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Terry Ward crashed her rental car, and learned how to h... Terry Ward crashed her rental car, and learned how to handle this sticky situation. (Terry Ward)
Wahhh-whoooosh went the air all around me, a sudden change of pressure that thundered in my eardrums as multiple airbags deployed down the length of the car with the deafening side impact. Before I could even process what was happening, it was over.

"This is not happening," I thought to myself. "I did not just get into an accident in a rental car."

Once I ensured that my passengers and those in the other car were fine, I immediately flashed back to the moment at the rental car office the day before when the clerk had asked if I wanted to take out the supplemental insurance on the shiny new Hyundai. "My credit card covers it," I'd said, declining the offer with the same confidence as so many times before, never intending to find out to what extent that was actually true.

Long story short, my credit card – the United Mileage Plus Explorer Card from Chase – did end up covering all of the damage to my rental car (over $9,000) since I had met all the requirements for coverage, including charging the entire price of the rental to the card. And my personal car insurance in Florida with Progressive covered the other party's car (it was totaled) as well as their medical expenses up to the full allowance of my coverage.

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It pays to know exactly what kind of car insurance your credit card offers, and to be fully aware of what kind of car insurance you carry for your personal car.

In the end, between the credit card insurance and my personal insurance, I was covered on all counts. But if I hadn't had credit card insurance (or, gulp, paid the car in cash), the damage to my rental car would not have been covered since I didn't take the company's supplemental insurance and my personal car insurance doesn't cover collision damage for my personal car (I'd decided my aging Acura was too weathered to be worth insuring for damages).

Despite things turning out okay in the end, I still feel like I dodged a bullet since I was just going on faith with my credit card insurance that things would be covered. Read on to learn when your credit card has you covered, how your personal insurance comes into play during a rental car accident and when you're best off purchasing the rental car company's supplemental insurance.

Knowing your card

As was the case in my situation, credit card insurance only covers damage to your rental car.

"When it comes to credit card insurance on rental cars, it's important to know that we're only talking about Collision Damage Waiver," also know as CDW, says Andy Shuman, author of The Lazy Traveler's Handbook. "It's not liability, meaning this coverage will not pay for damages or injuries you've inflicted on other cars or other people."

It's vital to make sure your credit card offers primary coverage, says Shuman.

"Primary coverage means that you won't have to deal in most cases with your own insurance company for coverage of the rental car damages," he says. Beware of credit cards that only provide secondary insurance. "(Secondary insurance) means that you have to go through your own insurance company first and only then your credit card company is supposed to pick up what's left."

The reason for wanting your credit card company to cover damages before your personal car insurance kicks in, he explains, is to avoid your insurance premium increasing.

Once you've ensured you have primary coverage through your credit card, it's important to know that all cards are not equal.

"Cards geared toward travelers may have particularly good rental car insurance coverage," says Laura Adams, senior insurance analyst at InsuranceQuotes.com. "On the other hand, some credit card insurance agreements have very specific exclusions to coverage."

Some of those exclusions, she says, apply to the rental of expensive or luxury vehicles, such as Aston Martins and Bentleys. But vans and SUVs can also sometimes be excluded, too. And if you use your business credit card to rent a car, make sure it's truly business travel that you're using the car for, as many credit cards insist you confirm this as part of the approvals process for claims.

Keep in mind that some insurance policies exclude specific countries from coverage, say Shuman and Adams. Among the countries often excluded are Ireland, New Zealand, Australia, Jamaica and Italy.

If you plan to use your credit card for collision damage waiver insurance, the two most important things to confirm are that the country you're renting in is included in coverage if you're outside the U.S. or Canada, and also that the type of car you plan to rent falls under the umbrella of coverage.

And always remember that credit card insurance only covers you if you charge the entire rental amount to the card and the name on the card is listed on the official rental agreement.

Personal car insurance

You might think that since a rental car isn't listed on your personal car insurance policy, that accidents in one wouldn't be covered. But depending on the extent of coverage you have through your personal car insurance, damage to a rental car in the case of an accident is usually covered.

