Primary vs. Secondary Auto-Rental Collision Coverage on Travel Credit Cards

One of the many valuable credit card benefits offered by travel credit cards is auto-rental insurance. This benefit can help you save money when you rent a car by insuring you against accidents.

What many people don’t know is that there are two types of auto-rental insurance offered by your card's benefits: primary and secondary coverage.

Most credit cards only offer secondary coverage. Generally, primary coverage is better to have than secondary coverage.

Learn the difference between the two, in addition to other relevant details that are important to know if you ever get into an accident with a car rental.

What is Secondary Coverage?

Secondary coverage is a type of auto-rental insurance coverage that you can take advantage of.

Usually, secondary coverage involves a deductible, so you’ll be on the hook for a portion of the cost of any damage you incur. Additionally, there might be limits and restrictions on secondary coverage.

This could result in the insurance failing to cover the full amount of the damage, or other fees associated with returning a damaged rental car.

There is a very big difference between secondary coverage and primary coverage. Secondary coverage applies after your personal car insurance.

If you have an accident: You need to file a claim with your own insurance company first. Once your insurance company pays out whatever amount it deems proper, you can file a claim with a secondary coverage insurer.

You can consider secondary coverage as a backup system. It’s there if you need it and your personal insurance won’t cover your bill, but it won’t be your first line of defense.

What is Primary Coverage?

Primary coverage is offered by far fewer credit cards but is more useful.

For one, primary coverage kicks in before your personal car insurance.

If you have an accident: You won’t need to file a claim with your personal insurance company.

That means you won’t have to worry about your personal insurance premiums increasing.

Additionally, primary insurance will cover the full cost of damage or theft of nearly any rental car. Primary coverage insurers publish maximums, but these usually exceed the total value of nearly any car that is covered.

Important Notes on Car Rental Coverage by Credit Cards

As you might expect, travel credit cards come with a long list of fine print when it comes to their benefits.

The complimentary car rental insurance from credit cards is no different. We identified some of the key details that you should be aware of.

Use secondary coverage as primary coverage

One good thing to know is that you might be able to use secondary coverage insurance as primary insurance.

If you don’t have personal car insurance, your secondary coverage might serve as primary coverage.

You’ll still have to pay attention to the insurance limits and maximums, but you’ll still be able to take advantage of the benefit.

Bring your own liability coverage

Another thing to note is that most primary and secondary coverage insurance plans do not offer liability insurance.

If you get into an accident and are at fault, the coverage will cover the car you rented. What won’t be covered is any damage you do to other vehicles or any injuries you cause to pedestrians, passengers, or other drivers. You’ll be personally liable for those costs.

If you have personal car insurance, it would likely kick in here. If you don’t have personal car insurance, you’ll have to pay for the expenses out of your own pocket.

Most car rental companies require that you have at least a minimum amount of liability coverage to rent a car. They offer this liability insurance as an add-on when you rent the car.

Long-term rentals not covered

If you’re traveling for a long time, you should take a close look at the terms of your card’s coverage details.

Most cards’ plans are intended to provide short-term rental insurance.

If you’re renting a car for more than a few weeks at a time, it’s likely that your credit card’s coverage will not apply.

Coverage does not apply in every country

If you’re traveling overseas, double check that your card’s coverage applies in the country you’re visiting.

While you won’t have trouble in most countries, there are a few that are commonly excluded.

These countries include Israel, Italy, Ireland, New Zealand, Jamaica, and Australia.

Not all vehicles are covered

If you’re renting standard cars, like a compact, SUV, or other normal cars, you won’t have any issues.

On the other hand, rent a non-standard vehicle like a motorcycle, passenger van, or sports car and your coverage might not apply. If you’re planning to rely on your card’s insurance coverage, stick to a typical vehicle.

Watch for exclusions

Before you rent a car using your card’s insurance coverage, read the fine print.

Some policies have very strict requirements or specific exclusions that could cause you to lose coverage.

For example, some policies will refuse to cover your rental if you drive on unpaved roads. Others give you a very limited time to file a claim in the event of an accident.

Also, make sure that your plan will cover the rental even if you aren’t the person driving at the time.

Does Your Personal Auto Insurance Matter?

When you rent a car, your personal auto insurance still matters. Just because you’re driving a different car than you usually do does not mean that your insurance no longer covers you.

Possibly the most important aspect of your personal auto insurance is the liability coverage.

Liability insurance isn’t usually included. If you are at fault for an accident, liability coverage will cover the costs of damage to other vehicles. It will also cover the cost of any injuries suffered by other people that are involved.

If you’re relying on secondary coverage for your car rental, your personal auto insurance is actually incredibly important.

Secondary coverage will only kick in once you’ve exhausted the coverage offered by your personal insurance policy. This includes insurance for collision damage to the vehicle you’ve rented.

If you decline to purchase insurance from the rental company, your personal insurance will have to cover damage to the car.

How to Make Sure Credit Card’s Coverage Applies to a Rental Car

There are a few things you need to do to make sure the coverage offered by your credit card applies to your rental.

1. Decline rental company’s collision damage waiver (CDW)

A CDW is a type of insurance that is available on rental cars.

When you purchase a CDW, you’re purchasing a waiver from the rental company, making them agree to cover the cost of damages to the car you’re renting.

If you waive the CDW, the rental company can pursue you for the cost of damages.

To make use of your card’s insurance benefit, you should not purchase the CDW.

2. Make sure that you are the primary renter

When you rent a vehicle, you might have to provide a list of all the people who will drive the vehicle.

If you’re not listed as the primary renter, your credit card’s coverage might not apply.

3. Use one card for full payment

Make sure to pay for the rental in full using the card that provides the insurance coverage.

If you use a different card, you won’t get to take advantage of the benefit.

Is There a Benefit to Purchasing the Rental Company’s Insurance Instead?

The benefit of using your credit card’s insurance coverage over the rental company’s is that it’s cheaper.

You can save money by declining to purchase the insurance offered by the rental company.

Thanks to your card’s coverage, you’ll still know that you’re covered should something happen.

There is, however, a benefit to using the insurance offered by a car rental company. Most cards offer only secondary coverage. The insurance offered by car rental companies is primary coverage.

If you get into an accident and only have secondary coverage, you have to ask your personal car insurance company to cover the accident. As a result, your insurance rates are very likely to go up.

When you purchase the insurance offered by the rental company, that insurance will be the primary coverage for your rental car.

If you get into an accident, you don’t have to involve your personal insurance company. All you have to do is notify them of the accident. In most cases, this won’t cause any change to your personal insurance premiums.

Purchasing insurance from the rental company might cost more in the short-term.

However, it can save you from increased premiums if you get into an accident.

Whether you want to take the risk and rely on your credit card’s insurance coverage is up to you.

Conclusion

Many credit cards offer auto-rental insurance as a benefit, but usually, this insurance comes in the form of secondary coverage.

Secondary coverage only covers you after you’ve used your personal insurance coverage.

If you want the best insurance you can get from a credit card, look for a card that provides primary coverage.

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