- Know what your credit card covers versus what the rental car company insurance covers.
- Some credit cards offer extra rental car insurance protection for a fee.
- Loss damage waivers only cover the car itself – not personal injury or anything else.
Credit Cards » Should You Buy Rental Car Insurance?
After battling security checks, turbulence and baggage claim, weary travelers often face puzzling choices at the car rental counter. Should they buy the rental car insurance offered by the rental car company, or is it enough to depend on their credit card for coverage?
Most credit cards offer some kind of free coverage for damage or loss to a rental car resulting from an accident or theft as long as you charge the rental to that card.
"The reason they offer this kind of coverage is the issuer would rather have you book your car on their credit card," says John Ulzheimer, president of consumer education at SmartCredit.com.
On the other hand, the rental car company provides this coverage for as much as $29.99 per day, depending on the vehicle and state laws.
It seems like a no-brainer to let your credit card cover your car rental. But before you turn down the rental car company's offer, make sure you know what you're getting. Bankrate outlines what you need to know and offers an easy-to-read chart to compare rental car company insurance versus credit card coverage .
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Cover all your bases
Credit cards offer only one type of coverage: the loss and damage waiver, also called a collision damage waiver. This waiver covers the cost of repair to a damaged car or the replacement of a totaled or stolen car. It does not cover anything else.
"Just understand that this is not liability insurance
and doesn't cover you for damage, injury or death that you cause," says Linda Sherry, director of national priorities at consumer advocacy group Consumer Action.
Some credit cards may offer supplemental protection for a fee. American Express cardholders can buy the company's Premium Car Rental Protection for $19.95 per rental (up to $75,000 in coverage) or $24.95 per rental (for up to $100,000 in coverage), which includes primary insurance, accidental death or dismemberment benefits, and medical and personal property insurance.
If your card doesn't offer a supplemental plan, Sherry advises consumers to check their personal auto policy, if they have one, to see if liability protection is included for car rentals. Otherwise, go with the coverage offered by the car rental agency for liability because your credit card won't provide it.
Know your coverage
Just because your credit card offers loss and damage coverage doesn't mean that it's the best option for you. Some cards offer better protection than others. It pays to call your credit card issuer beforehand and find out how much the protection covers, if towing or out-of-use fees are included, and what restrictions may apply.
In general, American Express offers the most coverage, dollar-wise. All cards come with up to $50,000 in loss and damage coverage. Its two premium cards -- the Platinum Charge Card and the Delta Reserve credit card -- provide up to $75,000.
Certain Discover credit cards offer up to $25,000 of coverage, and Visa credit cards cover up to the cash value of the rental car. MasterCard cardholders must contact a customer service representative for more details.
Visa and American Express cover the cost of towing and any fees the rental car company charges for the rental vehicle being out of use, but others don't. Discover cards don't cover loss-of-use charges, and only Discover's Escape credit card covers towing fees. (Again, MasterCard customers must call for details.)