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What You Need to Know About Credit Cards and Rental Car Insurance (It's All Changing) | Frommer's interstid/Shutterstock

What You Need to Know About Credit Cards and Rental Car Insurance (It's All Changing)

A number of cards are no longer offering rental car insurance. Here's how to find out whether you're covered—before you hit the rental counter.

This photo lies. Nobody smiles when dealing with car rental insurance.

Still, holders of the right credit cards in the past could escape having to buy insurance at the rental counter—a pricey and often unexpected fee that can add over $100 to the cost of a weekly rental.

I say "in the past" because in just the last two years, a number of major credit card companies have stopped offering free rental car insurance, according to the car rental site Autoslash.

The latest was Bank of America Cash Rewards cards. Starting in February of 2021, cardholders will have to use other means to get insurance.

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Citibank has also dropped the free insurance perk from all of its credit cards, with the exception of those cobranded with Costco. In addition, Kroger 1-2-3 Rewards Mastercards no longer carry insurance, and neither do any Discover cards. 

What Credit Card Insurance Actually Does

This all begs the question: do consumers actually need insurance from their credit cards? Or are other sources of this coverage better? Let's look at what this form of insurance does and doesn't do.

Credit card insurance comes in two forms: primary and secondary.

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If you have primary insurance on your credit card, that means that if the rental car is stolen or damaged while in your care, the rental car company won't approach the insurance agency that covers your personal car (if you own a car). Instead, the rental company will go directly to your credit card company for payment. Because of that, it is the best type of insurance to have because with it you run no risk of having your premiums rise.

But primary insurance is rarely offerred. Most cards carry secondary, and it can also be helpful. It kicks in after your primary insurance pays for damages and loss to cover any deductibles (which can sometimes be hefty, depending on the primary policy).

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As well, for those who don't own cars, and thus don't have another source of insurance, credit card insurance that's usually secondary becomes primary.

What Credit Card Insurance Will and Won't Cover

Credit card insurance won't cover damage to property beyond the rental car itself, or any monetary expenses related to injuring others with the car. But most people have personal liability insurance through other sources that provide coverage in these cases.

It's also important to remember that credit card insurance rarely covers specialty cars or those rented from peer-sharing services (like Zipcar or Ridester). Larger vehicles like trucks, vans, or cars that carry more than eight people are also excluded by most cards.

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There will be some time limits on credit card insurance, with few cards covering rentals of longer than a month.

Check, too, to see what types of coverage you'll get overseas from both your personal insurance and your credit card insurance. If your personal insurance won't cover you in a country, your secondary credit card insurance will become a primary policy, just as it would if you don't own a car.

Italy and Ireland currently require the purchase of local insurance when you rent a car; your credit card's insurance and your personal insurance won't work in those countries by law.

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Do check with both your personal insurance and your credit card company if you hope to use that coverage for other countries. Some policies cover international car rentals, but others don't—and the policies will vary from bank to bank and from card type to card type (Visa, Mastercard, Discover, American Express, what have you).

How to Know if You Have Credit Card Insurance for a Car Rental

The best way to figure out if your credit card offers rental car insurance, and what type it is, is the old-fashioned method: Call the phone number on the back of your card. Getting answers from a human being is usually far easier and more foolproof than wading through internet information.

In some cases, it's possible to upgrade your credit card insurance from secondary to primary if you pay the credit card company an additional yearly fee. You'll be able to ask about those options when you call.

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If you prefer to have things in writing, go to the website of your credit card and look for the section almost always labeled "Guide to Benefits." This should give you the lowdown on whether you're still getting car rental insurance and what type of insurance it will be.

The key right now is to make sure that you actually do this sort of checking before you rent a car. You don't want to overpay if you don't need to—or, worse, be stuck with a huge bill if something goes wrong and you're not sufficiently covered.

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