The Hidden Downside of Credit Card Rental Car Insurance

Rental car insurance is one of the useful extras that a lot of credit cards offer. If your card has this perk, it applies when you pay for the full cost of the rental car with your credit card. You also need to decline any collision coverage or similar types of coverage the rental agency offers.

When you buy it through the rental agency, collision coverage typically costs about $15 to $30 per day. It's hard to beat getting the same type of coverage for free from your credit card.

Overall, credit card rental car insurance is a nice perk. But many policies have a hidden downside that not every driver knows about. And it could lead to an unpleasant surprise if you need to file a claim.

Credit cards normally offer secondary rental car insurance

The exact terms for rental car insurance depend on your credit card. But most cards with this benefit offer secondary coverage, not primary coverage.

Here's the difference: With secondary coverage, you need to exhaust your other insurance policies first. If you have car insurance, you'll need to file a claim there. If you have travel insurance that covers your rental car, you'll need to file a claim with that. With primary coverage, you don't need to do this; you can file a claim with your credit card rental car insurance first.

Not sure which type of car insurance your credit card has? You can find this information in your card's guide to benefits. Or, call your card issuer and ask.

Secondary rental car insurance is still useful. More coverage never hurts. Once you've exhausted the benefits of your other insurance policies, then you can file a claim. Secondary insurance can cover damages that exceed the limits of your other insurance policies, and it can also pay for any deductibles you're charged. However, there are a couple of reasons secondary coverage can be problematic:

• Since you need to go through your car insurance first, your rates could go up.
• It makes the claims process more complicated, as you have to file claims with multiple insurance companies.

If those are deal breakers for you, then you should get a card with primary rental car insurance. While this isn't common, there are some excellent travel credit cards with this benefit.

Which credit cards have primary rental car insurance?

The following credit cards have rental car insurance with primary coverage:

• Chase Sapphire Preferred® Card
• Chase Sapphire Reserve®
• Capital One Venture X Rewards Credit Card
• United℠ Explorer Card
• United Quest℠ Card
• United Club℠ Infinite Card

If you're looking for a card to use for your business, these business credit cards have primary rental car insurance:

• Ink Business Cash® Credit Card
• Ink Business Unlimited® Credit Card
• Ink Business Preferred® Credit Card
• Ink Business Premier® Credit Card
• United℠ Business Card
• United Club℠ Business Card

Protecting yourself when renting a car

When you rent a car, you're responsible for anything that happens to it. That includes damage, theft, and loss of use charges if it needs to be repaired or replaced. Any of these can be expensive, which is why it's important to have insurance that covers all of them.

If you have car insurance, that normally covers rental cars up to your policy's coverage limits. But if you don't want to file a claim through your own insurance, make sure to pay with a credit card that has primary rental car coverage. That way, if you need to file a claim, you can do it solely through your credit card company's insurance.