Most U.S. residents who own a car and have car insurance will be covered when they rent a car as well. You don’t need to buy any extra coverage — it works just like if you were driving your own car, if something happens you file a claim with your insurance company. Of course, it’s worth making absolutely sure that your policy covers you in a rental vehicle. Ask your insurer once and have peace of mind.

Still, it’s nice to have even less liability when you rent a car than when you drive your own car. Especially since you’re probably driving a rental car in an unfamiliar place.

So I thought it was worth walking through ways to have that extra protection quite inexpensively.

First is to understand the difference between liability for damage you might to do someone else, or to someone else’s property, and damage you might do to your rental car.

Your car insurance will usually cover you for liability of you hurt someone or something. You can buy additional coverage from your car rental agency. But the rest of these tips don’t help you with that sort of liability. The rest of these tips only help you avoid the costs associated with damaging your rental vehicle.

Collision Damage Waiver from Your Rental Company

Your rental agency will gladly sell you a product that says you aren’t liable if you damage their vehicle, technically they waive their right to collect damages from you. There may be a deductible or ‘excess’. And they’re quite happy to sell you this product because they make good money on it, it’s expensive — too expensive — at least to the extent that there are cheaper ways to obtain a similar benefit.

And remember that if you have car insurance you probably don’t need it. If you damage a rental vehicle you ring up your insurance company. You may not want to file a claim, but you didn’t want to wreck the car either.

You’d think that only people who planned to or were likely to wreck their cars would take the coverage (‘adverse selection’). They’d grab the coverage and play adult bumper cars. But it turns out that more risk averse people (who are also less likely to have accidents) buy the coverage. And it works out quite handily for the rental companies.

I never buy a rental car company’s collision damage waiver. I hate renting from Enterprise because of the hard sell for this product, and the walk of shame around the vehicle before getting the keys followed by the close inspection on return.

Credit Cards That Offer Primary Collision Damage Waiver

There are some credit cards that will offer you collision damage waiver coverage just for paying for the rental with their card.

Some cards even offer this coverage as primary, meaning it kicks in before any other insurance applies. In other words, renting a car with this card and if you damage the vehicle your insurance company likely doesn’t even need to know.

Some cards which offer primary collision damage waiver:

  • Diners Club. Unfortunately cannot currently be applied for.
  • United Explorer. This is a legacy benefit from the Continental MasterCard, and is a great selling proposition for the card. If you rent cars frequently, you should probably have this card — even if you never put any other spending on it. (Benefit also applies to United Club Card.)
  • JP Morgan Palladium Card. You need to have a ‘private client’ relationship with Chase in order to get this card.

This won’t cover all possible expenses. A rental car company may tack on an administrative charge for fixing their vehicle. They may hit you with loss of use charges (rental fees for while the car can’t be used by potential customers as it’s being fixed), and the credit card company may not want to pay those without proof that the rental agency was sold out of cars during the given period of time (and thus were denied revenue they might actually have earned). In other words there may be some back and forth between the rental company and your coverage that leaves an uncovered amount you might have to pay or fight over. But the vast majority of your exposure is covered.

Credit Cards Which Offer Secondary Collision Damage Waiver

Secondary coverage means that whatever other insurance exists pays first, and the secondary offering picks up uncovered costs. In practice this works out to being the your insurance company will usually pay most of the damage, and the card company’s policy winds up paying your deductible.

Most premium credit cards, and certainly mileage, cards offer at least secondary coverage.

Some like business credit cards will offer primary coverage when renting for business purposes (that’s how the coverage works for the Chase Ink premium cards) but secondary for personal purposes. Some are primary outside the United States and secondary inside, although renting in certain countries may be excluded from coverage.

If you do not have your own car insurance policy, then a secondary coverage for collision is effectively primary. (When you rent a vehicle, it will generally come with minimum legal required coverages, that would be primary, and this would cover the additional most of the time.)

