Before visiting a rental car counter this summer, it’s wise to make two telephone calls: one to the insurer that covers your personal car and one to your credit card company.
Many people feel pressured to buy the rental company’s insurance coverage on the rationale of better safe than sorry, even though it can cost up to $30 a day, said Norma Garcia, a lawyer with Consumers Union, the advocacy and policy arm of Consumer Reports. But if you verify coverage you may already have before setting out on vacation, she said, “You can be safe and not sorry.”
Many, but not all, credit cards offer rental coverage at no extra cost, as a perk for customers when they pay for the rental with the card and decline the rental company’s offering. Coverage varies, however, and depends not only on the card’s payment network — like Visa or MasterCard — but also on the issuing bank, according to a recent analysis from CardHub.com, a card comparison website.
To avoid surprises, contact your card company before renting to confirm that your card indeed offers insurance protection, and ask about any limits or exclusions: “A simple call ought to do it,” Ms. Garcia said. Ask for the terms in writing, said Loretta Worters, a spokeswoman for the Insurance Information Institute, an industry group.
Most card policies cover rentals of up to 30 days, but others limit coverage to rentals of no more than two weeks. Some exclude some sport utility vehicles, trucks and expensive cars. Many card policies don’t cover damage to tires and rims.
Many cards also exclude coverage in certain countries (Ireland, Israel and Jamaica are often left out, as are Australia, Italy and New Zealand.) Citibank and Discover credit cards may come in handy when traveling internationally, according to the analysis, as they cover cars globally.
The analysis evaluated 10 large card issuers on 11 criteria, including the duration of coverage, exclusions and the card’s claims process. Citi cards generally offered the most favorable insurance coverage over all, the analysis found, although Citi’s claims process may require a bit more paperwork than other cards. USAA American Express cards also got high marks. (Some cards evaluated were CardHub sponsors. Jill Gonzalez, an analyst with CardHub, said CardHub “does not make recommendations based off of advertising partnerships.”)
Of the four card networks, MasterCard and Visa scored the highest over all for their insurance offering, the report found.
Keep in mind that credit card rental car insurance is usually secondary, or backup, coverage that pays for expenses, like your deductible, that your personal auto policy may not cover. And the card policies generally don’t provide liability coverage, for damage to other cars or injuries to other people. So before renting, check the coverage on your personal auto policy.
If you own a car, the auto insurance you carry on your personal vehicle often covers a rental car at similar terms, Ms. Worters said. (You usually must be using the car for personal reasons, not for business).
If you have dropped optional coverage on your car, like collision coverage, to save on premium costs, however, your rental car may not be covered if it’s damaged. In that case, she said, you should consider buying the rental company’s “loss damage waiver,” also called a collision damage waiver, so you won’t be responsible for damage to the rental car.
Rules vary by state, however, and in some states, your rental may still be covered if you drop optional coverage on your personal policy. So confirm the details with your insurer.
In most states, personal auto policies don’t cover something called “diminished value,” or a drop in the car’s value because of damages and repairs. Some insurers may add this option with a special “endorsement” on your policy, Ms. Worters said.
Rental car companies are required by law to provide liability coverage with the rental at the state-mandated minimum, which is low, Ms. Worters said. (Liability coverage protects you if you injure someone or damage their car in an accident.) Rental companies may sell “supplemental” coverage with higher limits, but if your personal auto policy is adequate, you probably don’t need to buy extra, the National Association of Insurance Commissioners says.
Here are some questions and answers about rental car coverage:
Do any credit card rental car policies provide primary coverage?
A few do, including the Chase Sapphire Preferred card, Ms. Worters said. Others do, for a fee, like “premium” car rental protection from American Express. You register your card for the service, and are automatically charged a flat fee (typically $25) per rental when you pay with the American Express card.
What if I disagree about minor damage to a rental car?
The best way to protect yourself from being charged for dings and scratches is to take photos of any damage — even small scratches — before you drive off the rental lot, and make sure the rental agent notes them on the agreement, said J. Robert Hunter, director of insurance at the Consumer Federation of America.
What if my personal auto policy doesn’t cover rentals?
You may be able to add a rental “rider” for an additional fee, rather than buying the rental company’s coverage, the National Association of Insurance Commissioners suggests.
If you don’t own a car but you rent frequently, it may be worth buying a “nonowner” auto policy. The cost is $300 to $500 annually, Ms. Worters said.