As I’ve discussed in previous posts, two valuable (but often overlooked) benefits of credit cards are travel insurance and secondary auto rental insurance, even though terms are sometimes poorly disclosed and policies can be inadequate. For instance, when you’re covered by secondary car rental insurance provided by your credit card and you damage a rental car in the US, you’ll still have to file a claim with your own car insurance company - something most drivers want to avoid like the plague. Fortunately, there are several credit cards on the market that offer primary car rental insurance, providing immediate and direct coverage to the driver of a rental car.
Car rental coverage provided by credit cards is called the Collision Damage Waiver (CDW). Secondary CDW coverage waives your rental car agency’s right to pursue you for damages incurred to your rental car as a result of theft, vandalism, etc. However, secondary coverage may come with a deductible (typically $500), and in most cases doesn’t cover administrative fees or total loss of the vehicle due to an accident. Secondary CDW coverage is offered by a variety of cards issued by Discover, American Express (e.g., Premier Rewards Gold) and Visa (e.g., Citi Hilton HHonors Reserve).
Primary rental car coverage provided by a credit card generally covers the loss of the vehicle, meaning you won’t need to 1) pay a rental car company an extra fee for coverage when renting a vehicle or 2) alert your car insurance company to any activity that could cause your premium to increase.
Most of these policies exclude certain countries from coverage - most commonly Australia, New Zealand, Jamaica, Israel, Ireland and Italy. All policies cover most private passenger automobiles, minivans, and sport utility vehicles, but often don’t cover sports and specialty vehicles like trucks, motorcycles, mopeds and motorbikes. Excluded across the board are cars considered antique (generally defined as any vehicle over 20 years old, or one that hasn’t been manufactured for 10 years or more) or exotic (e.g., Aston Martin, Porsche and Ferrari). In all cases, in order to receive primary car rental insurance via a credit card, you have to decline the rental agency’s CDW. The following credit cards presently offer primary auto insurance coverage.
American Express Cards. All American Express cards offer premium primary coverage for $24.95 (or $17.95 for California residents) for a rental period of up to 42 days. However, know that when you enroll an Amex card for this coverage, you give Amex consent to charge your card automatically each time you use it to rent a car; if coverage won’t be necessary for your travel needs, be sure to disenroll your card prior to your trip.
One of the best current offers on an Amex card is 40,000 points after you spend $3,000 on purchases in the first 3 months with an Amex Platinum. This card, which incurs no foreign transaction fees, comes with a $450 annual fee, but you can receive up to a $200 airline fee credit annually for airline incidental fees like checked bags, flight-change fees and snacks.
Chase Ink Bold and Ink Plus. Both of these business cards offer primary rental car coverage for most types of vehicles (with the exception of sports cars, trucks and off-road vehicles) in most countries except Ireland, Israel and Jamaica. Note that cardholders must be driving for business in order to be covered.
Both of these cards earn 50,000 bonus points after you spend $5,000 in the first 3 months, or $625 toward travel when you redeem through Chase Ultimate Rewards. On both cards, you’ll earn 5 points per dollar (up to $50,000 annually) spent at office supply stores and on cellular, landline, internet and cable TV services. In addition, you’ll earn 2 points per dollar at gas stations and hotel stays (up to $50,000 annually) and 1 point per dollar on all other purchases. Ink Bold must be paid off in full each month, while Ink Plus allows the flexibility of paying over time. Both of these cards incur no foreign transaction fees, and their respective $95 annual fees are waived for the first year.
Chase Sapphire Preferred. Just recently, Chase announced a change in the Sapphire Preferred CDW coverage from secondary to primary insurance. Rentals paid for with the Sapphire Preferred are now covered for losses including physical damage and/or theft of the rental vehicle, valid loss-of-use charges assessed by the rental company, and reasonable and customary towing charges related to a covered loss. Reimbursement is up to the actual cash value of the vehicle as it was originally manufactured. While expensive/exotic cars are generally excluded, exceptions include select models of BMW, Mercedes-Benz, Cadillac and Lincoln.
The present signup offer for this card is 40,000 points after you spend $3,000 in the first 3 months, and the $95 annual fee is waived the first year. This card is one of my favorites, due to its 2x earnings for every dollar spent on travel and dining, and its lack of foreign transaction fees. Note that along with the addition of primary auto coverage, Sapphire Preferred has also added trip interruption and cancellation insurance, though it eliminated the 7% annual points dividend.
The current sign-up offer for ThankYou Premier is 20,000 ThankYou points after $2,000 in purchases within the first 3 months, and you can also earn an additional 30,000 points after spending $3,000 within the first 3 months of your second year of being a cardmember. The card earns 3 ThankYou points per $1 spent on dining out and entertainment, 2 points per $1 spent on airfare and hotels, and 1 point per dollar on all other purchases. These ThankYou points transfer to a handful of travel partners. The card incurs no foreign transaction fees, and its $125 annual fee is waived for the first year.
For the ThankYou Preferred card, the current sign-up offer 20,000 ThankYou Points after a $1,500 spend within 3 months, with a 0% intro APR on Balance Transfers and Purchases for 12 months. The card earns 2 ThankYou Points per dollar spent on dining at restaurants and entertainment, and 1 point per dollar spent on all other purchases. The card comes with Chip technology and no annual fee.
