Credit card collision coverage is a type of auto insurance plan for rental cars. You’ve probably been asked to sign up for it at a rental car agency. But, if you have a credit card that offers this coverage for free, you might not want to spend extra at the counter. Some credit card companies offer free collision coverage. How do you know if yours does? And more importantly, what’s included in the coverage plan?
Your Insurance Versus the Insurance Offered by Credit Card Companies
When you rent a vehicle, the insurance policy they offer isn’t always insurance per se, but a waiver. The company is insuring the vehicles it rents out but the waiver is a way to protect yourself if there are any damages. It means the rental company won’t come after you if there’s damage to the vehicle or if it’s stolen while you have it. If you have auto insurance that duplicates the coverage offered, then you don’t need the extra rental car protection and you can decline it. You don’t want to pay extra for the same coverage if you already have it as it wastes money.
Primary and Secondary Credit Card Coverage
Insurance through your credit card is different. This coverage will generally cover a stolen vehicle or damages to a rental car after your auto insurance pays the claim first. So, this coverage is more like a secondary or supplemental coverage. It’s very valuable as it might reimburse you for your deductible which could be $500 to $1,000. Credit card insurance isn’t always secondary. It can also serve as primary coverage for your rental car.
How to Confirm Credit Card Benefits
If you want to check the coverage your credit card company offers, there are different ways to find this:
You can:
• Check the initial paperwork that was mailed to you when you first opened your credit card.
• Check online on your credit card company’s website.
• Call and ask for the benefit details.
Frequently Asked Questions About Credit Card Collision Coverage
You might have questions about whether you should purchase rental car coverage if you haven’t checked with your credit card company. Here are a few frequently asked questions that can help.
If you decline rental car coverage, how much can you save?
Savings can vary. But, to give you an idea, if the rental car coverage costs $30 per day and you have the vehicle for one week, that’s $210 that you’re saving.
If you’re at the rental car company and you have a credit card, is it safe to assume you have coverage through your credit card?
No. It’s recommended to check with the credit card company first. Ask what coverage is offered and ask about what exclusions there are for rental car vehicles. You also need to know if the coverage is primary (they pay first) or secondary (they pay after your auto insurer pays for claims). While primary coverage is a better option, not a lot of cards offer it.
With primary coverage
The credit card company will pay for damages or for a theft to the rental car company directly. This would bypass your own personal car insurance which means you won’t have to file a claim with them. And, you don’t have to worry about your rates going up.
With secondary coverage
The credit card company insurer will reimburse you for your deductible. They may cover costs not paid for by your auto insurance provider.
What if You Don't Have Your Own Auto Insurance Coverage?
If you don’t have auto insurance, your secondary coverage can become primary in the event of a collision. If you rent cars frequently, you may need to start a non-owner policy to cover liability.
What Coverage is Included with Credit Card Insurance?
• Typically, the coverage is CDW/LDW, meaning a collision damage waiver and loss damage waiver. The coverage will cover the cash value of most traditional rental vehicle types. However, some credit card companies will only cover a specific dollar amount like $50,000 or $75,000.
• The card might also include covering towing fees and any administrative costs.
• They may also compensate the rental car company while the vehicle is being repaired and out of service.
What Coverage Isn’t Included with Credit Card Insurance?
• Liability and injury may not be covered, Meaning there won’t be coverage for damages to any personal property or people and there’s no coverage for lawsuits.
• Theft of any personal property in the vehicle is also not always covered. For this, turn to your home insurance or apartment renters insurance.
• Ambulances, medical bills and emergency care are also not covered. You may need to refer to your health insurance and auto insurance policies in the event of an accident. Or, you can check with your travel insurance company if the rental is outside Canada.
• Rentals in certain countries may not be included. This can vary by the insurance company. Additionally, if your auto insurance doesn’t cover you outside of Canada, your credit card coverage might become primary. Check with your credit card company to confirm this applies to you.
How Do You Use Your Credit Card Coverage for Your Rental Car?
When you rent the vehicle, use your credit card that is offering the benefits. You must also waive the rental car agency’s collision coverage and ensure your name is listed on the rental car agency agreement. Coverage is typically for fifteen or up to thirty-one days in a row. Check with your credit card company to confirm the time frame.
What Types of Vehicles are Included and Excluded?
The coverage through a credit card provider will usually only cover traditional car rentals. They might not cover exotic or expensive cars, motorcycles, vans or trucks. Car-sharing and peer-to-peer vehicles may not be covered. Check with your credit card company to confirm their specific coverage details.
Are You Ready to Find the Best Auto Insurance Rates?
Ultimately, your credit card company can provide you with rental car coverage. Check your plan for benefit details to ensure you don't pay for coverage you don't need. And remember, your credit card coverage is only for collisions. Talk to your credit card provider about specific plan details. For auto insurance or if you have questions, contact InsuranceHotline.com.
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