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Some flashy travel perks, like rewards points, are highly sought after by consumers of all stripes. Other benefits are ignored until absolutely necessary. Unsurprisingly, rental car insurance tops this second list.
While it is increasingly common for credit cards with travel rewards to offer any policy, customers may not always be certain of the usefulness of the cover. To further muddy the waters, chart reviews and advertising usually refer to insurance as “primary” or “secondary”.
Before applying for a card, it is useful to know the differences between them, as they can be significant. Fortunately, we have what you need.
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How rental car insurance works
Before we dive into the differences between primary and secondary coverage, let’s briefly look at rental car insurance in general. First, and perhaps most importantly, the renter must pay for the car with the credit card that provides the protection. The cardholder must also be the primary renter, although other drivers are also covered provided they are listed on the rental agreement. Finally, the terms generally require the renter to decline the collision damage waiver (CDW) from the car rental company.
CDW covers damage to the car in the event of an accident or theft during the rental and may also cover towing costs related to any covered damage. Using a clever tactic, rental companies often offer discount prices for their cars, as they can often make a pretty penny selling CDWs. These policies can cost between less than $10 and more than $30 per day, depending on the agency and the level of coverage provided. With strong credit card insurance, however, you can decline CDW and be sure you’re covered.
Although credit card insurance can replace CDW, it does not provide any type of liability insurance. The CDW covers the driver’s car, not other cars or people. So if you were to cause an accident that damaged another vehicle or injured its passengers, you would be personally liable, even with credit card coverage.
To get full liability protection, you must have the rental company’s insurance at the counter (usually $8-20 per day), be covered by your home auto insurance (usually only covers national rentals) or purchase a separate policy.
Some countries (eg Mexico and most countries in Europe) require liability insurance to be included in the rental price, so you do not need to purchase it yourself. When booking, you may see this reflected in the base rate as “Third Party Liability Insurance”. Note that the maximum coverage offered by this included liability insurance may be low in some countries. For example, in Mexico it may only cover about $17,000 in injury and damage, but you can purchase additional liability insurance.
Read more: When Should You Buy Collision Damage Waiver
The difference between primary and secondary coverage
To begin with, it should be mentioned that most credit card offer secondary insurance for rental cars. This means that the card’s insurance will only pay for the amount not covered by any other policy the driver has. Therefore, you will first need to file a claim with your other insurance. As anyone who has dealt with insurance companies knows, this can take time.
In contrast, with primary credit card coverage, personal auto insurance is irrelevant. As the name suggests, primary insurance applies first, regardless of what other coverage the renter has. Conveniently, this means you can begin the process of submitting a claim by calling the number on the back of your card.
Why primary insurance is better
A card with primary cover eliminates the need to file a claim with your personal auto insurance, a process that would typically subject you to a deductible payment and a monthly premium increase. Primary coverage is also more likely to have generous terms and cover the full cost of the car. By contrast, secondary policies sometimes have lower limits for total coverage, a shorter permitted rental duration, and fewer countries in which rentals are covered.
Cards providing primary coverage
After establishing the value of the main car rental insurance, which credit cards offer it? As the list suggests, premium cards are your best bet.
Chase offers primary rental car coverage on the following cards:
The Chase small business cards below also provide primary coverage, but only when the rental is for business purposes:
American Express cards do not include the free primary cover, but cardholders have the option to purchase it for an additional $20-$25 per rental. This can be done on the American Express website. Many American Express cards offer secondary car rental coverage.¹
As you might expect, as the policy comes at a cost, the terms are even more generous than those of the insurance offered by cards from the other issuers listed above. For example, the American Express program includes $15,000 medical coverage for you and your passengers on a secondary basis (after any other medical or travel insurance) and offers coverage on rentals for up to 42 days, which is longer than most other cards. While this may be better than the terms of some other cards, note that liability coverage is still not included.
Other options for primary insurance
While we are big proponents of using insurance which you can get at no extra cost through your credit card, you can also purchase primary car rental insurance from companies such as Allianz, Bonzah and others .
Where you rent can matter
Some cards offer secondary cover in the driver’s country of residence (where you might be covered by your regular car insurance policy) and primary cover abroad. Generally, secondary coverage abroad will effectively act as primary coverage, since most personal auto insurance policies will not be applicable outside the United States. Likewise, if you don’t own a car and therefore don’t have car insurance, even secondary coverage will essentially act as primary coverage in the United States.
Although the rental of a normal sedan in most countries is covered by a credit card insurance policy, there are notable exclusions – usually expensive or exotic cars, vans with a capacity of more than eight people and vintage cars. Your policy may also not be valid in certain countries (Jamaica, Ireland, Italy, Australia and New Zealand to name a few), although Chase cards now offer worldwide coverage. Rental length can also be a factor; rentals longer than two to four weeks may not be covered. As always, check your card’s terms and conditions for exact stipulations.
Prime rental auto insurance is a valuable benefit offered primarily by top-tier cards. This can give you peace of mind when you decline coverage from the rental company and save you a lot of money. This will make your life easier by eliminating the need to file claims elsewhere if you ever need to file a claim. This is particularly advantageous in the event of an accident that damages the car, as it will not result in a rate increase on your normal car insurance policy. However, as mentioned above, it is not a substitute for liability coverage.
If you value the freedom of having a car when you travel, the insurance provided by your credit card can offer fantastic value. Be sure to ask about these benefits before applying for a card or going to the rental counter.
¹Eligibility and benefit level vary by card. Terms, conditions and limitations apply. Please visit americanexpress.com/benefitsguide for details. Underwritten by AMEX insurance company. Rental car loss or damage coverage is provided by American Express Travel Related Services Company, Inc.