"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.
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
Chase United Mileage Plus Explorer and Club Cards
Chase Fairmont Visa Card