"If you have comprehensive and collision damage (for your personal car), which pays for the theft of or damage to your car regardless of who is at fault, it may pay for damage to the rental car, as well," says Adams.

And if another party is involved in the accident – meaning there are liability considerations for both the other party's car as well as any medical bills for any passengers involved - that's when your personal car insurance's liability coverage really kicks in since liability isn't covered by credit cards.

Before you go on a trip, Adams says, take a few minutes to call your insurance company and ask exactly what rental car benefits are covered. And keep in mind, she says, that using your personal auto insurance to file a claim means your premium may increase.

When should you pay extra?

Rental car companies offer supplemental insurance that usually costs around $20 per day, sometimes a lot more. The main benefit of taking out a rental car company's insurance is that it exempts you from paying the deductible that your own insurance (as well as some credit card insurances) may require.

"If you have a high deductible on your insurance policy, meaning you must pay a certain amount before your insurance provider pays out on a claim, you may decide to take the coverage offered by the rental car company so you wouldn't have to pay the deductible," says Adams. Deductibles are usually between $500 and $1000, she says. And if you're concerned about your insurance premiums going up after filing a claim, she says, "the rental car coverage would keep you from having to get your auto insurance provider involved if you have an accident."

It's also worth considering using a rental car company's insurance if your credit card or personal insurance doesn't cover certain things, she says.

"For example, some insurers won't cover certain types of rental vehicles such as large trucks and passenger vans, so you have to buy the rental car coverage if you rented one of those vehicles."

Sorab Bhardwaj of Zalyn.com, a website that sources car rental rates at locations around the world, says to be aware, too, that maximum rental duration for credit card coverage is usually somewhere between 15 and 31 days. And when it comes to most rentals in Europe, third party liability is included in the rental price.

"Buy CDW at the rental counter if your rental won't be covered by your credit card because of one of the exclusions, and you either don't want to use your personal auto insurance, don't have it or it doesn't cover your rental," says Bhardwaj. The bottom line, she says, is to be sure you're insured one way or the other.

"As long as your rental is covered at an acceptable level and you're aware of what to expect in case of an accident, credit card coverage works very well," she says.

Some credit cards currently offering primary rental car insurance coverage:

Discover Escape Card
Diner's Card
Chase United Mileage Plus Explorer and Club Cards
Chase Fairmont Visa Card


