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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
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.
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.
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!
The Points Guy Assessment:
The Chase Sapphire Preferred is a great pick for the beginner and the frequent traveler. The CSP has superb travel benefits, double points on certain purchases, and a 50,000 point sign up bonus. The $95 annual fee is waived the first year so this puts it as one of the less expensive cards, while still allowing you to earn one of the most valuable point currencies.
- Earn 50,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $625 toward travel when you redeem through Chase Ultimate Rewards®
- Chase Sapphire Preferred® named a 'Best Travel Credit Card' by MONEY® Magazine, 2016-2017
- 2X points on travel and dining at restaurants worldwide & 1 point per dollar spent on all other purchases.
- No foreign transaction fees
- 1:1 point transfer to leading airline and hotel loyalty programs
- Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards. For example, 50,000 points are worth $625 toward travel
- No blackout dates or travel restrictions - as long as there's a seat on the flight, you can book it through Chase Ultimate Rewards