Guide to Car Rental Insurance (2021)

Car Rentals 101: Save Money and Time With Your Rental, Credit Cards That Provide “Primary” Rental Car Coverage

Regardless of whether it is "secondary" or "primary", car rental coverage from your credit card is only for damage that happens to the rental car—not to you or your passengers, things or people you hit, or stuff stolen from the car.

Jump to

The different types of car rental coverage
Credit card car rental coverage rules
Why you may still want coverage from the rental car company

“Liability” insurance is the most important. It covers the harm you do to other people and their property. If you hit a pedestrian, get in a collision with another vehicle, or hit or damage part of someone’s property (like a fence), liability insurance covers the damage that you’ve done. Supplemental liability insurance is often abbreviated SLI.

When you are driving in the United States or Canada, your personal auto insurance coverage will almost always provide the same coverage for rental cars as you have on your personal vehicle. If you want to be absolutely sure, you'll need to call your insurance company. If you don’t have auto insurance, you’ll need to get liability coverage from the car rental company instead.

Your regular auto insurance won’t cover you when you are renting elsewhere in the world. However, if you are traveling in most countries in the European Union, liability insurance is automatically included in the basic car rental rate, so you are covered without paying for any additional coverage.

If you are traveling elsewhere, liability coverage may or may not be included as part of the car rental rate. You may be forced (by law) to buy it at an additional charge. Or it may be included as part of the rental price. Otherwise, you’ll probably want to buy it from the car rental company. You may be able to get it from a 3^rd party provider before you leave home, but it can be hard to convince the rental location that you don't need their insurance. In any case, you need to make sure you have it.

No credit card provides any liability coverage when you rent your car.

Collision damage & theft (typically called CDW or LDW) covers damage to the car you rented. This could be from a collision, from backing into a support pillar in a parking garage, or because someone stole the car from the parking lot of your hotel.

If you are driving in the US or Canada, your personal auto insurance will generally cover your rental car, in the same way it covers your personal car. However, you will have a deductible and they may refuse to pay for some of the additional fees that the car rental company may apply (most notoriously the charge for “loss-of-use” fees, incurred while the car is getting fixed). As with liability coverage, your regular auto insurance won’t cover you elsewhere in the world.

However, the credit card you used for the rental will almost always provide additional coverage, as long as you follow the specified rules and you use the card to pay for the full cost of the rental. Typically, this coverage is “secondary”, meaning that your regular insurance pays first, and the credit card picks up any uncovered charges. In the US and Canada, that means that your credit card will pick up the deductible and (probably) any extra fees. In other countries, where you are likely to not have any normal coverage from you auto insurance, your credit card is your only source of insurance.

A few cards are “primary” and will cover the entire amount, even when you are travelling in North America, allowing you to avoid getting your insurance company involved.

Personal accident insurance (often called PAI) covers any injury that is sustained by you, as opposed to the injuries you cause to others. Your liability insurance doesn’t cover this. However, your health insurance would typically kick in, as it would for any other accident or illness. Often your auto insurance will provide additional medical coverage, in the US and Canada, to cover any gaps in your medical insurance.
Personal effects coverage (often called PEC) covers stuff stolen from the car. Standard auto insurance doesn’t cover personal possessions that are stolen from the car. However, depending on your policies, you might have additional coverage from your auto insurance, homeowner’s, or renter’s policy. Some credit cards offer theft protection for items purchased within the last 90 days.

In general, in the United States or Europe, you typically don’t need to buy any optional insurance for car rentals. In other parts of the world, you might.

Rules for taking advantage of your credit card car rental coverage

The details for different cards can be different and we can’t list out the fine print for every different credit card. But it is easy to sketch out some basic guidelines.

You need to decline the CDW coverage from the car rental company for your credit card coverage to apply. If you accept coverage and owe money, your credit card won’t help you out.
Coverage is designed for typical rental cars. It usually won’t cover luxury and classic cars or vehicles like trucks, full size SUVs, larger vans, RVs, motorcycles, etc. You might not have coverage for any vehicle that is worth more than $50,000.
There is generally a limit to the length of the rental that is covered. This is typically 15 days for domestic rentals, sometimes up to 30/31 days for international rentals, and can be longer with better cards.
You need to pay for the full amount of the rental on the card, your account needs to be in good standing, the rental must match the name on the card, and the driver needs to be an authorized driver. Most importantly, there is no coverage for "free rentals" earned from the reward program and there may not be coverage for rentals purchased with credit card points.
A few countries may not be covered.
You may need to show proof of your credit card's insurance coverage. Especially when travelling to a normally excluded country, you should travel with a copy of your credit card’s coverage details, to “prove” to the rental company that you are covered and avoid paying for coverage you don’t need. An even better solution is to ask your credit card company to email you an "insurance certificate" that you can show to the rental agent.
You won’t be covered if you didn’t comply with the terms and conditions of the rental.
In some cases, the card won’t pay for all your expenses. A few cards won’t cover loss-of-use fees or damage incurred from driving on dirt or gravel roads. Many won’t cover damage to tires or rims. So, after everything is said and done, you might still have to pay for some of the damage.
You may need to pay the rental company first and collect money from your credit card company later.

Why you may still want coverage from the rental car company

If you don’t have personal auto insurance, or are traveling outside of the US, Canada, or European Union, you may need to get liability insurance. Neither your credit card or your auto insurance will cover the possibility that you hurt someone or damage something in an accident. In many cases, it will be included in the rental price. If it is not, you need to pay extra and purchase it.
Even though you might be covered for collision and theft damage with your personal insurance or your credit card, there are still reasons why you might want to buy the coverage from the car rental company instead. We never decide to pay extra, but you might.

If you rely on your own coverage, you will typically have to pay the car rental company out-of-pocket and get reimbursed later. You will also need to put together a lot of documentation, handle a lot of paperwork, and shepherd things through the claims process. For domestic rentals, you’ll typically need to report the accident to your car insurance company (unless you have rented with a credit card that provides “primary” coverage).

Certainly, if your rental car is damaged or stolen, it will be easier if you have a CDW policy from the rental company. If you want this added layer of security, just make sure you know what you are buying. You still may need to pay a deductible, even after you have paid top-dollar for the rental’s company CDW policy.

Amex Premium Car Rental Protection

Another option is to buy"Premium Car Rental Protection" from American Express. This acts as a substitute for the damage protection you'd get from your credit card or from the rental company's CDW insurance. It does not provide any type of liability coverage. Official webpage.

This policy is subject to fewer rules and conditions than the typical coverage available from a credit card (and counts as "primary" insurance). Coverage typically costs $20-25 for your entire rental (not per day) but is cheaper for residents of California and Florida.

This can be a great option on longer rentals in the US, when you don't have a credit card that provides primary coverage, or for rentals in the other parts of the world where your credit card's coverage won't cover the type of car you are renting. In addition, if you wind up damaging the car, Amex is usually easier to work with than the insurance providers associated with other credit cards.