Am I Covered If I Use My Card?

Credit CardIt may be confusing, but you need to understand the “ins and outs” of car rental insurance, because sooner or later, you’ll need to rent a car and be faced with some confusing information.

This is the scene: the rental agent will ask you if you want to purchase insurance coverage. Then he’ll offer you different levels of insurance coverage, including a Loss Damage Waiver (LDW) or Collision Damage Waiver (CDW). If you’re wondering what those two coverage options provide, they cover the rental vehicle in the event of accidental damage and theft.

Now comes the really confusing, but important part…do you need insurance for your rental car or not? If you don’t own your own car, and as a result, don’t have any personal auto insurance, the answer would be a resounding “yes.” You do not want to risk having an accident in a rental car and having to pick up the cost of the damages yourself. Now, if you’ve already got car insurance for your own car, will that apply to the rental? Even if it does, is it the same? Is it enough? On top of all that, the credit card companies do a good job of making it even more confusing. Some of them say that if you use their card to rent the car, you’ll be automatically covered. However, the same questions arise…covered for what, and is it enough?

Still confused? We’re not surprised. So here’s some information that will hopefully clear up some or all of that confusion and make it understandable.

If you have a personal auto insurance policy read it carefully or call your insurance agent to ask for coverage details. (It would help if you could do this before renting your car so you can make an informed decision). Many auto policies cover rentals with the same type and amount of coverage on your personal vehicle. Also ask about coverage for any administrative fees you may be responsible for, such as loss of use (rental income not earned on a car while it is in the repair shop).

If you’re wondering whether you need additional coverage, if your policy does not cover rentals, has a high deductible, or does not include collision coverage or sufficient comprehensive coverage, you may wish to purchase additional coverage from the rental company. Also, insurance is invaluable in foreign countries where you may be responsible for paying for the damage in full before you leave the country.

If you’re wondering if your credit card offers car rental insurance, carefully read the documentation that applies to your specific credit card and understand the extent of the coverage it provides. Depending on the level and type of coverage your credit card offers, you might want to consider supplementing this with some additional insurance from the car rental company.

If you’re renting a car in a foreign country check your auto insurance policy for possible exclusions or limitations on renting a car abroad. Also check for coverage that may be offered by your credit card company or auto club.  If you are not sufficiently covered, you may wish to purchase third-party travel insurance to cover your foreign rental, or the Loss Damage Waiver from the agency. You will still be liable for any costs resulting from vehicle damage that are not covered by the waiver.

© Copyright 2020. All rights reserved. This content is strictly for informational purposes and although experts have prepared it, the reader should not substitute this information for professional insurance advice. If you have any questions, please consult your insurance professional before acting on any information presented. Read more.