If you rent a car, using a credit card with auto rental collision damage waiver insurance is a smart move. Simply by paying for your rental car with a card that features this benefit, you can protect yourself from unexpected expenses if a car you rent ends up in a collision or stolen.
This benefit is available on many travel and rewards credit cards. Some premium travel credit cards offer this benefit as primary insurance.
Always rent cars using a credit card that offers an auto rental collision damage waiver benefit. If you rent with a card that provides primary coverage a collision damage waiver benefit can protect you from making a claim against your personal auto insurance policy if your car is damaged or stolen.
What is typically covered?
Auto rental collision damage waiver benefits cover the cost to repair or replace a rental car if it is damaged in an accident, by vandalism or in a natural disaster. The benefit can also cover the cost to replace a car that is stolen. Generally, this benefit covers the lesser of the cost to repair or replace a car, plus reasonable towing expenses to a repair facility.
Liability-type expenses are not typically covered by auto rental collision damage waiver insurance. This means you won’t be reimbursed to damage to another person’s car or property. This insurance also does not cover medical injuries caused to you, your car’s occupants, or people in the other car.
Usually covered:
- Theft of a rental car
- Damage to a rental car
- Loss of use
- Towing charges required by collision or theft
Usually not covered
- Liability
- Damage to other vehicles or property
- Medical expenses
How to activate coverage
To be eligible for auto rental collision damage waiver insurance, you must reserve and pay for your rental car with your eligible credit card. In addition, you must decline the car rental company’s collision/loss damage insurance.
Most auto rental collision damage waiver insurances only cover rentals by the cardmember whose name is printed on the credit card. Additional drivers are typically covered as well, but the rental must be in the cardmember’s name.
Primary vs. secondary coverage
Your auto rental collision damage waiver insurance may provide either primary or secondary coverage. Here is what these terms mean.
Primary coverage means that the benefit will pay its coverage benefit before any other insurance you carry. If your rental car is damaged or stolen, a collision damage waiver offering primary coverage will pay to repair or replace a car, up to the limits of its coverage. You won’t be required to make a claim against your personal auto insurance.
Secondary coverage means that, if you have another insurance policy, you must make a claim under that policy before seeking reimbursement from your credit card benefit. If you rent a car using a credit card that has secondary coverage and that car is involved in an accident, you must submit a claim to your personal auto insurance before the credit card benefit will pay to repair your rental car. Once your personal auto insurance has paid its claim, the credit card collision damage waiver benefit will pay for eligible expenses not covered, usually just your deductible.
If you have a credit card that offers primary auto rental collision damage waiver insurance coverage, rent your car with that card, even if another card offers greater rewards.
Exclusions
All auto rental collision damage waiver benefits have a laundry list of exclusions. Exclusions include rentals over a certain length and rentals in certain countries. Policies typically exclude expense, unique, and antique vehicles. Vehicles typically used for work or transporting a large number of people typically aren’t covered.
Most importantly, car rental collision damage waiver insurance does not cover personal injury, personal liability or third-party personal property. If you are physically injured in a car accident, auto rental collision damage waiver insurance won’t cover that. If you damage someone else’s car in an accident, that won’t be covered by this benefit. Coverage only applies to the car you are driving.
Cars rented through car-sharing companies like Turo aren’t usually covered. Most auto rental collision damage waiver insurance benefits specifically exclude car-sharing services like Turo. If you want to ensure that you are covered for car rentals from individuals, look for a specific allowance or purchase separate insurance.
Mechanical failures, such as worn tires, are not covered.
Longer rental periods
If you are renting a car for long-term use, be aware that all auto rental collision damage waiver insurance coverage limit the amount of time you can rent a car under the policy. Typical limits are 14 or 31 consecutive days and will vary based on your card and policy. Check your card’s Guide to Benefits for details on the rental length restrictions
Your auto rental collision damage waiver insurance benefit may offer coverage for longer rental periods when traveling away from home. Again, check the Guide to Benefits for details.
Exotic, high-value, and antique cars won’t have coverage.
Your auto rental collision damage waiver insurance won’t apply to high-value or luxury cars. If you have any doubt, check your card’s guide to benefits to see which makes and models of cars are excluded. Here are the types of cars that are frequently excluded.
- Exotic/Ultra-Luxury cars – You’re fine renting a nice car, but you won’t want to rent a really nice car, at least not if you want to be covered by an auto rental collision damage waiver insurance. Auto rental collision damage waiver benefits frequently exclude brands like Aston Marton, Bentley, Maserati and Lamborghini.
- Antique vehicles – Likewise, the car rental companies don’t want to cover an expensive collector car, so these types of vehicles are often excluded.
- Work vehicles – Exclusions frequently include cargo vans, trucks, busses, moving trucks, and other vehicles that typically aren’t used for personal transport.
- Tesla vehicles – I have seen Tesla listed among the excluded vehicles on several auto rental collision damage waiver policies. If you plan on renting a Tesla from Hertz, double check your benefit’s terms.
Off-road and work usage is excluded.
Even if your vehicle type if covered, vehicles that are used for work won’t be covered by your credit card. You’re fine to rent a car and use it to get from the airport, hotel, and vacation destinations. But if you’re planning on renting a car and using it to make some ridesharing cash by driving for Uber or Lyft during spring break in Florida, don’t expect to be covered under your credit card insurance.
Subletting your car won’t be covered. You can’t arbitrage a car on Turo or another car-sharing platform and be covered by your credit card insurance. (This use of a rental car is very likely to be a violation of your car rental agreement as well.)
Finally, off-road use of a rental car will invalidate your credit card coverage. If you take your car off-road, you won’t be covered by auto rental collision damage waiver insurance.
Country limitations
Auto rental collision damage waiver benefits often exclude certain countries. Frequently excluded countries include Israel, Jamaica, the Republic of Ireland and Northern Ireland. If you are traveling outside the United States, and especially if you are traveling to one of the frequently excluded countries, double check your card’s terms and conditions to make sure you are covered.
Letter of coverage
Some countries and many rental car agencies worldwide will require you to provide a letter of coverage. If you do not have a letter proving that you have insurance coverage, the rental agency may require you to purchase additional insurance. This is most common in developing countries and countries outside the United States and Europe.
If you are traveling internationally, be sure to obtain a letter of coverage prior to your travel. This can help you avoid hassles at the rental counter. You can usually obtain a letter of coverage from your card benefit administrator. Some letters of coverage are available
What to do if you need to make a claim
Your credit card’s benefits guide will have the details of how to file a claim. Generally, you will be required to provide documentation to substantiate your claim, including:
- A copy of both the initial and final rental car agreements
- A copy of the accident report form or statement
- A copy of the repair estimate or itemized repair bill
- Photographs of the damaged car
- A police report, if one was filed. (This will typically be required in the case of a stolen car.)
- A copy of the demand letter from the rental car company showing the costs you are responsible for
Your coverage will require you to submit a claim within a reasonable amount of time, typically a few months after the incident. It’s a good practice to open a claim with your card’s benefit administrator as soon as possible if you have a claim.
Know your coverage: Read your guide to benefits
If you rely on the auto rental collision damage waiver insurance provided by your credit card, it’s important to read your card’s guide to benefits. This article can give you the basics of what is covered by your credit card benefit. But your specific credit card is likely to have at least a little nuance in its coverage limitations and exclusions.
Yes, digging into the legalese of your credit card’s Guide to Benefits is unlikely to be your idea of the most enjoyable way to spend your evening. But ultimately, when it comes to making a claim, what’s in your card’s Guide to Benefits will determine what expenses your coverage will pay.
