Your Credit Card Can Save You Thousands in a Car Accident

Consider this as you head into summer travel season or for some reason need to rent a car: You can do yourself a huge favor — potentially worth thousands of dollars — if you pay for a rental car with the right credit card.

Many of us make one of two mistakes when we step up to the car rental counter. Either we automatically waive extra coverage thinking our personal car insurance will cover any damage, loss or personal injury — or we buy all the rental car coverage offered.

Either one of these choices carries risk:

If you carry minimal insurance — such as no collision — on your personal car, you could be on the hook for thousands in the event that you damage your rental. But if you buy all the coverage the rental car company offers, you may be duplicating coverage that you already have — a waste of money.

What to do? Explore what rental car coverage your credit card provides: Many of them have it, and many credit card customers are unaware of it. Even better: Typically, you don’t need to notify the credit card company or sign a form asking for coverage during a trip. All you have to do is pay for the rental with the card.

According to CardHub:

When most people think of credit-card perks, their minds turn to rewards, low interest rates and convenience. However, credit cards provide a number of other basic benefits that help protect cardholders from both monetary loss and unnecessary hassle.

How much coverage you receive depends on what credit card you use for your personal trip. (It’s important to note that business trips may fall under different categories, so check with your auto insurer, employer and credit card company before you rent for business.)

“A lot of consumers have no idea rental car coverage is included with their credit cards,” said Jill Gonzalez,an adviser with Evolution Finance. “It fluctuates a little among the cards, but they usually offer more [coverage] than you need.”

Cards ranked by best insurance coverage

As Gonzalez noted, all credit cards don’t offer the same secondary rental car insurance coverage – but they are darn close. A survey by CardHub (part of Evolution Finance) found that Citi Cards offer the best coverage, followed by USAA American Express, all Chase Cards and USAA Visa Signature.

What that means: CardHub ranked the cards based on vehicles excluded, clarity on exclusions, coverage duration, type of road exclusions, country exclusions, loss of use and deductible on your auto insurance, towing, damage to tires and rims, activation and claims process. A perfect score would be 100 percent.

The card rankings were as follows:

• Citi Cards: 95.5 percent
• USAA American Express: 89.5 percent
• Chase Cards: 87.5 percent
• USAA Visa Signature: 87.5 percent
• Wells Fargo Visa Card: 87 percent
• U.S. Bank Cards: 87 percent
• Capital One Visa Card: 87 percent
• All Barclay Cards: 86.5 percent
• All American Express Cards not noted elsewhere: 84.5 percent
• All Discover Cards: 83 percent
• Wells Fargo American Express Cards: 81.5 percent
• USAA Rate Advantage Platinum Visa: 81.5 percent
• All Bank of America Cards not otherwise noted: 80.5 percent
• Capital One MasterCard: 80.5
• Bank of America Better Balance Rewards: 74 percent

Does that mean you need to read all the fine print to make sure the credit card you use gives the appropriate coverage? It wouldn’t hurt, but usually there’s no problem if you’re renting a standard or compact car for a domestic vacation of 15 days or less or an international vacation 30 days or less. But Gonzalez offers these tips for anything out of the ordinary:

• Do call if you want to rent a full-size SUV, truck, convertible or exotic car.
• Do call if you may go off-roading.
• Do call to double-check international exceptions. Many credit cards don’t cover car rentals in Ireland, Israel or Jamaica. Some cards have other countries that are excluded from coverage.
• Do call if in doubt.

“You don’t need to notify your credit card company if you plan to use it [for secondary auto coverage],” said Gonzalez, “but it’s not a bad idea to call, especially if you plan to rent a specialty car or have a specific question about coverage.”

Have you ever explored the auto insurance provided by your credit card companies? Share with us in comments below or on our Facebook page.