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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.
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:
- Pay for the rental using an eligible card
- 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.
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 Unlimited 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!