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When you approach the car rental counter after a long battle or breakdown, the last thing you want to worry about is buying additional insurance.
You can skip — and the daily fee — if your credit card offers a fee as one of its perks. But before you reject this extra protection, know what your policy covers. Understanding your credit card rental car insurance and how these benefits work can help you make an informed decision before you head to the counter.
How Car Rentals Work
When you rent a car, the rental company will give you the option to purchase car insurance. Known as a collision damage deductible or collision damage deductible, this coverage can cost as much as $45 per day. However, if you have your own car insurance and a credit card that offers rental car coverage, paying for rental car insurance is often unnecessary.
Whether you choose to take advantage of your credit card loan depends on the type of coverage and how it fits with your car insurance policy. Below are a few terms you should understand about the benefits of your credit card car loan.
Primary and secondary education required. Not all policies are created equal. The importance of a rental car means, in most cases, you can rely on your credit card instead of submitting a claim to your insurance company.
This is good, because it saves you from paying a deductible and higher car insurance. According to CarInsurance.com amount of data, auto insurance rates go up 31%, on average, after just one accident with more than $2,000 in damage. This equates to $450 per year.
With the second car loan option that most credit cards offer, you can’t avoid making a claim.
“The benefit of a credit card is when your first, or current, job stops,” explains Joe Stanish, co-founder of financial software Honeyfi, now known as Firstly.
Collision versus interest rate. Credit cards usually only offer collision protection. “This means that if you’re in an accident, the damage to your car is covered,” says Stanish. However, if someone is injured, or if you damage another vehicle or property, you will need liability insurance to be fully protected.
If you have car insurance, the policy will cover the rental car loan. But confirm this with your insurance provider. “If you don’t have car insurance, you’ll want to accept the extras the rental car company offers, which can be expensive,” says Stanish.
Check your credit card rental car policy before you travel. According to Rebecca Gramuglia, consumer expert at TopCashBack.com, knowing more will allow you to make a more confident decision at the lender. “Know what’s on your credit card,” he says. “Depending on the card, you may have certain restrictions, so be aware of how much you need for an accident.”
Does Your Credit Card Include Rental Car Benefits?
To find out if your credit card has a rental car benefit, log into your online account and check the benefits section. If you can’t find the information, call the phone number on the back of your card and speak to a customer service representative.
Remember that credit card companies sometimes change the benefits that come with a particular card, so it’s a good idea to double-check the terms first.
Is Your Credit Card Enough?
In most cases, credit card loan insurance is not enough on its own. Secondary education, for example, only comes after you upgrade your car insurance. Even if your card offers basic support, most of it is a collision rather than a fault. You will still need to rely on your personal policy or supplements from the rental agency if you do not have insurance.
Comparing the Best Credit Cards and Car Loans
Although most credit cards offer rental car insurance, few offer premium coverage. Here are some of the best credit cards with car rental insurance:
Questions to Ask Your Credit Card Provider Before Borrowing a Car
Make sure you understand when and how your car loan credit card benefits start. Most credit card issuers will provide that information online, but you can also call the phone number on the back of your credit card to verify. You will want to find answers to these questions:
- Is the treatment primary or secondary? Find out if you’ll need to rely on your car insurance, if you have it, before it’s a credit card.
- How can I be sure that I am protected? Your card may provide support, but that doesn’t mean you’re in the clear. In most cases, you must pay the full amount of the loan with the card that offers the service, as well as denying the company’s hit or damage deductible. You must also be the first person to lease the car.
- What types of vehicles are covered? Some credit card loan agreements exclude certain types of vehicles, such as motorcycles, trucks, vans, and vintage or expensive cars. Additionally, coverage often only covers traditional rentals and not car-sharing services like Zipcar.
- How long am I covered? Generally, your rental coverage lasts 14 days, although some policies last 30 days or more. If you want to take a long trip, you may need to rely on your insurance until the benefit of your card expires.
- In which countries do I study? Some countries are not allowed to broadcast international news. For example, Ireland, Israel and Jamaica are often excluded because local laws require drivers to purchase accident damage protection from the rental company.
What kind of events are – and are not affected? Theft and physical damage to the rental car are the most common types of covered loss, but many also cover towing costs and other charges. However, almost all credit card policies will not cover injuries or damage you cause to your vehicle or other property as a result of an accident. If you have an accident, you need to rely on your auto insurance for coverage, which may not be enough for a serious accident.
Additionally, credit card policies often do not cover stolen vehicle theft. Look for homeowners or renters insurance instead.
- What if I don’t have car insurance? You will need to purchase an origination fee from the rental company.
- What is the process of providing guidance? In the event of a theft or accident, filing a claim through your credit card instead of having the company’s insurance will require additional work on your part. Understanding the process, including the documents you may need, can save you from wasting time on what you need while doing business or on your travels.
- Who do I connect with? Once you start charging, you may need to handle the problem through someone other than the bank or credit union. Have accurate information in case of an emergency.
What Should You Do If You Are in Danger?
In the event of an accident, follow the same steps as if you were in your car: Make sure no one is injured, call first responders if necessary, exchange information and take pictures of any damage. Contact your rental car company – keep the rental agreement on hand – to report the accident and find out what the company will do. Next, check with your card issuer to find out how much money is left.
While most credit card issuers ask you to file a claim within 90 to 180 days, the goal is to file a claim and police report within 24 hours.
This may seem like a chore, but Gramuglia says don’t hesitate to put in what you want. “Doing this as soon as you know what’s covered can help you avoid unexpected expenses down the road.”
How to Choose the Right Car Rental Insurance Card
When it comes to choosing a credit card with a rental car, consider all of your needs. In general, the first loan is preferred, although a second loan can be useful if you have a low-cost, adequate loan for a car. Also, consider this:
- What is interest rate? You don’t want to pay interest if you carry cash next month, so look for a card with a lower rate.
- Is there an annual fee? Sometimes the annual fee is worth it if the card offers valuable benefits, but you may want to stick with the free card.
- Can you get a reward? Most credit cards allow you to earn points, miles or cash back for your spending. If you want to use the money, you can get some refunds.
- What other products are available? In addition to rental car insurance, look for a card that offers features that fit your budget and lifestyle. For example, if you travel a lot, you may want a card that also offers free baggage allowance or credit for airline purchases.