Does Your Credit Card Offer Rental Car Insurance?

Posted September 28, 2015 by cccadmin in

Car Accident - Man on Phone

Summer’s winding down, but there’s still a little time to getaway this year. When travelling by air, it’s often necessary to rent a vehicle for extended stays, or to explore more than just the resort. Before you get behind the wheel of a rental car, it’s important to find out if you’re protected in the event of a crash.

Find Out Ahead of Time If You’re Covered

Imagine this: you’re driving in your rental car down Highway 1 along the California coast, when suddenly you’re involved in a car crash. The rental car has significant damage. Normally your regular insurance is there for you in these situations. But in a rental car, your insurance might not cover you. That’s why it’s a good idea to call your credit card company ahead of time to find out if you’re covered. Just as interest rates and fees vary between cards, so does insurance coverage.

A lot of people make the mistake of assuming they’re completely covered by their credit card company for rental car insurance when in fact they aren’t. The most common type of coverage is collision loss and damage for rental cars. You’re typically covered for damage and theft limited to the actual cash value of the rental car, as well as towing charges. However, not every credit card offers this protection built in.

Your first step to being covered is paying for the rental vehicle with the credit card that offers rental car insurance (you may think this is a no-brainer, but you’d be surprised how many people pay with the wrong credit card). The next step is very important – you need to decline the rental insurance offered by the car rental company, otherwise this could negate your credit card rental car coverage.

Depending on the type of vehicle you rent, you may not be covered. For example, if you’re renting a sports car you probably won’t be covered. Other types of vehicles typically not covered include cargo vans, trucks and expensive vehicles (vehicles with an MSRP over $65,000). Again, each card has different coverage and limits so it’s wise to check with your issuer.

The Importance of Third-Party Liability

Even if you’re covered, it’s important to read the fine print and find out what your policy protects you against. Are you protected for third-party liability? Third-party liability protects you against damage from a “third party.” A third-party is considered another person or vehicle. For example, if you’re involved in an accident and damage another vehicle, third-party liability helps protect you. If you don’t have it and injure another person or a vehicle, you could be on the hook for paying thousands out of pocket. While Canadian rental car companies typically offer third-party liability protection, if you’re renting a vehicle in another country it’s important to find out if you’re covered.

The Bottom Line

If you’re renting a car, it’s important to plan ahead and make sure you’re protected. Start by calling your credit card company and finding out about your coverage. If your coverage isn’t sufficient, call up your auto insurance company. If you still aren’t covered, it’s a good idea to buy insurance from the rental car company. Being involved in a car crash without adequate insurance is a good way to ruin a dream vacation.