NerdWallet: What’s not covered by credit card rental car insurance

When you decline coverage at a rental car agency in favor of the protection your credit card offers, you’ll probably face that dreaded question from the salesperson: “Are you sure?”

You know your credit card’s policy doesn’t cover absolutely everything. But at the same time, you don’t want to pay upward of $10 a day at the last second for coverage you might not need. So instead of making a split-second decision at the counter, review your options beforehand. Here’s what your credit card protection might not cover.

Loss or damage already covered by your own auto insurance

Before leaning on your credit card for rental car protection, find out whether it offers primary or secondary coverage. To do this, ask your issuer.

“The coverage on credit cards typically isn’t primary insurance,” says Neil Abrams, president of Abrams Consulting Group, a global consulting and research firm specializing in ground transportation and car rentals. “It’s secondary insurance, which means your own [auto] insurance stands in front of your credit card insurance.”

Even so, this coverage can be valuable. If your card offers secondary coverage through an auto rental collision damage waiver, or CDW, it may pick up the bill for certain costs that aren’t covered, such as your auto insurance deductible. And if you don’t have auto insurance, or are driving in a country where your auto insurance doesn’t cover you, your card’s policy may become primary. For many, that’s reason enough to skip the expensive coverage sold at the counter.

Read: These are the types of insurance you need, and the ones you can skip

Even if you want more protection, buying primary coverage separately at the rental car agency or through a third party company — such as Allianz AZSEY, -1.62%   Travel or Bonzah — isn’t your only option. You could also use a credit card that comes with primary protection. Chase, for example, offers primary coverage on many of its credit cards. With American Express AXP, +0.04%   cards, you can generally pay extra for primary coverage that’s much cheaper than the policies you can buy at a rental car agency. Terms apply.

Certain vehicles, including RVs and luxury cars

Wrecking a Ferrari could prove much more expensive than wrecking a Nissan NSANY, -4.38%   Altima, and your credit card auto rental CDW takes that into account. Generally, luxury vehicles and other high-value cars are excluded from your card’s coverage. In some cases, you might have to provide more paperwork to the rental car agency when renting cars like these, too.

“For specialty vehicles, luxury vehicles and high-value vehicles, many rental car companies may require you to provide your own insurance,” Abrams says.

Likewise, your credit card might not cover you when you’re renting recreational vehicles, motorcycles, trucks and trailers. In that case, find out whether your personal auto insurance or homeowners insurance policies cover you. If they don’t, purchasing separate coverage — say, through a rental car agency or a third party company —  could be a smart call.

Rental cars in certain countries

Although you can generally rely on your card’s auto rental CDW outside of the U.S., some countries are excluded from these policies. Consider:

  • Visa: V, -0.11%   Coverage excludes “theft or damage from rental transactions that originated in Israel, Jamaica, the Republic of Ireland, or Northern Ireland,” according to terms. It’s also not available  where it’s prohibited by law or violates the territory terms of the auto rental agreement or prohibited by individual merchants.
  • Mastercard: MA, +0.74%   Coverage excludes “vehicles rented in Republic of Ireland, Northern Ireland, Israel, Jamaica,” according to the terms. It’s also not valid in countries where it’s prohibited by that country’s law or its terms are in conflict with the laws of that country.
  • American Express: Coverage excludes “rental vehicles rented in Australia, Italy, New Zealand and any country on the [Office of Foreign Assets Control] sanctioned country list,” according to the terms.

If you’re renting a car outside of your card’s coverage area, factor that into your budget. You might have to purchase protection separately through the rental car agency or a third party company.

Long-term rentals

Credit card rental car coverage is designed for short-term rentals, generally shorter than a month. You usually won’t see such restrictions when you’re paying for coverage separately at a daily rate at the rental counter or through a third party company.

Also on MarketWatch: Should you let your car insurer monitor you?

Terms vary. But in general, Mastercard’s auto rental CDW typically doesn’t apply to rental periods that “exceed or are intended to exceed 15 consecutive days.” Visa’s policy typically comes with a similar restriction, though it covers longer rentals when you’re traveling outside of the U.S. AmEx typically covers rentals lasting 30 consecutive days or fewer, though you can pay for longer-term coverage. Terms apply.

Careless driving

Credit card rental car protection doesn’t cover everything. But other policies you might purchase — say, at a rental car agency or through a third party — also come with caveats. No matter what policy you decide to go with, loss or damage might not be covered if you’re:

  • Driving on certain surfaces. Driving on unpaved roads or off-road carries more risk and may be excluded from coverage.
  • Being negligent. If you leave the car unattended and running, for example, you could be on the hook if the car is stolen.
  • Driving while intoxicated. If you’re under the influence of alcohol or drugs when you wreck, you’ll be responsible for any damage.

Treat the rental car with extra care, regardless of whether you get coverage through your credit card or elsewhere. That way, when you need coverage, it’ll be there for you.

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