Having your own auto insurance policy that covers you in a rental vehicle means that any sort of collision damage waiver isn’t really required, secondary coverage makes you ‘fully’ covered, and primary coverage is nicer but probably not worth paying much more.

What Do You Have to Do To Take Advantage of This Coverage?

You have to pay the entire cost of the rental with the card whose coverage you want to use. That means not renting through a site like Priceline that charges you for the rental, and then in turn pays the cost of the rental to the car hire agency. It means not splitting the rental onto more than one credit card. And it means not redeeming for a free rental, you need to generate a credit card charge and just paying the tax doesn’t suffice.

Of course even if it’s a free rental, since rental charges aren’t usually prepaid, you could probably return the car and have the agency process the full rental cost notwithstanding that you were going to use free rental credits. You might have to forfeit those credits but the savings by taking advantage of credit card coverage in the event of an accident would likely be worth it.

You also need to make sure not to rent an abnormally expensive vehicle, or rent for too long. Different card coverage programs limit you to rentals of 14 or 30 days, and to vehicles selling for a maximum amount (that I’ve never hit even when upgraded).

And you need to decline the rental company’s collision damage waiver offer, if you pay for that coverage your card won’t also cover you (but then you wouldn’t need it to).

What If I Want Primary Coverage and My Card Doesn’t Offer It?

American Express has for years offered primary coverage for a flat fee. The price is higher than it used to be at $24.95 per vehicle, but car companies often sell you their coverage at nearly that price per day and American Express charges that per rental up to 42 days.

It’s cheaper at $17.95 for California residents, and the length of rental this covers is shorter at 30 days for Washington State residents.

The option also covers theft of the vehicle, something different card coverages handle in different ways (eg some will exclude theft coverage if you leave your keys in the vehicle).

I tend to think this offers pretty good value if you don’t have your own coverage or want primary coverage and don’t have a card that comes with it — although I think a better value here is the United Explorer card if you rent frequently.


  1. Jb said,

    Gary,

    I live in NYC and don’t have insurance at all so this is very interesting .
    You mentioned the “Loss of Use” and admin fees – which I have been hit with. Does the Amex option cover those fees better than the United with primary?

    Thanks,

    Jb.

  2. Tom said,

    Does the Business version of the Chase United Explorer card also come with Primary coverage?

  3. JRG said,

    Great stuff. Might want to do a column on Overseas rentals. I just got back from Europe; important to understand many car insurance agencies in the US will not cover overseas rentals the same way, or way have a maximum cap (such as $5K). Important to understand the differences. Also, if you have certain Mastercards, you can deny the LDW coverage. However, you often need a letter (within the last 60 days or so) from Mastercard to present to the car rental agency. Finally, keep in mind there are requirements in winter that sometimes change the whole picture – I’m thinking Germany and their winter tire requirement. You can turn it down, but if you are in an accident, they can fault you for not having proper tires and perhaps causing that accident.

  4. Larry said,

    Chase Ritz card has primary too.

  5. Jb said,

    I carry a letter from Citibank (Premier card), who Rapid Travel Chai told me has the best international coverage and does not exclude Italy, Ireland like almost all others.

  6. JohnnieD said,

    Last Feb I had to make use of the coverage from the United card. Long story short, it did indeed cover the loss of use. The only issue was that the damage was charged to the United card which I had to pay when my monthly bill was due. Minor annoyance since two weeks later I recived a check covering the damages in full. I will never rent a car again without using the United card-well worth the annual fee- IMHO..

  7. Bill n DC said,

    Thanks for the review. I use the AmEx program & rent almost worry free ($25)

    Didn’t realize the UA Explorer had that, but when I found out it wasn’t the same as the mileage+ card I switch for sign up bonus :-)

    In any event our private vehicle is 20 year old Ford Ranger – still looks great – so we only have liability coverage now. Therefore AmEx provides good value to us. Especially in Mexico where I just put the car rental on 1 AmEx card, no other charges. I figure if something happens it’s between the Mexican car rental & AmEx

    So far so good – haven’t had any accidents/issues. Knock on simulated wood grain trim.

