Think about it: When was the last time you rented a car without being hit by the additional cost for collision damage coverage? If you've experienced this, you know how costly it can be, with daily rates averaging around $27. But, did you know there's an easy way to sidestep this fee? Simply opt to pay with the right credit card.
It's important to note that insurance for rental cars is provided by credit card networks (such as Visa, Mastercard and American Express) rather than by the banks that issue the cards. To activate this free insurance, charge the full rental amount to the credit card and decline the collision damage coverage offered by the rental company, also known as the collision damage waiver or CDW.
There are two flavors of insurance provided by credit cards: primary coverage and secondary coverage. But don't get confused! With the secondary coverage offered by all three major credit card networks, your personal auto insurance policy comes in as the primary coverage, and the card's secondary coverage picks up your deductible. It's important to check with your personal insurance provider to ensure that they do cover rental cars.
Primary coverage, on the other hand, kicks in directly with the credit card company, bypassing the need for a personal car insurance policy. Yet, this perk is only available with select credit cards.
Credit card coverage isn't absolute. Expect restrictions on high-end cars (typically those valued above $50,000), antique cars, trucks, off-road vehicles, and full-size vans. Moreover, even within these limitations, coverage duration is generally limited to 15 days for domestic rental and 31 days for international hires.
The coverage is typically limited to the cardholders or authorized users. Furthermore, there's a deadline to file a claim in case of an incident.
Two great options for primary rental car coverage are the Chase Sapphire Preferred Card and American Express cards. The Chase Sapphire Preferred Card not only offers primary coverage but also rewards with 2X points on travel and 3X points on dining. They cap the reimbursement at the actual cash value of the vehicle.
American Express cards, apart from secondary coverage, do offer an opt-in primary coverage at a flat rate per rental period, not per day, without any policy deductible. Coverage details include up to $100,000 for accidental death or dismemberment, secondary medical expenses, and personal property coverage.
So, before your next road trip, make sure to check the rental coverage of your credit card along with your primary insurance carrier. This often-overlooked benefit is not only more valuable than reward points but also makes using a credit card a logical choice over a debit card when renting a car.