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  • 40 Comments
      • 1 Year Ago
      Great article!! just found best truck insurance company, they are 100% trusted http://www.truckinsurancequote.co.uk Great article!! just found best truck insurance company, they are 100% trusted http://www.truckinsurancequote.co.uk
      raptureready1958
      • 1 Year Ago
      Depending on your insurance carrier, if you have full coverage on your own car, most of those insurances cover rentals.
      peach2man
      • 1 Year Ago
      American express offers rental car insurance at a one time cost per rental at around 26 bucks coverage for around three weeks instead of a rental car charge of 26 or more per day. ITs a seperate policy above and beyond there regular rental overage built into the card.
        Susan
        • 1 Year Ago
        @peach2man
        Actually, I just checked it and rental car insurance through AMX is included in your annual fee, so there is no additional charge as you said. I can't imagine why you'd buy additional. The policy covers up to $50,000 damage on the car. If you have Platinum card, it covers up to $75,000 and there's some additional liability coverage. It's good pretty much worldwide except for a handful of countries. Our USAA insurance covers liability in rental cars, though. I once worked at Avis and I tell you, they pay a big ole premium to a rental agent who gets you to take the insurance, just like they pay them a big bonus when they talk you into buying up in car class (i.e. like a convertible ).
      joeschmoeredux
      • 1 Year Ago
      Would have been nice to see this boiled down to a few points under Insurance, Credit cards, etc., rather than wading thru a novelette...
      Leo
      • 1 Year Ago
      Stated: (or, gulp, paid the car in cash), I seriously doubt you could have paid cash even if you wanted to do that! Try to pay cash the next time you rent a car.
      mflmarlton
      • 1 Year Ago
      If the accident is your fault you may have a surcharge for three years on your personal auto insurance.
      suecqrn
      • 1 Year Ago
      My insurance company considers a rental car my car so I have the same coverage as my insurance plan. I called them when I intended to rent a car in Greece and they said "get the insurance offered". It is always best to know what your insurance company (or credit card in this case) covers. On a side note, when changing over coverage to Italy, I asked the person on the phone if someone came to visit and drove my car, would they be covered under my insurance. She said she had never been asked that question before....LOL And yes they are covered.
      chefjohnp
      • 1 Year Ago
      This is all I have to say.....ALWAYS TAKE THE INSURANCE!!!!!! Don't blink, protest, give me any reasons or flinch at the idea of purchasing the insurance. Story: I rented a Lincoln for a nightly date in NYC. The insurance cost $10.00 for full coverage. (Yes, it was a while ago.) Anyway, I drove very safely and got to the 49th street garage. Maybe 50 feet from the entrance when bump!!! This guy hits the left quarter panel and puts a dent in it the size of a bowling ball. He, being of a foreign culture, tells me that it will only cost $50.00 to fix the dent. BS!!!!!, I replied. I made him wait until 2 police officers came up the street and I reported the incident. I drove the car home, reported the accident to the rental company and they said that I had no "out of pocket" expense. When I asked them how much did they think it would cost, they said between $5,000 and $7,000 depending on the underlying damage. Lesson: GET THE INSURANCE!!!!
        Dave
        • 1 Year Ago
        @chefjohnp
        That WAS a while ago, because these days, full coverage will cost more than the car rental itself. In many areas, it can run upwards of $50 per day.
      • 1 Year Ago
      Beware! We were hit head on by an uninsured driver in MT in August. She was charged with careless driving and no insurance. She left the secene and only stopped due to a driver that witnessed the accident , chasing her down to make her stop. She never even came up to see if we were ok. Our insurance company picked up the bill for the damage to the rental car and the towing fee but did not pay for administrative fees, diminution of value and other bogus fees tacked on by the rental company’s representative, PurCo. We’re out about $2,500.00 due to someone else’s negligence. Don’t know if the credit card company will pay that or not but we are filing with them since the rental car was charged to MC.
        • 1 Year Ago
        Having owned a rental car business I can tell you that when a client wrecks one of my cars I have to spend weeks on paper work with my insurance company, the body shop, and my car finance company. I still have to make my payment for the car and pay my employees the same amount every week even though I have one fewer car to rent for income. It's a loss of use of the car and that costs me money. Then, when I go to sell the car nobody wants to give me much for it because it was wrecked and then stitched back together. I lose on that too. So, although you may think the charges billed to you are "bogus" let me assure you that the rental company, in the end, probably lost money on the whole deal.
          Fiona
          • 1 Year Ago
          That is the cost of doing business. Everyone who is in a wreck has to deal with insurance, car payments, etc. You can't really blame someone for not wanting to pay a lot of money for a car that has been in a wreck...would you? As for the general public, I would check laws in your state before you buy "extra" insurance. As the person stated above they have an insurance company too...they couldn't rent cars if they weren't already insured. I worked for a large car rental agency and the insurance is pretty much a junk fee. The cars are already insured.
      f4180
      • 1 Year Ago
      article left out one big problem . Rental companies have started billing for "loss of use " of the car while it is being repaired . Beware .
      • 1 Year Ago
      To all overseas driving americans using ameircan credit cards to pay your car rental be careful. Call before hand to your C/C to see if damages will be covered in the country you are driving in. I used my AMEX to pay for the car rental in Australia got into a self inflicted fender bender only to have them reply sorry theres no coverage in Australia, Mexico, Ireland...etc
      RAUL
      • 1 Year Ago
      I always buy the insurance
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