The Citi Prestige card’s sign-up bonus is 30,000 ThankYou points after spending $2,000 in the first three months. The annual fee is $450, and the card’s benefits will undergo some considerable changes as of October 19, 2014. Among the coming changes are: a free 4th night at all properties (rather than select ones) in the World Elite Luxury Hotels and Resorts Portfolio, only when booked through Citi’s designated travel advisor, Carlson Wagonlit Travel; an airline statement credit of $250; and Priority Pass membership. The card presently earns 2 ThankYou Points for each dollar spent on dining and 1 point per dollar for all other purchases. Starting in October, though, Prestige will introduce a new 3x bonus category for airlines, hotels, and travel agencies, and will expand the 2x category to include entertainment.
Diner’s Club International Card. This card is not accepting new applications, but for present cardholders, its primary coverage applies to physical damage and theft of the vehicle, reasonable loss of use charges, reasonable towing charges, and includes secondary personal effects insurance. Protection for covered damages applies to rental cars with a retail price of up to $100,000.
Diner’s Club doesn’t come with a sign-up bonus and charges a 3% foreign transaction fee, but has no annual fee and earns 1 Club Reward point for every $2 spent. These Club Reward points can be transferred to a wide variety of partners (including restaurants, airlines, and hotels), and the card offers 24/7 personal concierge service, global airport lounge access, and discounts on car rentals at Avis and Budget.
Discover Escape Card. This card’s primary rental car insurance covers you for a rental period of up to 31 consecutive days, and excludes tax, gasoline, and airport fees from its definition of car rental charges. Covered vehicles include minivans and sport utility vehicles, but exclude off-road vehicles and cars that have a suggested retail price above $50,000. Coverage includes physical damage to and theft of the vehicle, reasonable towing charges, and any deductible or other eligible amounts not covered by other insurance. The insurance doesn’t cover personal injury, personal liability, damage to other vehicles or property, or any injury to any other party.
The current sign-up bonus on this card is 25,000 points, given to cardholders at a rate of 1,000 points a month for the first 25 months. (This equates to roughly $10 a month for two years, which is decent, if not particularly exciting.) You receive 2 miles for every $1 spent, as well as a o% APR for the first six months. The card’s annual fee is $60, it incurs no foreign transaction fees, and points can be redeemed for any flight, hotel stay or car rental without restrictions or blackout dates. However, be aware that Discover still receives limited acceptance within the US, and isn’t accepted at all in Germany, France, India and Chile.
Fairmont Visa Signature. Primary coverage is offered for physical damage and theft of most rented vehicles, up to 15 consecutive days in your country of residence and 31 days outside your country of residence.
The current sign-up offer is two complimentary nights with breakfast for two after you make $3,000 in purchases within the first 3 months, as well as one complimentary night each anniversary year that you spend $12,000 with the card. You earn 5 Fairmont Rewards for every $1 on Fairmont stays, 2 for every $1 spent on airline tickets purchased directly with airlines, at car rental agencies, and on transit and commuting, and 1 for every $1 spent on all other purchases. The card incurs no foreign transaction fees, you’re given an automatic upgrade to Premier Status, and when you spend $7,500 on the card, you’re given a maximum of two stay credits per calendar year towards Platinum status.
The Ritz-Carlton Rewards Visa Signature. Primary coverage offered by this card protects you up to the actual cash value of most rental cars, as well as damage due to collision or theft.
The current sign-up bonus on this card is 70,000 points after you spend $2,000 in the first three months. You receive 5 points per dollar on your Ritz-Carlton spend; 2 points per dollar on dining and car rental expenses, as well as airfare when purchased directly with the airline; 1 point per dollar on everything else. Points earned with the card can be redeemed at Ritz-carlton properties and for Marriott free nights. It incurs no foreign transaction fees, and comes with a $395 annual fee.
Additional benefits of this card are a $200 airline credit each year, $100 in hotel dining, spa or activities for each Ritz-Carlton stay of two nights or more, Priority Pass Select membership (free for additional cardholders), three upgrades to Ritz-Carlton Club level each year, concierge service, and instant Gold Elite Status, which is normally earned after 50 paid nights. Gold status is retained with $10,000 in annual spend each following year.
United MileagePlus Explorer and United MileagePlus Club. These are the only two Visa Signature cards to offer primary rental car insurance, and the insurance policy terms are the same as those offered by the Sapphire Preferred, with the exception of the expensive/exotic cars inclusions and the fact that United offers its primary coverage in all countries, even those normally excluded by other policies.
The current sign-up bonus on the Explorer card is 50,000 miles after spending $2,000 in 3 months, plus a $50 statement credit after your first purchase and 5,000 miles for adding an authorized user. You can earn another 10,000 miles if you spend $25,000 within a calendar year. In addition, you’ll earn 2 miles per dollar spent on tickets purchased from United and 1 mile per dollar spent on all other purchases. The $95 annual fee on this card is waived for the first year, and the card incurs no foreign transaction fees.
The Club card gives you full United Club membership (and Hyatt Gold Passport Platinum membership), as well as a $100 statement credit after your first purchase. It earns 2 miles per dollar on United purchases and 1.5 miles per dollar elsewhere. On United-operated flights you’ll get your first and second checked bags free, as well as priority check-in and boarding. This card comes with a $395 annual fee, but when you sign up for the card in a Chase branch, the first year is waived.
Please note that USAA co-branded cards (e.g., American Express, Mastercard, etc.) also offer primary rental car insurance to their cardholders, but are only available to officers, enlisted personnel, or veterans of the US military and their eligible family members.
When you accept primary rental car insurance from a credit card, don’t assume that you’re covered for every possible auto-based mishap. Before you travel and/or rent a car, be sure to give your credit card’s customer service a call to determine exactly what is covered and what is not.
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