How a rental car is covered by a credit card
Speak to any rental car company employee before renting a car, and you’ll surely be asked if you want to purchase extra insurance. But at $15 to $30 a day (typically), buying this additional coverage is like paying $5,000 to $10,000 a year to insure your car.
Thankfully, you may be able to receive similar coverage through your credit card. In fact, rental car coverage may be one of the most valuable benefits offered by some credit cards. However, it’s important to understand how this coverage works, and what its limitations are.
Key rental car statistics
- The global car rental market size was valued at $92.92 billion in 2019 and is projected to reach $214.04 billion by 2027. (Allied Market Research)
- In 2022, there were 15,577 car rental businesses in the U.S. (Carsurance)
- Most rent-a-car businesses operate in California (1,355), Florida (1,050) and Texas (960). (Carsurance)
- The international vehicle rental market experienced a decrease of 32 percent in 2020. (Carsurance)
- The U.S. vehicle rental market was expected to grow 26.9 percent in 2022. (Carsurance)
- Enterprise Holdings is among the largest companies in the world. Its three companies, combined — Enterprise Rent-A-Car, Alamo Rent-A-Car and National Car Rental — serve more than 95 percent of the global vehicle rental market. (Carsurance)
- The U.S. leads in tourism car rentals with its vehicle fleet of two million. (Carsurance)
- The average cost of a rental car in the U.S. was $30 per day in 2019 and $109 in 2021. (Carsurance)
What is car rental insurance?
Whenever you rent a car, you should always have insurance that covers at least theft or damage. If you own a car, then your personal car insurance might cover you when you rent a car in the U.S. Nevertheless, you might not want to rely on your personal coverage, or you might need coverage when you rent outside of the country.
Many credit cards include a form of coverage called an auto collision damage waiver. When you pay for your rental car with your credit card and decline the optional insurance, this coverage can take the place of the expensive policies sold by rental car companies at no additional cost.
Do credit cards cover rental car insurance?
Rental car coverage used to be standard on most credit cards, but some major issuers no longer offer this benefit. The best way to find out if your credit card includes rental car coverage is to call the number on the back of your card or read the most recent version of the card’s benefits guide.
How rental car insurance works
- Check to make sure that your credit card offers rental car coverage.
- Review the card’s benefits guide to ensure that the coverage applies to the type of car you’re renting and, if renting outside the U.S., the country you’re renting in.
- Reserve your car using the credit card that offers you coverage.
- Decline the optional damage and theft insurance sold by the rental car company.
- Pay for your entire rental using the credit card that offers you coverage.
- Abide by the rules of the rental car agreement.
Types of rental car insurance
It’s important to note that credit cards offer different types of rental car coverage, usually in the form of primary or secondary coverage.
Types of rental car insurance
- Primary rental car coverage
- If your credit card offers primary coverage, then you won’t need to ever file a claim with your personal automobile policy. Since this insurance is “primary,” it will apply before any other coverage. Luxury credit cards are more likely to offer this type of coverage.
- Secondary rental car coverage
- If your credit card offers secondary coverage, it requires that you make a claim with your personal automobile insurance first, if you have any. The secondary coverage will kick in to cover whatever is not covered by the primary insurance. Most credit cards offer secondary coverage.
Keep in mind that all of the rental car policies offered by credit cards only insure the car you’re renting against theft and damage. If you are responsible for damage to another vehicle, injure a person or cause any other property damage, then any rental car coverage provided by your credit card won’t cover these losses.
Top rental car companies in the U.S.
According to the J.D. Power 2022 North America Rental Car Satisfaction Study, Enterprise ranks the highest in overall customer satisfaction for the second year in a row. Here’s how J.D. Power ranks the top rental car companies:
| Rental car company | Score (out of 1,000 points) |
|---|---|
| Enterprise | 865 |
| National | 859 |
| Alamo | 837 |
| Hertz | 836 |
| Avis | 816 |
| Dollar | 799 |
| Budget | 788 |
| Thrifty | 780 |
Additional ways credit cards cover your travel
Rental car insurance is just one of many types of travel insurance perks that can be offered by your credit card. Other benefits may include trip delay insurance, trip cancellation and interruption coverage, lost luggage coverage and medical coverage.
Many credit cards also offer roadside assistance coverage. With this coverage, you can call to receive help when your car breaks down, but you’ll have to pay for any services received. However, some credit cards provide basic services (like lockout service or changing a flat tire) at no extra cost.
FAQs
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You should always have rental car insurance, but there’s no need to pay extra for it if it’s included as a benefit of your credit card.
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No, the coverage offered by credit cards only covers the rental car, not any damage to third parties.
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Yes, the credit card covers all other authorized drivers.
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For more travel tips & tricks, check out Bankrate’s travel toolkit.