  8. Trevor said,

    Hi Gary, as you probably know, you can often save a substantial amount of money by renting a car through Chase’s Ultimate Rewards portal and paying with a combination of cash + points. I typically use this option with my Ink card, and I use 1 point (which is the minimum) and pay the rest on my Ink. In this case, do you suspect that Chase would deny any claims because technically I didn’t pay 100% of the reservation with my Ink card (because I used 1 Chase Ultimate Reward point)? Thanks in advance.

  9. Santastico said,

    I always use my Amex Platinum when renting a car for leisure. It automatically triggers the Primary Coverage which I enrolled a long time ago. Paying $24.95 per rental period it is a great value for piece of mind. Remember that even if your own insurance covers any issues you still have to pay deductible and they will increase your premium since you had a claim.

  10. swag said,

    When I rent through Priceline, how I am not “paying the entire cost of the rental with the card”? Is that really excluded?

    I looked over the T&C of Amex coverage at http://www.americanexpress.com/us/content/pdf/card-benefits/ZyncfromAmericanExpress/CRLDI-DOC-CCSG.pdf and don’t see the small print that would exclude a Priceline name-your-own-price rental.

    The only questionable clause says “uses the Card to pay for the entire auto rental from the Rental Company at the time of vehicle return”, but if that excludes PL, it would also exclude a prepaid remtal directliy from the rental company.

    Are there anecdotes of credit card coverage being denied on Priceline or Hotwire rentals?

  11. AutoSlash said,

    @Jb If you don’t have any insurance, you should be aware that none of these options covers liability (which Gary points out), so you might also want to consider SLI which would cover damage you did to someone else’s property or injury if the accident was deemed your fault.

    As far as Loss of Use, Amex Premium Rental protection does cover it. It’s tough to locate, but here’s a link to the full terms & conditions of Amex’s PCRP policy:

    http://www.proandcontracts.com/wp-content/uploads/2011/03/2011.03.04-American-Express-Premium-Car-Rental-Policy.pdf

    This link is also helpful for information on Amex’s standard card policies:

    https://yourcarrentalclaim.com/AmexClaimStatus/aeBenefits.aspx

  12. Ben L said,

    Gary,
    Does this mean you never use sites like Priceline (NYOP) for rental cars? I seem to always be able to get cars from them for $8-$15/day which is always considerably lower than what the same agency has via their own website (in my leisure travelling experience). Would you recommend paying the rental companies for insurance if we rent through Priceline? Or is their a better way to be insured that I’m missing?

  13. EggSS4 said,

    Like @Bill in DC – I also have rental insurance but without collision insurance (14 year old car). I am trying to figure out whether a credit card, which would ordinarily only offer secondary insurance, would be primary because I don’t have collision, or whether I would need something supplementary (like AmEx). Anyone have any thoughts?

  14. Ajay said,

    “Loss of use” is usually un-enforceable by the Rental Company. I had one instance a few years ago where the Rental Company was asking for loss of use and Amex responded asking the rental company to provide Fleet Utilization Records to demonstrate “Loss of use” and that there was indeed a customer willing to rent a car and there was no other car available. The Rental Company did not want to share these internal records and it is extremely difficult to prove that a customer was turned away and as a result the Rental Company backed off on the “Loss of use” claim.

  15. Dave said,

    I will be traveling to Mexico in the next few months and plan to rent a car. Do these coverages/cards still apply?
    Thanks!

  16. Angelina said,

    I was always under the impression that the AmEX Business Platinum came with the primary collision waiver – is that not the case? If not, I will use the UA Explorer card in the future instead

  17. AutoSlash said,

    @EggSS4 Yes, if you don’t have collision insurance on your personal policy, then the credit card policy will become primary. The Amex coverage is better in general, but any credit card policy will automatically become primary.

