Have you ever relied on your credit card's rental car insurance? One of the most valuable credit card benefits offered is the rental car collision damage waiver policy, which is available in some form on most major credit cards. Yet as important as this benefit is, the terms and conditions of these policies can render your coverage useless precisely when you need it most.
Rental Car Insurance Basics
When you rent a car using most major credit cards, you can be covered by its rental car collision damage waiver policy, which is technically not considered to be insurance. These policies cover collision damage to your rental car, but only when you decline the optional coverage offered by the rental car company.
The coverage offered can be either primary or secondary. With secondary coverage, you must file a claim with your personal automobile insurance first, and the credit card's policy will only reimburse you for losses not covered by your personal policy. But if your personal policy does not cover the accident, such as those in foreign countries or if you don't have personal automobile coverage, then the coverage becomes primary. Some credit cards offer primary coverage eliminating the chance that you would have to file a claim with your personal policy.
Watch Out for Exclusions
In addition to understanding the distinction between primary and secondary coverage, travelers who rely on their credit card's rental car insurance need to be extremely careful to avoid the numerous exclusions these policies contain. For example, most policies exclude a variety of non standard vehicles including sports cars, luxury cars, pickup trucks, and full-sized vans. And while you may not ever intend to rent one of these vehicles, it's possible that you could be given such a vehicle when your chosen class of vehicle is not in stock.
Another common exclusion is territorial, as most credit card's car rental policies will exclude vehicles rented in certain countries. Commonly excluded countries include Ireland, Israel, Italy, Jamaica, and Australia, all popular tourist destinations. Thankfully, some credit cards now offer global collision damage waiver policies that don't contain any geographic exclusions.
Renters also need to examine the terms of these policies to learn how the car must be paid for in order to be covered. In most cases, you must pay for the entire rental with your credit card to be covered, which excludes free rentals offered by loyalty programs. Nevertheless, you are still able to use coupons that offer a "free day," so long as the majority of the rental is paid for by your credit card.
Finally, you have to look at the terms of the rental itself, as your credit card's rental car insurance will always exclude any activities prohibited by the rental car agreement. Examples of forbidden uses can include allowing an unauthorized person to drive the car, driving the car for hire, or driving on an unpaved road. If any damage is incurred while breaking the terms of your rental car agreement, your credit card's insurance will not cover the loss.
Learning About Your Coverage
Before taking a trip where you will be relying on your credit card's rental car insurance, request a copy of the collision damage waiver policy from your credit card issuer, and familiarize yourself with what is covered and what is not. By understanding the terms of this credit card benefit, you can make the right decision when you are asked to purchase optional rental car insurance.