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Short answer: In 90% of cases, no, especially if, like many in the military, you’re a USAA member.

Long answer: It depends on what country you’re in, your auto insurance coverage, what credit card you use, and how much hassle you want to deal with in the event a claim is made.

Renting Outside the United States

If you’re planning on renting a car outside the US, the quickest way to determine if you’ll be covered is to contact your auto insurance company or credit card company. Most credit card companies and insurance companies extend coverage to most of the world, but it doesn’t hurt to check. Personally, I always pay extra for rental car insurance outside the US. It’s just not worth the hassle dealing with foreign laws and rental car companies when they find the slightest ding on your car. The rest of the information in this article assumes you’re renting in the US.

Auto Insurance

Many military members insure themselves and their automobile through USAA. If you have USAA auto insurance, the coverage you have on your vehicles extends to your rental car. You can see this for yourself in your USAA auto insurance by going to the FAQ section.

For other companies, I recommend calling them or checking their respective website to see  if they extend the same coverage to rental cars. Usually, they do.

Do credit cards cover car rental insurance?

All of the four major credit cards (Visa, MasterCard, American Express, and Discover) offer some sort of car rental insurance. All of these programs require the following two steps:

  1. Pay for the rental using an eligible card
  2. Decline the collision damage waiver offered by the rental car company

That second step can throw people for a loop. “You mean I’m supposed to say no to extra insurance?” Well, yes. It can be counter-intuitive, but if you want to save money, declining the rental insurance offered by the rental company can save you 30-50% of the cost of renting.

Most of the credit card insurance programs offer “secondary coverage.” That means that your auto insurance is on the hook first for any damage and then your credit card will cover the remainder. If your auto insurance doesn’t cover collision or some other category, then the credit card company would become your primary coverage provider and would cover the damage, usually up to a pre-determined amount.

VISA – Auto Rental Collision Damage Waiver

If you have any of the following:

  • Visa Standard Credit
  • Visa Rewards Credit
  • Visa Premium Rewards

Then you have a collision damage waiver from Visa. That list covers pretty much every card Visa issues, other than Student cards, debit cards, and prepaid cards. Visa “covers up to the actual cash value of the vehicle as it was originally manufactured.” Be sure to file any claim within 45 days. This does not appear to cover liability or medical expenses, so ensure that your regular auto insurance covers you for these contingencies.

MASTERCARD – Car Rental Collision Damage Waiver Insurance

MasterCard is not as forthcoming on their website as to what cards are eligible or what their coverage limits may be. However, they do offer car rental collision damage waiver for some of their eligible cards. The USAA Cash Rewards® World MasterCard® is one of the MasterCards that offers auto rental insurance.

AMERICAN EXPRESS – Car Rental Insurance

AMEX offers up to $50,000 coverage on most of their cards. Like most the credit card auto insurance products, their coverage is secondary (meaning your regular auto insurance covers what they will first). Some of the AMEX Platinum cards offer up to $75,000 in coverage.

DISCOVER – Car Rental Insurance Plan

Discover only offers $25,000 in secondary coverage. This should be sufficient provided you have additional coverage through your auto insurance company. If not, you may want to consider purchasing collision coverage from the auto rental company or using a different card that offers better protection.

The Best Credit Card Auto Insurance Policy

Of the course major credit card companies, Visa seems to offer the most protection, on the most number of cards, for the lowest cost (FREE!). Visa is also the most transparent of the four companies when it comes to describing their policy and coverage.

My experience with Chase car rental insurance

When I was TDY to Oklahoma for 3 months, I rented cars nearly every weekend. It was cheap (usually only $70 for Friday morning to Monday morning) and of course I didn’t have to worry about maintenance or other annoying costs of ownership.

During this time, I never once paid for the Enterprise car rental insurance. Because I was using the Chase Freedom Card and the Chase Sapphire Preferred to rent these cars, I never paid a dime for rental car insurance from the rental car company. This saved me over 50% of the cost of renting, and I was still covered by my USAA auto insurance and the supplemental coverage of the credit cards.

