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How Secondary Car Rental Insurance Works for Renters Without Auto Insurance

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If your travel plans involve renting a car but you don’t have any personal insurance or a card with primary insurance, you may think you need to accept the rental company’s Collision Damage Waiver option. However, as TPG Contributor Akash Gupta explains, having a credit card with secondary insurance is sufficient to cover damage to the rental vehicle.

Update: As readers have pointed out, it’s very important to consider adding liability coverage as well, which is typically not provided as a component of credit card car rental insurance.

You’re likely familiar with some of the great credit cards that offer primary car rental insurance, allowing you to bypass filing a claim with your own auto insurance first in the event of a mishap during rental. Even for renters without auto insurance, this primary coverage is easy to understand, as you just need to decline the car rental company’s Collision Damage Waiver (CDW) option and approach the credit card company to file a claim for any damages.

But what about renters who are not only devoid of any personal auto, theft or damage insurance, but also hold a card that offers only secondary insurance on car rentals? Should they still decline the CDW when initiating the rental? The answer is a resounding yes — they can still decline the waiver offered by the rental agency because secondary coverage simply becomes primary in their case.

Secondary Car Rental Coverage

You're not out of luck if you don't have any personal insurance.
You’re not out of luck if you don’t have any personal insurance. Image courtesy of Shutterstock.

I’m a frequent car renter and don’t have any personal auto insurance policy since I don’t own or lease a vehicle. After canceling my Chase Sapphire Preferred Card — which offers primary rental coverage — last year, I switched most of my travel spending over to the Citi ThankYou Premier Card, which only offers secondary coverage through MasterCard, albeit on any car rented in any location. Upon mentioning this at the desk of a car rental agency, the rep insisted I buy the waiver from them since secondary coverage for uninsured people was insufficient. Skeptical about this statement, I whipped out my phone and called the card issuer to confirm how it would work in my case. Both Citibank and MasterCard agents confirmed that the secondary car rental insurance would function as primary in my case, and quoted me an excerpt that can also be found in the MasterCard Guide to Benefits:

“If you have no other insurance or your insurance does not cover you in territories or countries outside the United States, MasterRental is considered the primary coverage.”

Upon checking with Visa, I was referenced a similar statement, which can be found in its own guide to credit card benefits:

 “If you do not have personal automobile insurance or any other insurance covering this theft or damage, this benefit reimburses you for the covered theft or damage as well as valid administrative and loss-of-use charges imposed by the auto rental company and reasonable towing charges that occur while you are responsible for the rental vehicle.”

The same is also indicated for American Express cards that offer secondary or “excess” Car Rental Loss and Damage Insurance, confirmed by customer service:

“Car Rental Loss and Damage Insurance is an excess insurance plan. When any other plans apply, such as collision damage waivers, personal auto insurance, employer’s auto insurance or reimbursement plan, or other insurances, a Cardmember must first seek payment or reimbursement and receive a determination based on the stated terms of such other Plans.”

However, one thing to note is that both primary and secondary coverage only insure damage to the rental vehicle and are not all-inclusive. Things such as personal injury, personal liability and damage to other vehicles and personal property are not covered under either car rental benefit. As per various sources (as well as agents at the car rental desk), apparently the only card that offers liability coverage on a rental by default is the American Express Centurion (Black) Card. Even American Express’ optional Premium Car Rental Protection doesn’t cover liability.

The Citi ThankYou Premier's secondary car rental insurance could come in handy if you rent cards but don't own one.
The Citi ThankYou Premier’s secondary car rental insurance could come in handy if you rent cars but don’t own one.

Additionally, even though secondary coverage is as good as primary in the discussed scenario, in both cases you should still check with your card issuer about the terms and extent of this feature, as they tend to vary between banks and payment networks. For example, the Citi ThankYou Premier Card covers any vehicle rented in any location up to $100,000, whereas MasterCard lists exclusions to both vehicle type and location, covering up to only $50,000.

Bottom Line

Even if you lack your own auto insurance, you can rent most cars in most locations with the confidence that as long you use a card which offers at least secondary coverage, you’re insured for damage to the rented vehicle in the event of an accident. Just make sure you research the specifics of your card’s coverage if you’re unsure of anything before renting a car.

Have you ever utilized a card’s secondary car rental coverage in a similar scenario? Share your experience in the comments!

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