Car Rental Insurance Guide – Read Before Renting!

Renting a car is a necessity when traveling to many cities, but it’s also important to make sure that you’re protected should you cause any damage to your car, or any other car. Car rental agencies as well as OTAs offer many different products, some of which are entirely unnecessary, especially if you use the right credit cards to make the car reservation.

Our friends at DansDeals recently posted a very informative post on this subject and we wanted to share the main points that travelers should be aware of as well as which credit cards give you the best possible protections for your reservation. 

→ There’s liability insurance and there’s the collision damage waiver insurance (CDW). 2 different things.

→ No credit card covers liability insurance, but you might already be covered in the U.S.

When you drive in the US, you need to have liability coverage which covers damage to other people and their property. If you own a car and are insured, you’ll be covered when you rent a car in the US, so there’s no need to take out liability insurance. If you don’t own a car you can rely on the state minimum liability that the car rental agencies are required to provide free of charge. However, you can be on the hook if you cause damage in excess of the minimum requirement, so you may want to take out that coverage if you don’t have a personal car insurance policy. Note that in California and Texas, there is no state minimum liability, so any damage you cause will be your responsibility.

→ In some countries, like Israel and Mexico, you are always required to pay for liability insurance.

→ Many credit cards provide CDW insurance. That covers damage that occurs to your rental car. However, most cards only provide secondary coverage in your home country, which means that if you have your own car insurance you would have to file a claim with them and only if they deny it will the credit card cover the damage.

American Express cards have the option to add a premium car rental insurance option that changes coverage from “Secondary” to “Primary”, but that will set you back about $20 per rental. (You can automatically set that up that every time you use a specific AMEX, it charges your card $20. Click here)

→ 2 popular Chase cards provide free primary CDW coverage even in your home country, the Chase Sapphire Preferred and the Chase United Explorer. If you damage your rental car, then those 2 cards will cover the damage without having to file a claim with your personal auto insurance policy. Additionally, you can use one of the Chase INK business credit cards, which has the same protections as the Sapphire Preferred, but only if you are using the car for business purposes.

All of these aforementioned Chase cards have no foreign transaction fees if used abroad.

The Sapphire Preferred also gives 2x points on car rentals, making it the best card to use when renting a car anywhere in the world.

→ Most cards exclude CDW coverage in select countries such as Israel and Jamaica.  All Chase cards provide coverage worldwide, including Israel.  Just call the number on the back of your card to be connected with the CDW insurance department who can provide you with a letter of coverage to provide the car rental agency in any country that you specify.

→ In a country like Israel, you’ll still need to purchase liability insurance, but you won’t have to pay the CDW insurance. This is a good thing as the basic CDW insurance in Israel comes with a high deductible; so even if you pay the daily CDW fee you may still wind up paying for the small scratches that car rental companies in Israel love to charge to everyone without ever repainting their cars.

With CDW coverage insurance from your credit card, there is no deductible as long as you decline to take out the CDW coverage from the car rental agency.  You won’t be responsible for a thing as long as you use the right card.