While I never had to make a claim, Chase’s customer support has always been helpful and relatively painless. I’m sure they would handle the claims process quickly and professionally. The Chase car rental insurance covered me for nearly a dozen car rentals and I never once had a problem with it.

The Bottom Line on Rental Car Insurance

So before you rent, ask yourself these questions:

  • Am I renting in the United States?
  • Does my regular auto insurance extend to rental cars?
  • Am I using a credit card that includes a auto rental collision damage waiver?

If you answered “yes” to all of these questions, you do not need to purchase rental car insurance from the rental car company. If you answered “no” to one or more of the questions, you’re going to want to double check your coverage and make sure that you’ll be covered in some form.

Insurance is an important part of protecting your financial assets and moving towards financial independence. However, saving money is also one of the quickest ways to becoming financially independent. By using your regular auto insurance and credit cards, you can insure yourself while saving over 50% of the cost of renting automobiles.

Have you ever had an accident while driving a rental car? I’d love to hear about your insurance experience in the comments, especially if you went through your credit card company!

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Do I need to buy rental car insurance?

3 thoughts on “Do I need to buy rental car insurance?

  • October 1, 2013 at 22:26
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    There is some very useful info here. So many people spend money on rental car insurance when they really don’t have to. It’s good to know when you should add extra and when it’s not necessary.

    Reply
  • September 23, 2015 at 22:23
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    USAA badly misled me!

    Reply
  • September 23, 2015 at 22:30
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    A few days prior to going on a trip to Scotland, I rented an Avis Rent-a-Car through a travel agent, and paid for the entire rental with my USAA World Master Card. Since it had been seven years since I had rented a car in Europe, I felt I needed to check carefully about whether my USAA Auto Policy would cover me in case of an accident. So I phoned USAA Insurance and spoke to a lady who worked in the auto insurance department. I asked her to check for me to see if I would be covered in the rental car while in Scotland by my USAA Auto Insurance. After carefully checking my specific auto policy, she assured me it would cover me in case I had an accident over there. I further asked her if I should decline all the insurance offered by Avis Rent-a Car. She said that was correct, I should decline all the coverages offered by them since I was already covered by my USAA Auto Insurance Policy. Unfortunately, I had a collision over in Scotland on the first day of my arrival within hours of picking up the Avis car. I exchanged all the information with the other owner and called Avis to pick up the car, since it was not driveable. I spoke to the manager of the Glasgow Avis Airport location where I picked up the car. I gave everyone concerned my USAA information for Auto Insurance. Avis said they always charge me what their mechanics believe the repairs to cost and charged my USAA World MasterCard for that amount (telling me to file the paperwork they gave me to my insurance company for the claim to reimburse me). I e-mailed the claim information to USAA as their website said to do to file a new claim. When I returned to the USA, I called the USAA Auto Claims Department to ensure they had the information they needed. They assigned a claim number but told me that my USAA Insurance WOULD NOT Cover me in the UK. I was SHOCKED after having gotten the information prior to the trip that I had specifically asked and been told I would be covered by USAA. They said they were sorry that I had been told that, but that there was no coverage under my Auto Policy. As a retired active duty officer who had all my various policies with USAA for over forty-seven years, I was NOT HAPPY! They said I could check with Master Card to see if they had any coverage on me. I apparently have some coverage under my USAA World Master Card, but it is a long and difficult claims process with an uncertain outcome (and would not cover the damage to the other car). I am fit to be tied with this whole matter with USAA. If their agents don’t know the facts, and give false information to the USAA member, they don’t deserve my (or anyone else’s) loyalty or business. It is now apparent that I was definitely mislead, and as a result will probably cost me thousands of dollars. I now have a new statement from Avis, in the United Kingdom which is more than twice the amount they already charged me on my credit card.

    Reply

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