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About Renting Cars in the United States
For anyone living in the U.S., renting a car is more or less unavoidable from time to time. If an accident happens while you are renting a car and you have to use your own insurance, not only may you have a deductible, but your future premiums can also increase significantly. However, the Collision Damage Waiver (CDW) offered by rental car companies is usually quite expensive, sometimes around ~$20 per day, which can become a sizable expense for longer rentals. Fortunately, many U.S. credit cards offer CDW coverage. As long as you use one of these cards to pay the full rental cost and the cardholder is the primary renter, you can receive complimentary CDW. This post introduces and compares the CDW benefits offered by these cards.
If you have questions about other aspects of renting cars, you can refer to our post:
What Are CDW, Liability, and SLI?
CDW stands for Collision Damage Waiver. Strictly speaking, it is not insurance, but after you purchase CDW, you may be released from responsibility for damage to the rental vehicle if an accident occurs. For that reason, people often loosely refer to it as rental car insurance.
The first thing to understand is that credit card CDW benefits are divided into Primary CDW and Secondary CDW. Primary CDW means that after a qualifying loss to the rental vehicle, you can use the rental car coverage provided by your credit card first, without having to file a claim with your own auto insurance first. Secondary CDW generally provides coverage after your own auto insurance, such as reimbursing the deductible or covering eligible portions that your own insurance does not cover. The exact claims process still depends on each card’s Guide to Benefits. Some Secondary Coverage benefits do not even require you to actually file a claim with your own insurance first, but they may require you to provide your auto insurance information.
If you do not have your own auto insurance, Secondary CDW may also be able to handle damage to the rental vehicle directly in some situations, so you should not simply assume that Secondary CDW is completely useless. However, if you normally have full coverage auto insurance, I still prefer using a credit card with Primary CDW for car rentals. That way, if an accident happens, you do not have to involve your own auto insurance unless necessary. This post mainly discusses Primary CDW.
Second, CDW only covers damage to the rented vehicle. It does not cover damage to the other party’s vehicle or injuries/death to people involved in the accident. Those items are covered through liability insurance. If you normally drive your own car, your auto insurance company’s liability coverage generally includes accidents that occur while you are renting a car. Some states require rental car companies to provide a certain amount of liability insurance. If you rent in those states, the rental rate includes the cost of that insurance, but because the coverage amount is basically the state-law minimum, I do not recommend relying on it too heavily.
SLI (Supplemental Liability Insurance): this is essentially the part of auto insurance that covers other people.
What Insurance Should You Buy When Renting a Car?
You can match your situation to the scenarios below.
If you have your own car, have full coverage, and have a credit card with primary coverage:
- Just use the credit card with primary coverage to rent the car, and remember to decline the rental company’s CDW/LDW. Whether you need to buy Liability/SLI depends on the liability coverage provided by your own auto insurance.
If you have your own car, have full coverage, and only have credit cards without primary coverage:
- You have two options: 1. buy the rental company’s LDW; 2. use a credit card with Secondary CDW to rent the car, while accepting the risk that after an accident you may first need to file a claim with your own auto insurance, and then the credit card coverage may reimburse the deductible or other eligible portions not covered by your own insurance.
If you have your own car, have full coverage, and do not have a credit card:
- You have two options: 1. buy the rental company’s LDW; 2. do not buy it, but be prepared to pay the deductible under your own insurance policy if an accident occurs.
If you have your own car, only have liability coverage, and have a credit card:
- Prioritize using a credit card with rental car collision coverage, and confirm that card’s Guide to Benefits in advance. If you qualify, you can decline the rental company’s CDW/LDW, but the Liability portion still depends on your own auto insurance.
If you have your own car, only have liability coverage, and do not have a credit card:
- Just go ahead and buy the rental company’s LDW.
If you do not have your own car but have a credit card:
- Use a credit card with CDW to handle collision and theft coverage for the rental vehicle itself. The Liability portion needs to be considered separately; buy the rental company’s SLI if necessary.
If you do not have your own car and do not have a credit card:
- Just go ahead and buy the rental company’s SLI and LDW.
Which Cards Offer Primary CDW?
Below are some of the more common credit cards that currently offer Primary CDW or allow you to obtain Primary CDW. Credit card insurance benefits may change, so before renting a car, it is still best to check the latest Guide to Benefits for your own account:
| Issuer | Credit Card | Annual Fee | Primary CDW | Price |
|---|---|---|---|---|
| Chase | Sapphire Preferred | $95 | Offered, up to $60,000 | Free |
| Chase | Sapphire Reserve | $795 | Offered, up to $75,000 | Free |
| Chase | United Explorer | $150 (annual fee waived the first year) | Offered, up to $60,000 | Free |
| Chase | United Quest | $350 | Offered, up to $60,000 | Free |
| Chase | United Club | $695 | Offered, up to $60,000 | Free |
| Chase | Ink Business Cash | $0 | Offered for business rentals, up to $60,000 | Free |
| Chase | Ink Business Unlimited | $0 | Offered for business rentals, up to $60,000 | Free |
| Chase | Ink Business Preferred | $95 | Offered for business rentals, up to $60,000 | Free |
| Citi | Strata Premier | $95 | Offered outside your country of residence; Secondary within your country of residence | Free |
| Citi | Strata Elite | $595 | Offered outside your country of residence; Secondary within your country of residence | Free |
| Capital One | Venture X | $395 | Offered | Free |
| AMEX | Eligible American Express credit cards | Depends on the card | Offered after purchasing Premium Car Rental Protection | $12.25-$24.95 per rental |
Currently, the Primary CDW on cards such as the Chase Sapphire Preferred, United Explorer, United Quest, and United Club pays up to $60,000, and usually requires the rental car’s MSRP to be no more than $125,000. The Sapphire Reserve offers a higher coverage limit of up to $75,000, and its current terms do not have the Sapphire Preferred’s $125,000 MSRP limit. However, every card has excluded vehicle types and excluded uses, so you should not look only at the payout limit.
