A great conversation companion. A perfectly-curated playlist. An exciting destination. And the open road. These are the fine qualities of an excellent road trip. There is something difficult to describe about that combined sense of freedom, adventure, and joy that comes from cruising along a new highway or back road.
For many people, in particular urban dwellers and millennials, owning your own car is not a realistic or necessary option. Therefore, the convenience and adventure of a personal car comes through a rental. Renting a card is easier than ever, with a great range of options, pricing and even combinations with car-sharing services.
And then there’s of course the travelers, who rent cars on trips.
However, there is always the question of the fine print. When you get the counter and the salesperson asks “Would you like to include insurance with your rental?”, people can often have a knee-jerk reaction. If you’re like me, my risk-averse personality automatically opts for ‘Yes, please!’. For others, who are more budget conscious or confident, the automatic response is ‘No, thanks.’ Insurance for a vehicle is an important decision that may have upfront and future costs. By choosing the right credit card and knowing your policy, you could save hundreds of dollars in insurance fees or claims payments.
Credit cards are a great travel partner and many cards, even those without an annual fee, offer car rental coverage. In this article, we’ll review the kinds of insurance and some of the best kinds of credit cards that will provide you coverage and peace of mind.
Disclaimer: Car rental insurance regulations and requirements vary state by state. The advice provided in this article is a useful first step, but insurance decisions should be well thought out.
Types of Insurance
The insurance coverage provided by credit card companies is Collision Damage Waiver (CDW). This coverage waives the right of the rental company to come after you for the costs of the damages and losses, in the case of an accident or other problem. The range of coverage (from theft to damage to amounts) depends on the provider. One very useful insurance to keep an eye out for is loss of use. This insurance will pay for the monetary loss by the rental company of the car while it’s out of commission. Yes, you could be responsible for the time the car is getting repaired and not able to be rented. This is why it’s very important to read the fine print and ask questions of your provider.
You can purchase CDW from the rental agency, or you can decline theirs and use the one provided by your credit card company. There are two basic kinds: primary and secondary. Secondary is where the coverage is first provided by your private auto insurance policy, and whatever is remaining can be covered by the credit card company. Primary coverage provides all the insurance for the rental. Primary is the preferred type as it means that in the case of an accident, there is no claim to your primate insurance, and so your rates won’t increase. You can find both primary and secondary insurances, but because of this key benefit, I will only highlight cards with primary coverage.
Credit Cards Providers
Chase Sapphire Preferred® Card
Sapphire Preferred will cover you for all losses including physical damage or theft, reasonable charges such as towing, as well as loss of use. As is quite common, exotic cars are no covered, but certain high-end manufacturer’s models are covered. You can even use your Chase Visa Sapphire Preferred for international car rentals!
The current sign-up bonus is 50,000 points if you charge $4,000 on the card within the first three months of your account opening. If you would like to put those points towards a trip, you’ll have $625 you can redeem in Travel Rewards, including on car rentals. With the nice bonus and the coverage, and 2x points on travel spending, the Chase Sapphire Preferred® Card is a great road trip companion. Plus, you save the $95 annual fee for the first year.
With the United MileagePlus Explorer & Club cards, you’re covered for all costs up to the actual cash value of the vehicle for theft and collision damage for most rental cars in the U.S. and abroad. The coverage is a reimbursement, so you’ll need to cover the costs upfront.
If you’re a fan of flying with United, then this card could be a good fit, as you earn 2% back on United bookings. In addition, you can start off with a free United Club Membership (for airport lounges) and $100 statement credit with the MileagePlus Club card. The Explorer has current sign-up bonus is 30,000 miles if you spend $1,000 in the first three months.
With AMEX, every card comes with primary coverage for additional flat rate of $19.95 or, for higher coverage amounts, $24.95 for the entire rental period. To take the coverage, you enroll online and the fee is charged once you put a rental car onto your enrolled card. Conveniently, though you have to be aware, the fee will automatically be added for each future car rental purchase, unless you revise your protection. The coverage includes damage and theft, and does not have a deductible.
The AMEX Blue Sky Points card gives you 1 point for every dollar spent, with no annual fee. For every 7,500 points earned, you earn $100 statement credit towards travel, included car rentals from select companies.
Of course, whichever card you chose, you must put the entire rental purchase on that credit card.
Car rental insurance can feel like a tricky business. However, armed with knowledge and a well-chosen credit card, you leave on your road trip with both a sense of adventure and peace of mind knowing that you are covered. When you’re looking for a card with coverage, seek one with primary coverage including loss of use, and the number of days and vehicle type coverage for your general rental style. It’s also important to review your insurance policy and ask about coverage and exceptions with your card company before heading to the rental counter.
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