Today’s rewards cards are brimming with hidden perks that could save you $1,000s. And you might not even be aware of some of these goodies unless you did a deep dive into your card’s benefit guide (the one you probably recycled).
One such benefit is rental car coverage. Yep; if you rent a car using the right credit card, your card issuer will actually insure part of the rental for you!
But what are the limits? How can you make sure you’re covered? And why is this particular perk way more valuable than it sounds?
What Is Credit Card Rental Car Insurance?
Most travel rewards cards — and even some regular rewards cards — come with an Auto Collision Damage Liability Waiver (CDW), aka rental car coverage.
A CDW is basically free, limited comprehensive coverage for your rental car. It typically covers theft, damage, towing, and the rental car company’s loss of use (i.e. their cash loss from being unable to rent the car out during repairs).
How Does Credit Card Rental Car Coverage Work?
Typically when you book a rental car with Budget, Hertz, etc., at some point — online or in-person — they’ll ask you what kind of insurance you need.
They’ll then charge you ~$10 to $60 per day per type of insurance, so it can add up quickly.
What they won’t tell you is that your regular insurance already covers most of these.
- Liability coverage – Unless you’re renting a sports/luxury car worth way more than your daily driver, your regular auto insurance limits should cover your rental just fine.
- Personal accident insurance – This covers your medical bills in the event of a crash in your rental car. Again, if your existing auto insurance has Personal Injury Protection (PIP), or your health insurance has you covered already, you’re safe to skip.
- Personal effects coverage – PAC covers stuff stolen out of your rental car like your laptop bag. Your home or renter’s insurance typically covers this already; check your policy for coverage related to “property away from the residence premises,” or alternatively, just keep valuable stuff out of your car!
- Collision damage waiver (CDW) – Finally, we get to CDW, which covers theft and damage to your rental. This is what your credit card company may cover for free.
Enterprise may want $20 per day for a CDW, so at this point, you’ll definitely want to see if your credit card already has you covered.
To find out, check your card’s Guide to Benefits and search for terms like “auto” and “waiver.” For reference, here’s the one for the Chase Sapphire Preferred® Card card.
Then, before you yell “Yahtzee!”, let’s first ID whether you have Primary or Secondary coverage.
Primary vs. Secondary Coverage
Your card’s Guide to Benefits will clearly state whether you have Primary or Secondary auto rental coverage.
- Primary means that your credit card’s insurance kicks in before your regular auto insurance.
- Secondary means your existing auto insurance policy kicks in first, and your credit card’s insurance will simply pay the remaining difference (typically just your deductible).
Say, for example, you have an existing auto policy with comprehensive coverage and a $1,500 deductible. You slide off an icy road in South Dakota and the poor Kia Soul you rented goes to car heaven.
- With Primary coverage, your credit card company will cover the Actual Cash Value (ACV) of the vehicle, so you shouldn’t have to pay anything out of pocket.
- With Secondary coverage, your auto insurance provider steps in first, covering the ACV minus your $1,500 deductible. Then you have to file a second claim with your credit card company to cover the $1,500.
Primary coverage doesn’t just save you from the tedium of tracking two claims; it also lets you skip dealing with your regular auto insurance company entirely.
That’s a bigger deal that it sounds, because filing a claim with your regular provider will generally lead to them increasing your auto insurance premiums, even if it wasn’t your fault.
How Do I Use My Credit Card Rental Car Coverage?
Check your Guide to Benefits to confirm, but in 99% of cases all you have to do is:
- Pay for the rental in full using the card that includes a CDW.
- Deny the rental agency’s CDW.
The rental car company may still insist that you need to buy their coverage. If so, just call up your card company using the number on the back of your card to confirm that you’ll be covered.
Then, if your car gets stolen or damaged, call your credit card company — not your insurance.
I know it sounds strange to call Chase and say “hey, I hit a pole,” but remember, the whole point of Primary coverage is that it lets you avoid filing a claim with your own provider.
If you have Secondary coverage, you will have to file a claim with your own insurance first and then call your credit card company.
What Does Credit Card Rental Car Coverage Include?
Credit card rental car coverage – in Primary or Secondary form – typically covers the following for you and your other authorized drivers on the rental:
- Damage up to the actual cash value of your rental car, including accidents (you hit another driver) and incidents (hailstorms, hit-and-runs, etc.).
