Published in: Credit Cards | Dec. 14, 2018
By: Jordan Wathen
The Chase Freedom® and Chase Freedom Unlimited® both offer insurance coverage for the financial cost of damage or theft to a rented vehicle. However, coverage through the collision damage waiver (CDW) is secondary insurance, kicking in only after other forms of insurance (like your personal car insurance).
For this reason, those who use rental cars more often may be better off with the Chase Sapphire Preferred® card, which offers its cardholders primary rental car insurance.
The CDWs from Chase Freedom® and Chase Freedom Unlimited® provide reimbursement for damage resulting from collision or theft up to the cash value of a vehicle you rent with the card. But note that this benefit pays out only after other forms of insurance do.
The benefits guide states, "Auto rental CDW will not pay for theft or damage reimbursable by your own insurer, employer, employer's insurance, or any other valid and collectible reimbursement."
That means the CDW from Chase Freedom® and Chase Freedom Unlimited® is secondary insurance, so if you have your own car insurance, the protection the card provides will cover only what your insurance doesn't. In most cases, the benefit will cover your deductible, or perhaps the money you have to pay out of pocket when making a claim to your existing car insurance policy.
Other Chase credit cards provide primary insurance, which steps in before your personal car insurance when you make a claim. The Chase Sapphire Preferred® is one such card, though unlike the Chase Freedom® and Chase Freedom Unlimited®, it carries an annual fee of $95.
You receive a CDW from the Chase Freedom® or Chase Freedom Unlimited® when you use the card to pay for the entirety of the car-rental transaction and decline similar coverage from the car-rental company.
The benefits guide explains in a two-step process.
Here's what you need to do:
The CDW reimburses cardholders for covered losses when the vehicle rental period doesn't cover periods longer than 31 days and the rental is within your country of residence.
According to the benefits guide, covered losses are:
Loss-of-use coverage is very important, as few people realize that they''re responsible for paying to rent the car while it's in service for repairs. For example, if a collision results in damage that takes a week to fix, the renter has to pay for that week it was out of use. Credit card rental-car insurance can be very valuable here. Note that the coverage does not, in any way, cover any liability or damage to other cars. It also doesn't cover any bodily harm or other liability. The coverage is solely for the cost of repairing or replacing a damaged or stolen vehicle you rented. On the bright side, state laws typically require that car-rental companies provide liability and bodily-injury coverage for people who rent cars.
For obvious reasons, most credit cards, including Chase Freedom® cards, don't cover automobiles that are especially expensive. Most luxury cars, larger vehicles (vans that can transport more than eight people), and antique vehicles are excluded from the CDW. Trucks are also excluded from coverage.
The benefits guide explains:
When you use a Chase Freedom® or Chase Freedom Unlimited® to pay for a rental car, you are covered as the primary renter. Any additional drivers that the rental contract permits to operate the card are also covered.
Your card's CDW will cover other people only if you add them to the rental contract. Note that car-rental companies usually charge a fee for additional drivers, often $5 or $10 per day, per additional driver.
A CDW is really a protection for the financial cost of a damaged or stolen rental car, and little more. If you return a car with damage, the card's coverage will kick in after other forms of insurance, including your personal car insurance. For that reason, secondary rental car insurance is most valuable for people who have a high deductible on their existing car-insurance policy.
Frequent car renters would be better off with a credit card that provides primary rental-car insurance, since it steps in before your personal auto-insurance policy. Cardholders who have primary rental-car insurance can avoid a claim, and thus higher premiums on their car insurance, because the card, rather than other forms of insurance, covers the claim. That's not the case with the secondary insurance most credit cards provide, requiring you to make a claim on your personal car insurance before it pays out on any excess expenses.
For cards with better primary car insurance policies, see the Chase Sapphire Preferred®, which offers primary car insurance and has the lowest annual fee of any card that offers the benefit. On the downside, the only cards that offer primary insurance carry an annual fee, but for frequent renters, the annual fee more than pays for itself, given that rental-car companies charge as much as $10 or $15 a day for CDWs. Therefore, a $95 annual fee on a card with primary coverage pays for itself for people who rent cars for at least one week each year.
We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
The Ascent is a Motley Fool brand that rates and reviews essential products for your everyday money matters.
Copyright © 2018 - 2020
The Ascent. All rights reserved.