A particular perk has quietly been making its way to more major credit cards – primary rental-car coverage.
That may not sound too exciting, but it’s a step up from the secondary rental-car coverage most cards have traditionally offered. Read on for why it can save you money and time on your next trip – and for a list of cards that offer primary coverage.
Why primary beats secondary
Most cards on the market offer what’s called “secondary” rental-car coverage. If you damage a rental car, you first have to file a claim with your personal auto insurance (most major auto insurance company policies cover U.S. car rentals). After that, secondary coverage on your credit card steps in to pick up 0costs you’re still stuck with: for example, your deductible, costs left over after your policy maxes out and loss-of-use fees (fees rental car companies charge while their car is out of commission).
If you’ve ever filed an auto insurance claim, you’ve probably noticed an uptick in your premium shortly after. And that is what primary rental-car insurance helps you avoid. Instead of first filing a claim with your personal auto insurance policy, you tap in immediately to your card’s coverage.
“It basically means they’re not going to be impacted in terms of their rates going up on their personal policy because they don’t even need to report it,” says Jonathan Weinberg, president of AutoSlash, a site that helps renters get discounts on car rentals.
Primary coverage through your card can save you money on your next car rental because the only other way to get primary coverage is to buy protection from the rental company – in the form of a collision damage waiver (CDW), which can cost upwards of $20 per day.
Primary coverage still doesn’t mean “full” coverage
Having primary coverage from your card doesn’t mean you can drive off in your rental, secure that you’re covered for anything the road throws at you.
The biggest coverage gap is liability coverage. Credit card rental-car coverage and CDW coverage via the rental agency, for that matter, cover physical damage and theft of the rented vehicle only, says Lynne McChristian, spokesperson for the Insurance Information Institute. It does not cover damage you do to other cars or property, or injuries you cause to pedestrians. You’ll need liability coverage for that, and, unfortunately, you won’t get that from your credit card.
“There are no credit cards out there today that provide liability insurance,” Weinberg says.
Due to state liability insurance laws, rental car companies will have their fleets covered with minimum liability insurance (otherwise their cars can’t legally be on the road). However, if you, say, crash into a building, the car-rental company may still pursue you for the costs associated with that accident, Weinberg says.
If you want liability coverage, you have three ways of getting it. The first is through your personal auto insurance policy. The second is through the rental company. Most will let you buy a liability insurance supplement (LIS).
“That is actually excellent coverage,” Weinberg says. “It’s typically $1 million in coverage. And that would cover any damage or injuries you cause to someone else or their property or pedestrians. But that can come with a pretty high cost. They’ll charge you extra per day for that.”
If you don’t have personal auto insurance (maybe you don’t own a car) and don’t want to buy liability coverage from the rental company, both Weinberg and McChristian suggest getting a non-owners policy.
“For a few hundred dollars a year, you can get a policy that will cover you for liability,” Weinberg says.
There are other exclusions for cards’ primary coverage, including certain luxury car rentals and damage you cause to the car while breaking the law. Read your card’s terms. Loss-of-use charges can also (infrequently) be a gray area, Weinberg says. Your credit card issuer may need documentation from the rental agency that the car was indeed out of commission and the company was out of other cars to rent before it will reimburse you for loss-of-use fees. If the rental agency balks at providing this documentation, you might find yourself in the middle. It’s a rare problem, though, with the premium cards that provide primary coverage, Weinberg says.
“It’s not a deal-breaker, but you might find yourself on the phone with the car rental company and card company,” Weinberg says.
Cards offering primary rental-car coverage
To see if a card offers primary coverage for rental cars, search your benefit terms. Here’s a screen shot from the Chase Sapphire Preferred card’s benefits, for example:
Cards offering primary rental-car coverage
As of Sept. 2016, the following cards offer primary rental-car coverage:
- Chase Sapphire Preferred ($95 annual fee, waived first year)
- Chase Sapphire Reserve ($450 annual fee)
- Chase Ink Plus Business card ($95 annual fee) and Ink Cash Business card (no annual fee)
- United MileagePlus Explorer ($95 annual fee, waived first year) and Club ($450 annual fee) card
- Ritz-Carlton Rewards Credit Card ($450 annual fee)
- Fairmont Visa Signatre
In addition, if you have a card from American Express (a CreditCardForum advertising partner), you can purchase primary coverage for a flat rate of $12.25 to $24.95 for rentals of up to 42 consecutive days (almost certainly less than what a rental agency would charge).