- Theft up to actual cash value.
- Administration and towing fees.
- Loss of use compensation, which is the amount of money the rental car company loses when they can’t rent out the car during repairs. This is especially nice to have since no regular auto insurance policy covers it.
What Does Credit Card Rental Car Coverage Not Include?
Credit card rental coverage typically doesn’t include:
- Damage to the other driver’s car.
- Anyone else’s medical bills.
- Damage due to negligence like drunk driving, speeding, or off-roading.
- Theft due to negligence like leaving the car running while you run back into the AirBnb.
Coverage also typically won’t apply to:
- Exotic or expensive cars (Ferraris, Lamborghinis, even Corvettes).
- Classic cars (2002 or older) or cars that haven’t been made in 10 years.
- Vans, motorcycles, ATVs.
- Rentals lasting longer than 31 days.
- Cars rented from non-rental agencies (Turo, Zipcar, Getaround, etc).
Yeah, that last one is a bummer. I’m a huge fan of Turo, but since they’re not officially registered as a commercial rental agency, free credit card CDWs don’t apply.
Even Still, Why Is Rental Car Coverage a Low-Key Awesome Perk?
Credit card rental coverage may not always apply — but when it does, you’re in for some serious savings and stress-relief.
- Right off the bat you’re saving the cost of a CDW, which can be 25–40% of the car’s base rental price (~$15–$30+) per day.
- In the event of a covered incident, you’re saving the cost of a deductible you would have paid your regular auto insurance company ($500, possibly $1,000+).
- Finally, you’re saving on that rate hike, which The Zebra found to be an average of $36 per six-month policy.
So, let’s say your card has Primary coverage and you go on a seven-day trip with a Toyota Camry from Hertz.
- If you don’t have an accident, you just saved $20 x 7 = $140 on a CDW.
- If you do have an accident, you just saved $140 + a $1,000 deductible + a $72/year premium hike = $1,212.
Talk about a valuable perk!
How Do I Check to See If My Credit Card Has Rental Car Insurance?
Simply Google “[your credit card’s name] Guide to Benefits,” download the PDF, and do a search for Auto Rental Collision Damage Liability Waiver (or some combo of those keywords, or ‘CDW’).
Again, it’s common for travel rewards cards to have Primary coverage while many regular rewards cards may only have Secondary coverage (or none at all).
Be sure to read the terms and conditions carefully. For example, Chase covers some BMWs and not others; so if you plan to cruise down Highway 1 in a shiny new M240i, be sure to call them to confirm coverage.
If you discover that your card doesn’t have any rental car coverage (Citi cards, for example, dropped all rental car coverage in 2019), you might consider upgrading to the right travel rewards card before your next big trip.
Best Credit Cards for Rental Car Coverage
| Card | Coverages | Length of rental covered | *Countries exempt | Best for |
|---|---|---|---|---|
| Chase Sapphire Preferred® Card | Theft Damage Administration Towing Loss of use compensation |
Up to 31 days domestic and international | None listed – call Chase to confirm before traveling | Overall travel rewards |
| Ink Business Preferred® Credit Card | Theft Damage Administration Towing Loss of use compensation |
Business-related rentals up to 31 days domestic and international | None listed – call Chase to confirm before traveling | Small business owners |
| Capital One Venture X Rewards Credit Card | Theft Damage Loss of use Administrative fees Towing |
Up to 15 days domestic, 31 days international | Israel, Jamaica, the Republic of Ireland, and Northern Ireland | Frequent rental car drivers |
| Chase Freedom Unlimited® | Theft Damage Administration Towing Loss of use compensation |
Up to 31 days domestic and international | None listed – call Chase to confirm before traveling | No annual fee rewards |
| American Express® Gold Card | Theft Damage Administration Towing Loss of use compensation |
Up to 30 days domestic and international | Australia, Italy, and New Zealand | Long list of perks and benefits |
*the card’s rental car insurance is not valid in these countries
The Bottom Line
Like other perks hidden in your Guide to Benefits, Auto Rental Collision Damage Liability Waivers can save you thousands of dollars under the right (or wrong) circumstances. Knowing if your card entitles you to that coverage is the first step toward saving a lot of money on a car rental. If you regularly rent a car but your credit card doesn’t provide CDW, you should strongly consider applying for a new card that will have your back every time you take the rental for a spin.