    @Dave Each credit card company is different and each rental company has their own policies on what sort of documentation you will need to decline coverage. You need to check both to potentially avoid paying for the coverage from the rental company. You may need printed documentation of the policy from the credit card company to present to the rental company. The rates in Mexico can be ridiculously cheap, but the flip side is that they make it up on exorbitant insurance fees, and they will do everything in their power to force you to take it, so be forewarned.

    @Ajay “Loss of Use” is far from unenforceable. Trust me, you got lucky here. I’ve seen many, many cases where the rental company doesn’t back down and the credit card company refuses to pay. Yes, the credit card company will ask for fleet utilization reports, but the rental car company is not required to provide them, and the credit card company can deny the claim if the rental company won’t play ball. Just something to keep in mind.

    @swag I think these links may help to clarify at least some part of what you are asking:

    http://community.americanexpress.com/thread/1767
    http://www.flyertalk.com/forum/diners-club-club-rewards/724535-priceline-car-rentals-primary-insurance.html

    You might want to ask that prepaid question on the Amex forum referenced above. It is an interesting question.

    @Ben L You might consider Amex Premium Rental Protection ($24.95 per rental) and calling them after renting from Priceline/Hotwire as suggested here:

    http://community.americanexpress.com/thread/1767

  18. JB said,

    Thanks Autoslash. I will look into SLI. Autoslash…that’s the service that will mess someone’s tires up for a fee right?

  19. Shannon said,

    I don’t know about the business Platinum, but we have the the personal platinum and subscribed to their program for $25 per rental: https://www295.americanexpress.com/premium/car-rental-insurance-coverage/home.do

  20. Aaron L said,

    This is mostly good advice but there are a few things I would add.

    Don’t gloss over liability coverage. People who own cars will be fine here, but people like me who don’t own a car will need to pay close attention. Most states require the rental company to include a nominal amount of liability insurance coverage (which is probably completely inadequate). My home state of CA is an exception, and rentals here DO NOT include any liability insurance. I have a named non-owner liability insurance policy from AAA, which I pay about $80/year for. This is far more economical than opting into the rental company’s liability insurance supplement every time I rent a car.

    Also, be careful about using coupons and discounts. I’ve heard some horror stories about credit card companies (particularly AMEX) considering these partial payment, and refusing to honor the CDW benefit. Some of my MasterCards have language in the benefits document saying that at least one day of rental charges must be charged to the card for the benfit to apply. I’m always careful to use one of these cards when I use a coupon, and make sure the math works out so that CDW would apply.

    Finally, it sounds like making claims under a credit card’s CDW benefit is often difficult. The fine print for many cards requires a police report, which you may not have in a minor single-vehicle accident. Read the fine print, and if you’re truly risk-averse, buy the rental company’s CDW supplement for peace of mind.

  21. VS said,

    Great post and good timing for me as we’re about to book a rental car in HI.

    A question: most of the coverage that’s being discussed seems to focus on protecting the rental car…..but do any of the available options cover damage to another car or people in another car if you’re found to have been at fault? Does the Amex insurance for $24.95 cover this (note: we don’t have a car at home so don’t have car instance). Thanks!

  22. samir said,

    always use your smart phone and do a walk around video, especially in foreign countries (less relevant in the US, but definitely good for international, esp. Caribbean & Latin/South America where the cars are usually a bit older with more damages).

  23. sruly said,

    How about a similar post for liability insurance as Aaron L touched upon ?
    and options like he mentioned
    non-owner liability insurance policy from AAA,
    Thanks

  24. Jon said,

    @Aaron

    Are you sure that you are only paying $80/year? I just called AAA and they quoted me $350. I live in Boston.

  25. Aaron L said,

    I just looked and my premium is $88 yearly. A $57/year AAA membership is also required. The premium is surprisingly low, possibly because I only drive a few thousand miles per year. Note that this is liability-only and excludes collision, medical payments, uninsured motorist, etc.

    I remember calling GEICO and being quoted hundreds of dollars per year for a similar policy.

    It’s very frustrating to shop for this kind of insurance. I haven’t found any insurance companies that can give quotes for it over the web.

