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Credit Cards and Rental Car Insurance: How It Works

Rent a car and it’s guaranteed you’ll be asked if you’d like purchase separate insurance coverage that will pay for any damage that may be caused while driving the vehicle.

Many consumers don’t know what to do in this situation or if their auto insurance policy will cover the vehicle they’re renting. The answer depends on your auto insurance policy’s language but many policies exclude such coverage.

However, many credit cards include protections or “coverage” if your rental car is damaged or stolen. Before you travel, you need to check to make sure your credit card provides rental car coverage.  Make sure to read the terms of your credit card agreement carefully to ensure that you qualify for coverage.

If you do have coverage, here are some typical things that you’ll need to be aware of (although all policies are different):

• For coverage to apply, you must typically pay for your car rental in full using the credit card providing coverage for any potential loss;
• You must typically rent an applicable car (some are excluded);
• You must typically rent the car under your name and be a driver listed on the rental;
• You may be required to decline any coverage offered by the rental company before coverage under your credit card agreement is available;
• You will almost certainly be required to promptly notify your credit card company after any damages or theft and provide all applicable documents requested to complete the company’s coverage investigation.

Many credit card companies provide these coverages for damage caused to your rental by a crash, vandalism or theft. However, most credit card companies (and most auto insurance policies) will not cover large vehicle rentals (e.g. limousines or tour buses) or premium sports cars.

Primary vs. Secondary Coverage

Some credit cards offer primary coverage. In the event of an accident, you call them first and they will bear responsibility for all damage to the vehicle. This is the ideal coverage because your insurance company won’t need to pay out damages and potentially raise your insurance rates as a result. Check with your credit card company to see if they offer primary car rental coverage.

Most credit card companies, however, offer some type of secondary coverage – your credit card company will bear secondary liability, meaning your car insurance will be the first one liable to pay for the damages (if coverage exists). The credit card company will cover any remaining costs, which may include the deductible required by your insurance company or downtime charged by the rental company.

When in doubt, always call your credit card company and review the terms of your agreement. While we hope you do not have to face an unfortunate incident, being prepared ahead of time will spare you of confusion, time and money down the road.

If you’ve been in an accident and your claim has been wrongfully denied, do not hesitate to call the Austin car wreck attorneys at TK Injury Lawyers immediately. We are available 24/7 at 512-910-2000 to provide a free initial consultation and case evaluation.