How Should I Choose a Credit Card for Car Rentals?
The more common cards that offer free Primary CDW for personal rentals mainly include the Chase Sapphire Preferred, Sapphire Reserve, several United credit cards, and the Capital One Venture X. The Citi Strata Premier and Strata Elite are somewhat special: coverage is Secondary within your own country of residence, but Primary outside your country of residence. The rental car insurance on the Chase Ink series is also very good, but its Primary Coverage is mainly for business rentals.
If you already keep the Sapphire Preferred long term, then of course I recommend using the Sapphire Preferred for car rentals: in addition to the complimentary CDW, you also earn 2x UR points. If you have a card such as a Chase UA card, using it for rental cars is also a good choice. If you have the Sapphire Reserve, it now provides up to $75,000 in coverage for rental car collision and theft, so the coverage limit is a bit higher. Capital One Venture X also currently provides Primary Coverage, making it another good option.
If you do not have any card that offers free Primary CDW, then we need to consider AMEX’s paid option. The rental car collision coverage included with most eligible AMEX cards is Secondary Coverage, but you can first enroll an eligible credit card in Premium Car Rental Protection. After that, when you use that card to pay for an eligible car rental, you are charged once per rental rather than per day, and you receive Primary Coverage. The current price varies by state and by the coverage plan selected, ranging from $12.25-$24.95. In general, one rental can be covered for up to 42 days.
You should evaluate how often you rent cars each year. If you rent frequently, it may be better to keep the Sapphire or another credit card that includes free Primary CDW long term. Sapphire Preferred in particular is already very valuable on its own, since UR points can be transferred to various airlines and hotels, and you do not need to buy extra insurance every time you rent a car.
Other Things to Keep in Mind
Here are a few other things to keep in mind:
Renting Outside the United States
In the past, many people simplified this as: “My own US auto insurance does not work abroad, so Secondary CDW naturally becomes Primary overseas.” In reality, that is not necessarily true. Different credit cards have different terms for rentals outside the United States, so you should rely directly on the latest Guide to Benefits for that specific card.
For example, Chase Sapphire Preferred and Sapphire Reserve currently both explicitly provide Worldwide Primary Auto Rental Coverage. Citi Strata Premier and Strata Elite provide Secondary Coverage within the cardholder’s country of residence, and Primary Coverage outside the country of residence.
In addition, some countries or rental companies do not allow you to decline the local rental company’s own CDW/LDW. Using Chase’s current terms as an example, if you rent outside the United States and the rental company does not allow you to decline its CDW/LDW, the credit card coverage becomes Secondary Coverage after the rental company’s CDW/LDW.
AMEX Premium Car Rental Protection currently covers most rentals outside the United States, but Australia, Ireland, Israel, Italy, Jamaica, and New Zealand are not covered. So before renting abroad, you should definitely read the latest Benefit Guide for your specific credit card, and if necessary call the Benefit Administrator in advance to confirm.
Prepare Proof of Coverage for International Rentals
When renting in the United States, you generally will not be asked to specifically prove that your credit card includes CDW. Outside the United States, however, it may be different. Some overseas rental companies may not understand rental car coverage provided by US credit cards, and they may ask you to provide proof of insurance when you pick up the car. If you cannot provide it, they may require you to buy their own CDW, or they may place a relatively large preauthorization hold on your credit card.
If you run into this situation, you can contact the credit card’s Benefits Administrator a few weeks before departure and request a Proof of Coverage / Coverage Letter. Ideally, the letter should explicitly state which countries the card covers and what type of rental car coverage it provides. After receiving it, save an electronic copy and also print a copy to bring with you when picking up the car. Chase’s current Sapphire Preferred and Sapphire Reserve Guide to Benefits also explicitly states that some countries or rental companies may require a Letter of Coverage.
Vehicle Type Restrictions
Ordinary sedans and SUVs that people commonly rent for everyday use are usually eligible for the complimentary CDW provided by credit cards, but some unusual vehicle types are often excluded, such as motorcycles, large vans or trucks, recreational vehicles, antique cars, and chauffeur-driven vehicles. Luxury cars and Exotic Cars depend on the specific credit card. For example, Sapphire Preferred currently excludes Exotic Vehicles and vehicles with an MSRP over $125,000, while Sapphire Reserve’s terms are relatively more lenient, but the total reimbursement is still capped at $75,000. Again, I recommend carefully reading the benefit guide before renting, and if necessary calling the bank to confirm that the CDW applies.
Rental Duration Limits
Chase Sapphire Preferred and Sapphire Reserve currently cover up to 31 consecutive days per rental. Citi Strata Premier and Strata Elite likewise currently have a limit of 31 consecutive days. AMEX Premium Car Rental Protection generally covers up to 42 days per rental, while Washington State residents are limited to up to 30 days. For most people, that is enough, but for long-term rentals you should check the specific terms of your credit card in advance.
Other
Finally, do not forget that when renting a car, you must complete payment according to the credit card’s Guide to Benefits, and you must decline the rental company’s CDW/LDW, rather than broadly declining all insurance offered by the rental company. Liability/SLI, for example, is not something covered by credit card CDW, so whether you need to purchase it depends on your existing auto insurance and local regulations.
In addition, the cardholder must be the Primary Renter, and everyone else who drives must satisfy the rental agreement’s requirements for Additional Driver(s). If an accident occurs while the car is being driven by someone not permitted to drive under the rental agreement, you may very likely lose the coverage provided by the credit card because the rental agreement was violated.
