How Credit Card Car Rental Insurance Works

Every car rental agent is required to ask you if you want to purchase rental insurance as part of the package. Some can persuade you that the extra $20 to $30 or more for insurance is critical for preventing thousands of dollars in out-of-pocket expenses in the event of an accident. If you're a credit card account holder, it's likely that you already have coverage for car rental insurance and don't even need to pay the extra fee for coverage from the car rental company. Make sure you're aware of the limitations and terms of your existing policy to avoid buying coverage you don't really need.

General Credit Card Rental Insurance Terms

Most credit card companies have various restrictions and limitations based on the type of account you have. You may not have coverage for certain types of rental cars or you will only be covered as long as you are the sole driver of the vehicle. The total dollar amount of coverage may also vary by company, and each company will have different administrative processing fees in place. Take a few minutes to review your credit card terms and conditions, and look for specific information about car rental insurance. This information is often listed in the "perks" section of your agreement and will include dollar amounts and limitations of coverage, who is protected under the policy, and other key details.

If you don't feel confident that your credit card company is providing the level of coverage you need, you can always purchase the full coverage extended by your car rental provider.

Initiating Credit Card Car Rental Insurance

In order to be eligible for coverage through your credit card issuer, you have to pay for the rental using the same credit card that offers insurance coverage. Neglecting to do this will make you ineligible for the insurance benefit so you must make sure you're using the right card. You won't have to contact your credit card issuer directly unless you are going to file a claim. You "initiate" insurance coverage the moment the rental is charged to your credit card.

When the car rental company asks you to purchase insurance, you have to sign a waiver that states you have denied coverage. If you do end up getting into an accident and need to file a claim, you will have to work directly with the credit card company. This can be a complex process depending on who the issuer is, and you'll need to follow all instructions to file your claim and have it processed as quickly as possible.

Sources:

Mastercard - Card Benefits

USA Today - Should you say yes to rental car insurance? It depends

Personal Finance Advice - Rental Car Insurance: Making Use of Credit Card Benefits