Does Your Credit Card Cover All Your Car Rental Insurance Needs?

Does Your Credit Card Cover All Your Car Rental Insurance Needs?

Last updated on May 31, 2018 Views: 2785 Comments: 5

Knowing whether you need to buy car rental insurance is confusing in the best of times. It’s even more so, when the rental agent gives you a hard sell at the counter, and asks “are you sure you’re credit card covers that”? The truth is, credit card car rental insurance alone probably won’t cover all your needs. But, for most, you won’t have to buy any additional insurance anyways. Confused? Don’t be. We’re going to offer a quick, but comprehensive primer on what car rental coverage you’ll need, where to get it and what to watch out for, so you can drive worry free. Many Canadian credit cards come with free car rental insurance. If you have a Canadian travel credit card, you likely have it included as a key benefit. Even if you don’t have a travel card, if you’re paying an annual fee, it likely comes with car rental insurance. If you have a no fee card, free car rental insurance is not as frequent, but it does exist, so you’ll need to double check.

What You Need To Be Covered For When Renting A Car

When renting a car you’ll need to cover yourself for the following events:

  1. Damage to the rental vehicle
  2. Theft of the rental vehicle
  3. Damage to another person’s vehicle
  4. Injury to another person
  5. Loss of use of the rental vehicle while it’s under repair

Without insurance you could find yourself in significant financial trouble. It’s not the $150 scratch you have to worry about. If you’re driving in the United States, and cause bodily injury to another person in a car accident, you could be liable for millions of dollars. Hit someone else’s car, it’s on you. Crash the rental agency’s car, it’s on you (so is each day the car is in the shop). Each of those costs can spell financial ruin.

What Does My Credit Card Car Rental Insurance Cover?

Your credit card car rental insurance probably does not cover each of the 5 events listed above. However, what it likely does cover is:

  1. Damage to the rental vehicle
  2. Theft of the rental vehicle
  3. Loss of use of the rental vehicle while it’s under repair (many times, but not all times)

If you have credit card car rental insurance, you’ll likely see the term CLDI, which stands for Collision, Loss, Damage Insurance. That means your credit card car rental insurance covers you for theft and damages up to the actual cash value of the rented vehicle and valid rental agency loss of use charges. In essence, your credit card covers you for any damages caused to the car rental itself. As a result, there is no need to take out the CLDI insurance offered by the car rental company, because it’s already covered by your Canadian credit card.

What Does My Credit Card Car Rental Insurance NOT Cover?

Your credit card car rental insurance likely does not cover you for:

  1. Damage to another person’s vehicle or property
  2. Injury to another person

In legal speak, your credit card does not provide insurance when you damage someone else’s car or hurt someone else, what’s called 3rd party liability. The good news is, if you have a car of your own, your auto insurance likely already covers you for 3rd party liability, even when driving a rental vehicle in the United States and Canada (double check to see if you’re covered elsewhere). So there is NO need to take out the 3rd party liability insurance offered by the car rental agency. However, if you do not own a car, chances are you do not have 3rd party liability insurance coverage. You will need to get some. You can usually get 3rd party liability insurance, without getting the CLDI, from the car rental agency itself or from your insurance broker.

What To Watch Out For

There are several conditions and exclusions you’ll want to be aware of prior to renting a vehicle:

  1. You have to pay for your car rental with your credit card. However, if you are redeeming points to pay for your car rental, like with Aeroplan credit card rewards, you will still be covered (if your card is still active).
  2. You have to decline, the car rental company’s collision damage waiver insurance, to be covered by your credit card
  3. Some types of cars are not covered, such as pick-up trucks, commercial vans, antique cars, luxury cars (over $65K)
  4. Some countries may not be covered by your credit card’s car rental insurance, the United States is.  Double check before you travel.
  5. Make sure your credit card account is in good standing, or you may not be covered.
  6. Usually there is a maximum number of consecutive days you can rent a vehicle for (45 days or so).

Credit card car rental insurance can save you $15-$35 a day, nearly the cost of renting the car itself. So before saying yes to the high pressure pitch from the sales clerk at the car rental agency, check your credit cards to see if you’re already covered and for what.

Article comments

Bogdan Zbyszewski says:

Is my rental car paid by Visa covered by insurance in Panama. This question ask at the Hertz rental counter in Panama Int. Airpot ( Tocument) ends up with the nasty discussion with the Hertz staff.
Avry time i am claiming that I should be covered by visa the question they shoot at me is: Do you have any document that you can proove it?

The GreedyRates Team says:

Hi Bogdan,

Thanks for the interesting request. The truth is, it’s going to be difficult to determine if and how your rental vehicles are covered until we can identify the Visa card you hold. Credit cards can cover a vast range of potential problems with the car, collisions and accidents, and the items and passengers inside—but not all equally. Regular car insurance for your own vehicle (if you have one) might also be relevant. However, many cards might also suffer from exceptions in the coverage contract, but we can’t give a precise answer until we get more information.

However, here’s a list of common things you normally need to do for your rental car coverage (via credit card) to kick in. First, you should decline the Hertz employees’ offer for their own coverage, ensure that you’re the primary renter and driver of the vehicle, and also pay for the rental in full using the Visa card you want coverage from. If you’ve satisfied all these criteria, and your Visa has standard CDW coverage (collision damage waiver) as many do, you’ll likely be able to ignore the Hertz salespeople anyway. They’re probably frustrated that they can’t get you to pay extra for insurance you may not need, and even more irked when you asked them to help you figure it out (unfortunately).

Best of luck on your travels.

jim mckergan says:

rental company asked for written proof of insurance coverage is this normal and how do I get it

GreedyRates says:

Hi Jim, thanks for the interesting comment. Why would your car rental company ask for proof of outside insurance? Normally, if you elect not to cover the car with the insurance they sell, then they don’t ask questions and allow you to shoulder the liability instead. Regardless, if they’re insistent, we encourage you to call ahead and ask them if a printout of your card’s rental coverage policy is acceptable. If not, you’ll likely be able to get the official coverage waiver certificate via your credit card issuer. However, confirm first with the rental company if either of these options is acceptable. Thanks, and let us know how it turns out.

GreedyRates Staff

Ardo says:

Certain countries ask for letters from the credit card provider explicitly stating that you have CDW coverage. This happened to me in Costa Rica, and apparently, it is also the case in Australia.