  26. Erndog said,

    Hey Gary -

    A lot of people talk about the Chase Sapphire as a great credit card for car rentals, you didn’t mention it . . good to know about the United Explorer card, though!

  27. Jon said,

    @Aaron

    Thanks. It sounds like you got a great deal.

  28. Tom said,

    A word about rental company provided liability coverage- most rental companies only include state minimum liability coverage, which may not be sufficient. As a car rental industry veteran here are a few tips:
    Always check you car for damage
    Always check your car for insurance/registration paperwork
    Always check your car for a spare tire/tools

    Also, if going on a long trip, or in extreme weather, check the fluids.

  29. Gary said,

    @Erndog – Chase Sapphire Preferred earns 2.14 points per dollar on car rentals. It has no foreign transaction fees and you earn those points outside the United States. Its collision damage waiver coverage is secondary.

  30. Dan said,

    @Jon – Car insurance in MA is way more expensive than in most other places due to extensive regulations and the fact that many of our roads are little more than paved cow paths which leads to lots of small fender benders (incidentally MA is often the safest place to drive based on road deaths per capita since average speed is low). My car insurance went up 75% when I moved from the DC suburbs to Boston without my driving record having any changes.

    As for loss of use, this is a complex topic that cannot be answered simply. A lot of this depends on the choice of law provision in the contract which differs by rental company. In my legal experience, most courts are fairly strict on demanding the rental agency provide a fleet utilization report. Also, the % of utilization required to get loss of use varies by jurisidction. Since no company wants this private info in the public record, the rental agencys will usually drop it if Visa or Amex’s lawyer push them on it.

  31. John K said,

    @Dave
    Last time I visited mexico and rented a car, they REFUSED to accept credit card CDW. It’s a HUGE hassle, and they will SUPER hard sell you on their own CDW.
    They even bring a MAGNIFYING glass when you return your car. Unbelivable!
    If you are going to rely on your credit card CDW, make sure to come ARMED and prepared with documents. And even then, they may not honor it…

  32. jim said,

    Geico told my my insurance covers car rental in US & Canada. My personal car is a camry. Will my private insurance cover SUVs or other premium rental cars?
    If I have my personal full insurance, I don’t need any other coverage when renting a car? No need to buy primary you said? Will my personal coverage cover car rental’s “LOSS OF USE”?

    Or the primary coverage bought with rental company or offered by a credit card provide loss of use?
    thanks

  33. Jana Miller said,

    subscribing

  34. AutoSlash said,

    @jim You need to ask Geico exactly what is and what is not covered. You don’t need other coverage if they cover the type of car you are renting and they say that they will also cover loss of use.

  35. blake said,

    @Dan(@Jon) -

    Just to provide another datapoint, my auto insurance actually fell by about 50% when I moved from NJ to MA, with no other changes in my driving record or profile

  36. winger13 said,

    So if I rented a car from the Chase Ultimate Reward Mall with cash, it appears I am forced to pre-pay the car ressie with my Ink card, which is tied/linked to UR Mall. What can I do to get primary coverage using my Chase United Explorer card?

  37. AutoSlash said,

    @winger13 Unfortunately you cannot. You’re likely stuck with whatever coverage your Ink has (hard to say given the previous posts about needing to pay at the rental counter). One option though might be to sign up for Amex Premium Rental Protection ($24.95 per rental) if you have an Amex card, and call them to initiate the rental coverage manually as per here:

    http://community.americanexpress.com/thread/1767

    Of course you can take the LDW/CDW from the rental company directly, but that will likely wipe out any savings you got from the Chase UR Mall.

    In all honesty, my recommendation is to just book a non-prepay rate with the rental company directly and then track your rental with AutoSlash.com. It’s rate that we can’t find a better deal that beats Chase UR Mall, Priceline, Hotwire, etc. The earlier you book, the more likely it is we will be able to save you $$$.

  38. bear said,

    Does United Explorer cover Ireland? Going there this summer and renting a car.

