How to get car rental insurance from your credit card

Want to save money on your next vacation?

Consider declining the rental car agency’s collision damage waiver (CDW) or loss damage waiver (LDW) to avoid the daily fee. Instead, use a credit card that offers similar protection for free.

Many credit cards — especially travel credit cards or rewards credit cards — include rental car protection as a free benefit to cardholders. However, the coverage, limits and policies can vary depending on your card. Understanding what’s covered and how the benefit works can help you make an informed decision the next time you step up to a rental car agency counter.

• Do you need insurance when renting a car?
• What might a credit card cover?
• What do you need to do to get rental car insurance from your credit card?
• How to make the most of your credit card car rental insurance

Do you need insurance when renting a car?

When renting a car, you’ll either need to carry a personal auto insurance policy or buy one from the car rental agency. The good news is you’re probably already covered.

Most states in the U.S. require you to have at least some liability coverage if you want to drive a vehicle. Liability coverage helps pay for others’ medical bills and damage to others’ vehicles and property. It can also help pay the fees to defend you during a lawsuit.

If you already have auto insurance, you might be covered when you rent.

In addition to liability coverage, rental car agencies may offer you several other types of protection. The names and coverage rules or limits may vary depending on the rental company, but in general, they fall into these three categories.

• Personal accident coverage — Generally covers medical bills and funeral costs for you and your passengers.
• Personal effects coverage — Generally covers theft of personal property during the rental period. In some cases, the coverage applies to thefts outside the rental vehicle, and it may include the personal property of others traveling with you.
• The CDW or LDW — Although technically not insurance, loss-damage waivers often get offered alongside insurance plans. The CDW or LDW typically covers theft and damage to the rental vehicle — provided the loss or damage was not the result of any prohibited use of the vehicle — similar to a personal policy’s collision and comprehensive coverage. The waiver also covers the rental company’s loss-of-use fees.

Your existing insurance could already cover you in many of these situations. For example, a renters or homeowners insurance policy might cover theft of your personal property, such as the items in your rental car.

Health insurance, auto insurance personal injury protection and life insurance could cover you during a medical emergency or help family members pay for expenses after a death.

If you have comprehensive and collision coverage on your auto insurance policy, your insurance may cover damage to or theft of a rental vehicle. But your personal auto policy, even one including comprehensive and collision, likely won’t cover any administrative or “loss of use” fees you may be charged if you damage a rental vehicle.

When there’s a gap in your insurance, or if you don’t have auto insurance, purchasing coverage from a rental agency could provide you extra protection. Some rental agencies may require you to show proof of insurance or purchase minimum protection from them, although minimum coverage is sometimes included with your rental rate.

Some travelers decide to buy liability insurance from the rental car agency for other reasons. For example, their primary policy’s limits may not be as high as they’d like while driving a rental car. Also, if you buy coverage from the rental agency, a claim might not affect your current insurance premiums.

What might a credit card cover?

Credit cards’ rental car protection may only extend to the CDW or LDW portion of coverage. The benefit helps reimburse you for damage to or theft of the rental car. In some cases, a credit card’s coverage will also pay for loss-of-use, administrative or towing fees incurred by the rental car agency.

What do you need to do to get rental car insurance from your credit card?

To receive credit card coverage for your rental car insurance, you may need to …

• Reserve and pay for the rental using the card
• Be the primary driver on the rental agreement (additional listed drivers may also be covered)
• Decline the rental agency’s CDW or LDW coverage

Check your card’s policy for other details, such as the maximum rental period (which may be around 30 consecutive days), limitations in different countries, which types of vehicles it covers and coverage limitations.

Also, check to see if your card offers secondary or primary coverage. Most credit cards offer secondary coverage.

This means you may need to file a claim with your insurance company first, and the credit card’s coverage may only reimburse you for claims that your primary insurance doesn’t cover, such as your deductible, administrative fees and costs that exceed your policy’s limit.

How to make the most of your credit card car rental insurance

Here are a few practices to help you use credit card rental car insurance to its fullest.

1. Pay for your rental car (in full) with the credit card that you plan to use for insurance. If you split the payment with another card, you might not be covered.
2. Don’t double dip. Your credit card may require you to decline the car rental company’s collision-damage waiver for your card’s insurance coverage to kick in. Find out before you’re at the rental counter.
3. Decide if you need to purchase separate liability insurance. Your credit card may cover damage to the rental car. But if you get into a car accident, the credit card issuer won’t necessarily pay for damage you cause to other vehicles involved in a collision or injuries sustained by people in those cars. Check your card’s terms to figure out what other coverage you might need.
4. Find out if you’re already covered. Your auto policy may also cover your rental car. But if you file a claim, your premiums may go up. On the other hand, if your credit card offers primary coverage, you can avoid this by filing directly through your credit card company.
5. Follow the rules. Your credit card probably won’t insure you if you don’t follow the rental agreement. This can include provisions that prohibit other drivers who aren’t listed on the rental agreement from getting behind the wheel, as well as coverage for intoxicated drivers.

If you follow these tips — and read your policy carefully — you should be in good shape the next time you rent a car.