A car rental company's charges for insurance coverage can add up quickly, but credit cards often provide coverage that can help you cut the costs. If you use the right credit card in combination with your own vehicle insurance coverage, you might be able to decline the rental company's coverage.
First you need to understand the four basic types of car rental insurance (as explained by the Insurance Information Institute):
Loss of damage waiver (collision damage waiver)
This covers you if the vehicle you're renting is lost or stolen. It's similar to the collision coverage on a personal auto insurance policy.
Rental companies also charge for loss of use coverage; they bill you because they can't rent the car when it's in the repair shop. They may tack on some administrative fees and/or towing fees as well.
This coverage costs somewhere between $9 and $19 a day.
This covers you if you're sued for your role in an accident that involves your rental car. It costs $7 to $14 a day.
Personal Accident Insurance
This coverage pays for the medical expenses of you or any passenger injured in an accident. It costs $1 to $5 a day.
Personal Effects Coverage
This pays for damage to or theft of any personal items that you have in your rental car. It will cost you between $1 and $5 a day.
Some insurance offered by rental companies duplicates what you already have on your own vehicle insurance policy. Other coverage, like the loss of use and administrative fees, your own insurance wouldn't pay for.
Credit card rental insurance is generally intended to fill in some of the gaps in the car rental coverage provided through your insurer. Suppose had an accident in your rental car and the cost to repair the vehicle was $5,000. If you had declined the rental insurance policy and relied on your own insurance, you'd have to pay the same deductible - say $500 - that you'd pay for an accident involving your own car. If your credit card offers vehicle rental insurance, it might reimburse some or all of that $500 deductible.
The major credit card companies - Visa, MasterCard, American Express and Discover - often provide some type of auto rental insurance through their credit cards. Coverages vary with the card company, the issuing banks and the levels of cards.
The best way to determine how much auto rental insurance coverage is to call the 800-number on the back of the card. If you carry several credit cards, you can call them all to see which will provide the best protection. You'll also want to contact your insurance company to see what insurance protections it provides.
A few other things to remember when you're researching your options for credit card rental car insurance coverage:
A quick call to your credit card company the next time you're renting a car may save you money - and that gives you more cash to put gas in the tank of your rental car.