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It may seem hard to believe, but summer is right around the corner (April winter weather nonwithstanding). For many families, that means taking to the skies to go see family, visit historical attractions or take over theme parks across the country. Here at The Points Guy, we tend to focus on how to best use your hard-earned points and miles when booking travel, but what about saving money when the unexpected happens while traveling?

APPLY HERE: Chase Sapphire Preferred – 60,000 points after $4,000 spent within the first 3 months

If you’re planning on renting a car this summer for your vacation, there’s a credit card that you need to add to your wallet now: the Chase Sapphire Preferred Card. No, it’s not just for the hefty sign-up bonus or the 2x Ultimate Rewards points you’ll earn by paying for the car with the card. Instead it’s the layer of insurance you’ll get on the purchase thanks to a protection known as primary car rental coverage, one that can save you hundreds or even thousands of dollars in the event of an accident.

Intrigued? Keep reading to find out why this card should be added to your wallet today.

What is primary car rental coverage?

Let’s start with a quick primer on exactly what this benefit is to ensure everyone’s on the same page. Whenever you rent a car, you’re typically offered additional insurance coverage through the rental company for an added fee (which could be as high as $20 per day). This is commonly referred to as “Collision Damage Waiver” or CDW. Fortunately, many popular credit cards offer car rental coverage and thus allow you to decline this added fee but still enjoy protection on the car. However, the vast majority of these policies give you secondary coverage. As the name indicates, this would kick in on a secondary basis after other applicable insurance policies apply (namely your own personal car insurance) in the event of damage or loss to your rental car.

Primary coverage works in the opposite way. If you’re driving a rental car and get into an accident or have your car stolen, primary car rental protection kicks in first. This prevents you from needing to submit the claim to your personal insurance company back home and subjecting you to a possible deductible and future rate hikes.

If you decline the car rental company’s optional CDW and use the Chase Sapphire Preferred to pay for the car, here’s what you’ll get:

“The Auto Rental CDW benefit provides reimbursement for damage due to collision or theft up to the actual cash value of most rental vehicles. It is primary coverage which means you do not have to file a claim with any other source of insurance before you can receive coverage under this benefit.”

Bear in mind that this only provides coverage for the car; it doesn’t include liability insurance for damage you cause to property nor will it cover injuries to you or other involved in an accident. That being said, it can still be an incredibly valuable benefit if things go wrong this summer.

APPLY HERE: Chase Sapphire Preferred – 60,000 points after $4,000 spent within the first 3 months

 

Hypothetical Example

Let’s consider two hypothetical travelers who are hitting the road this summer and renting a car with their respective families: John and Allison. After reading this article, John signs up for the Chase Sapphire Preferred Card, and when he arrives at the rental car desk, he declines the extra Collision Damage Waiver (despite a hard sell from the agent) and uses his new card for the rental. Allison, on the other hand, also declines the CDW but then swipes her no-annual-fee card for the car. Since she uses that card for all of her purchases, she doesn’t even think twice.

Fast-forward to three days later…after a fun day of sightseeing in their respective destinations, the two families come back to their rental car to find the following:

No note from the other driver or any nearby cars with damage; just the horrible realization that they are facing the possibility of an additional expense for repairs to the car.

The rest of the two families’ trips continue without incident, and they pull into the car rental return ahead of their flights home. The agents in charge of checking their cars back in notice the damage (not surprising) and file an accident report. Each one notes that they’ll need to repair the car and will assess both the cost of repairs as well as loss of use fees while the car is in the shop (and thus can’t be rented).

After a few weeks, the bill from the car rental company arrives and includes the following amounts (rounded to make the calculations easier):

  • Damage: $960
  • Loss of use: $150

$1,110 has been charged to each renter’s credit card used for the rental car to cover these amounts.

Here’s where the two families’ experiences diverge. John calls the benefits administrator on his Chase Sapphire Preferred Card (1-888-320-9961) and fills out the Collision Damage Waiver claim form. Along with this completed form, he submits copies of the billing statement showing that the entire rental was charged to his card, the accident report from the car rental company, the rental agreement, the repair estimate and several photos he took of the damage. Just 12 days later, John receives a check in the mail for the full amount that he paid.

Allison, unfortunately, has a very different experience. Since the card she used for the rental doesn’t include primary car rental coverage, she must submit the claim to her personal insurance company for reimbursement. Her policy has a $500 deductible and doesn’t include a provision for loss-of-use coverage. As a result, Allison is only reimbursed for the additional damage above her deductible $460. In addition, when her personal insurance policy renewal comes up later in the year, she notices that her rates have been hiked $90, a jump of roughly 8%.

When all’s said and done, John came out $650 ahead of Allison simply by opening and then using the right credit card for his summer vacation car rental. This gap will actually grow each subsequent year thanks to the higher insurance premium Allison now must pay. Talk about an expensive mistake!

APPLY HERE: Chase Sapphire Preferred – 60,000 points after $4,000 spent within the first 3 months

Bottom Line

Opening and using travel rewards credit cards is a great way to unlock valuable redemptions like luxurious hotel rooms or premium-class flights. However, a less-heralded set of perks on these cards can really come to the rescue when things go awry, especially when you’re traveling. Damaging a rental car is one such example, but paying with a card like the Chase Sapphire Preferred Card will ensure those issues won’t cost you dearly.

Of course, there are a handful other card options with primary car rental coverage, but the Sapphire Preferred is my top pick thanks to the waived annual fee the first year and lucrative value proposition it offers, especially for someone just getting started with points and miles. If you don’t currently have one of these cards and are renting a car this summer, time’s running out to grab one and drive off the rental car lot with added peace of mind.

Photo by @Gouldjosh via Twenty20

Know before you go.

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2018 TPG Award Winner: Mid-Tier Card of the Year
Chase Sapphire Preferred® Card

NEW INCREASED OFFER: 60,000 Points

TPG'S BONUS VALUATION*: $1,200

CARD HIGHLIGHTS: 2X points on all travel and dining, points transferrable to over a dozen travel partners

*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.

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More Things to Know
  • Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 toward travel when you redeem through Chase Ultimate Rewards®
  • 2X points on travel and dining at restaurants worldwide & 1 point per dollar spent on all other purchases.
  • Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards. For example, 60,000 points are worth $750 toward travel
Intro APR on Purchases
N/A
Regular APR
18.24% - 25.24% Variable
Annual Fee
$95
Balance Transfer Fee
Either $5 or 5% of the amount of each transfer, whichever is greater.
Recommended Credit
Excellent/Good

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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