Renting a car? You could have insurance coverage through your credit card
Whether you’re renting a car for a road trip or to get around while on vacation overseas, one topic will inevitably come up before you’re handed the keys: buying supplemental insurance.
Before you decide to spend a few extra dollars for the added peace of mind or opt-out altogether, you’ll want to check your credit card’s policy first. That’s because many credit cards have free built-in coverage on car rentals that overlaps with what agencies offer - and you may already be insured.
To help make sure you aren’t needlessly paying extra for insurance or losing out on coverage, we’ve broken down some of the facts about credit card rental car insurance below.
What credit card rental car insurance does (and doesn’t) cover
Credit card rental car insurance essentially offers the same protections that you’d receive from a Collision Damage Waiver (CDW) or Loss Damage Waiver (LDW). Namely, coverage for the damage, loss, or theft of your rental car.
That means you’ll be insured for everything from the cost of repairing your rental due to an accident to the price of the car if it’s stolen - all while not having to shell out extra money to the rental agency. A CDW or LDW can easily run you upwards of $20 per day, on top of the price of the car rental, if you were to pay for it outright.
You’ll want to read up on your credit card’s terms to get a sense of what coverage it offers, or whether it offers any in the first place. Generally, though, the best cash back credit cards and best travel credit cards in Canada typically provide coverage for 48 consecutive days for vehicles with an MSRP of up to $65,000.
While you won’t be on the hook to pay for damages to the rental vehicle, credit card rental car insurance doesn’t cover everything. Most importantly, it lacks personal injury and liability insurance. So, medical bills from injuries or payments to cover damage to someone else's property while driving the rental would both be beyond the scope of your card’s policy.
Unless you’re covered for personal injury and liability under your existing auto insurance policy, you’ll need to pay out of pocket to be fully insured. Personal effects insurance, which covers your belongings if they're stolen from the rental vehicle, isn’t offered by most cards either.
Do these things first to make sure you’re covered
In order for your credit card’s car collision and loss insurance policy to kick in, you’ll need to check off a few boxes.
First, you must pay for the majority of the car rental using your credit card. Most policies require you to cover 100% of the rental booking using plastic, while some only need you to foot 75% of the cost. You may want to do a bit of research when booking a car because, depending on your card, you could get up to a 20% discount for using a specific rental company.
Second, you’ll need to decline the Collision Damage Waiver (CDW) or Loss Damage Waiver (LDW) offered by the rental car agency. Some agencies may put a few roadblocks in your way and refuse to decline coverage unless you provide a deposit. Since you’ll get this deposit back, however, it’s almost always worth paying it forward.
Scenarios that could void a card’s rental insurance policy
In most cases, your credit card rental car damage and loss insurance will keep you financially protected. That said, depending on which type of vehicle you’re renting and how you plan on using it, there are some scenarios that will void your card’s policy.
While almost every credit card rental car insurance policy covers four-seater passenger cars and minivans, a number of car types aren’t covered. For example, trucks, trailers, and vans with over eight-passenger seats are often exempt from a card’s coverage. Much older vehicles (usually 20 years old is the benchmark) are also typically excluded.
A credit card’s rental insurance policy also covers one car at a time, with coverage usually defaulting to the car that you booked first.
While credit cards will usually provide rental car insurance internationally, if you are booking a rental vehicle outside of Canada’s borders, you may want to double-check with your credit card company if there are any limitations. For example, if you’re travelling to a country with a travel advisory or warning, it could affect your coverage eligibility.
Lastly, car insurance won’t cover the rental car booking that has been made for commercial purposes, such as hauling office supplies from one location to another.
If your credit card has built-in rental car insurance, you could stand to save several dollars off the cost of your car rental. Not to mention, it can be your financial saving grace in the unfortunate event your rental vehicle is totalled in an accident, vandalized, or stolen. But, like any insurance policy, there are terms and limitations that you need to be aware of, so be sure to read up on the fine print or contact your credit card’s insurance provider to make sure you don’t void its terms.