If your summer plans involve getting behind the wheels of a rental car, either for an epic road trip or to go sightseeing once the plane lands, you’ll almost certainly get asked to pay extra for insurance. Liability? That’ll be $15 a day. Damage waiver? $9. Roadside assistance? $8.
Before you let your fears take over and say yes, “just in case,” take a few seconds to consider this: adding optional insurance can literally double your daily rate and cause you to pay for extra coverage you don’t need.
Just say no to optional insurance
If you have collision and comprehensive coverage on your own car, then you can skip the loss-damage waiver or collision damage waiver. Same goes if you have a credit card that offers this waiver—and most do. "If you decline the rental company's supplemental insurance, and charge the rental cost on your credit card, you're automatically covered by the credit card rental car insurance policy,” said Jill Gonzalez, a WalletHub analyst. “That will cover you in the event of damage or theft."
What's not covered
Unless you have the American Express Centurion Card, your credit card almost certainly won’t cover liability, which is damage to another person’s car or property in addition to their medical expenses. If you have liability insurance on your personal car, however, you are covered.
Cards also often exclude coverage on specialty vehicles like motorcycles, antique cars or trucks. If you’re renting overseas, some countries are excluded as well, depending on which card you use. CreditCards.com has a list here. In some cases, coverage is limited to rentals of 15 days or less. You may also need to pay a deductible of up to $500 if your rental is damaged and your credit card doesn’t offer secondary insurance.
Most importantly, be sure to pay for the rental car with the credit card that offers coverage or that insurance won't kick in.
Primary v. secondary coverage
“Most cards that cover auto rentals provide secondary coverage, which means if you have an accident in a rental car, the credit card insurance only kicks in after you've first looked to your own personal auto insurance policy, which could lead to higher premiums down the road,” Julian Kheel, Senior Editor at the Points Guy, said. If you don’t have personal auto insurance, however, then the secondary coverage on your card becomes primary by default.
A few cards offer primary coverage, which can eliminate the deductible and help keep your personal insurance rates low in case of an accident. Chase Sapphire Preferred pays for the cash value of the car in the case of theft or damage, for example, while Chase Sapphire Reserve pays up to $75,000 and offers free roadside assistance.
One last tip: to avoid a dispute with your rental car company, take pictures of the vehicle before you drive away from the lot. That way you’ll have a photographic record of any dents or scratches the car already had when you got it.