the rental car company, for instance, if you don't already have it as part of your health or auto insurance policy. According to the Insurance Information Institute, the typical claim for bodily injury in 2019 was $18,417, which is a rather large amount of money you will be responsible for paying if you do not have insurance.
Key Takeaways
IDENTIFY GAPS IN YOUR COVERAGE
Make sure you have insurance that covers you in the event of a liability claim, as well as personal injury, comprehensive, and collision coverage. Check with your current insurance policies to see if there are any scenarios that they do not cover.
FILL IN THOSE VACANCIES WITH MERCHANDISE FROM OTHER COMPANIES
If you don't have coverage in these four important areas, you should seriously consider purchasing additional rental car insurance through either your credit card company or a rental car company.
READ EVERY LINE OF THE FINE PRINT
Be sure you have a complete understanding of the specifics of each type of rental car coverage, including what it does and does not cover and the requirements necessary to obtain that coverage.
RENTAL AUTO VEHICLE INSURANCE WITH A CREDIT CARD IS NOT SUFFICIENT ON ITS OWN BY ITSELF
In most cases, this coverage won't kick in until after you've exhausted your own insurance options. It also only covers you if there is damage to the vehicle, which is just one aspect of ensuring that you are completely covered.
