Consider opting out of the car rental insurance agency’s Collision Damage Waiver (CDW) or Loss Damage Waiver (LDW) to avoid the daily fee. Instead, use a credit card that offers similar protection for free.
Do you want to save money on your next vacation?
Many credit cards include rental car protection as a free benefit for cardholders. However, coverage, limits, and policies may vary depending on your card. Understanding what is covered and how the benefit works can help you make an informed decision the next time you walk up to a car rental counter.
Do you need insurance when renting a car?
When renting a car, you will need to carry a personal auto insurance policy or purchase one from the car rental agency. The good news is that you are probably already covered. Most states in the US require that you have at least some liability coverage if you want to drive a vehicle. Liability coverage helps pay for others’ medical bills and damage to others’ vehicles and property. It can also help pay fees to defend you during a lawsuit.
If you already have car insurance, you may be covered when you rent. “Unless otherwise expressly stated in the list of exclusions in a policy contract, your car insurance policy could follow you when you apply for or rent cars,” says Neil Richardson, licensed insurance agent and consultant for comparison website The Zebra Auto Insurance Company. However, it is recommended that you check your policy or call your insurance agent to verify your coverage. Richardson also adds, “keep in mind that an exclusive liability policy will not provide physical damage coverage for a rental car.”
In addition to liability coverage, car rental agencies may offer you other types of protection. The names and coverage rules or limits may vary by Rental Company, but generally fall into these three categories:
- Personal accident coverage. It generally covers medical bills and funeral expenses for you and your passengers.
- Personal effects coverage. Generally covers theft of personal property during the rental period. In some cases, coverage applies to theft outside the rental vehicle and may include the personal property of others traveling with you.
- The CDW or LDW. Although not technically insurance, loss damage waivers are often offer in conjunction with insurance plans. CDW or LDW generally covers theft and damage to the rental vehicle. As long as the loss or damage is not the result of prohibited use of the vehicle. Similar to the comprehensive and collision coverage of a personal policy. The waiver also covers loss-of-use fees from the rental company.
Your existing insurance may already cover you in many of these situations. For example, a renters or homeowners insurance policy might cover theft of your personal property. Such as items in your rental car.
Health insurance, auto insurance, personal injury protection, and life insurance could cover you during a medical emergency or help family members pay expenses after a death.
What could a credit card cover?
Credit card rental vehicle protection can only be extend to the CDW or LDW portion of coverage. The benefit helps reimburse you for damage to or theft of the rental car. In some cases, credit card coverage will also pay for loss-of-use, administrative, or towing fees incurred by the rental car agency.
To receive credit card coverage, you may need to:
- Reserve and pay the rent with the card.
- Be the primary driver on the rental agreement (additional drivers list may also be cover).
- Decline CDW or LDW coverage from the rental agency.
Check your card policy for other details, such as maximum rental period (which can be around 30 consecutive days), limitations in different countries, types of vehicles covered, and coverage limitations.
Also, check to see if your card offers primary or secondary coverage. According to Loretta Worters, vice president of communications for the Insurance Information Institute, most credit cards offer secondary coverage. This means that you may need to file a claim with your insurance company first, and credit card coverage can only reimburse you for claims that your primary insurance doesn’t cover, such as your deductible, administrative fees, and costs that exceed the credit limit your policy.
What cards offer car rental insurance?
Most consumer credit cards offer some type of car rental coverage as a benefit. However, Worters says benefits can vary widely by issuer and card, so it’s important to check your policy details. For example, the Chase Freedom Flex Auto Rental CDW benefit provides secondary coverage up to the actual cash value of a vehicle. But Chase Sapphire Reserve offers cardholders up to $75,000 worth of primary coverage and rebates.