  39. bear said,

    Subscribe

  40. Joshua said,

    I believe one point that you wrote above is NOT correct. I rented a car through Hotwire where I payed in full with one credit card beforehand. My car was damaged in a severe hailstorm (greater than $6,000 in damage). Both Geico (my auto insurance agency) and Visa were willing to pay their portions for the damage. I do not see why reserving a car from Priceline and using a credit card would be any different.

  41. Jb said,

    @bear
    Citibank Premier Thank you does and I carry a copy of the coverage with me when I travel. That said I have had endless arguments with Irish (Hertz) rental agents about it.

  42. Vince said,

    Gary, does the Business version of the Chase United Explorer card also come with Primary coverage?

  43. bear said,

    @Jb – unfortunately, Citi doesn’t seem to like me anymore, so I need to use either the AmEx $24.95 deal (which I don’t think covers Ireland) or the United Explorer card. And it’s very difficult to find the T&Cs for their car rental agreement.

  44. Ken said,

    Ink Bold will do Primary coverage outside the US for personal rentals, and it does include Ireland as well.

  45. EggSS4 said,

    Thanks @Autoslash for being very helpful here! Love your service, as well.

  46. Mark S. said,

    Gary—

    I think you brush off the card issuers’ limits on maximum vehicle value too casually. You write, “different card coverage programs limit you to [...] vehicles selling for a maximum amount (that I’ve never hit even when upgraded).” I carry a number of AmEx cards, and they all exclude coverage on vehicles over $50,000, which frankly isn’t all that much. You’re never upgraded to mid-level luxury cars? I’m not saying it happens every time, but I’ve enjoyed a number of high-end upgrades.

    Also, the AmEx terms and conditions exclude specific vehicles, some of which are surprisingly common, e.g., full-size SUVs like the Chevrolet Suburban. (Admittedly, some of these vehicles also violate the $50K clause.) I often rent large SUVs when taking weekend trips with a group of friends.

    For what it’s worth, the $25/rental supplemental insurance AmEx offers raises the maximum vehicle value to $75K, if I recall correctly.

    Just thought I’d point out these minor details that could have a major impact on unsuspecting renters.

  47. Car rental coverage: What is a "truck"? - FlyerTalk Forums said,

    […] I'd consider the Amex Premium Car rental protection. It is a flat rate of $24.95 per rental period up to 42 days (primary coverage) so if you are renting for more than 1 day, usually this is cheaper than the CDW from the rental agency. It covers SUVs and pickup trucks, up to $100k value vehicles. Signing up enrolls all your Amex credit cards. But, it is activated only when you charge the rental to your Amex card, so if you don't get an upgrade from your standard car, then you can use a non-Amex card to pay and use its free CDW. If you do get the upgrade to SUV or truck, then pay with an Amex for peace of mind. Here's a nice comprehensive post on this subject last week by Gary Leff at VFTW: http://boardingarea.com/viewfromthew…time-rent-car/ […]

  48. $9 Audi Car Rentals from Silvercar - View from the Wing - View from the Wing said,

    […] interesting issue was raised in the comments of Lucky‘s post on Silvercar, that credit card collision coverage wouldn’t apply to a luxury car rental. But I Googled pricing for Audi A4s and they seem to […]

  49. Jake said,

    Concerning the collision damage waiver: It’s tempting to avoid buying the collision coverage because you have collision on your own insurance. But if there’s any damage on the rental they will charge you for lost rental income while the damage is being repaired — often about 2 weeks I was told. Ouch!

  50. Jonathan said,

    Yes, that is true. It’s called “Loss of Use”. Many insurance companies/policies will cover this as well though, although a dispute can arise in some cases between the rental company and the insurance company with regard to fleet utilization reports which are needed to prove the car would have in fact been rented during the period it was out of commission.

    More information on Loss of Use can be found on the AutoSlash blog here:

    http://www.autoslash.com/blog-and-tips/posts/loss-of-use-what-it-is-and-how-to-avoid-getting-stuck-with-the-bill-for-it

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