creditcardsThis is the last in the series of posts I’ve done on renting cars. I recently wrote about why I ended up using commercial car rental companies over peer-to-peer rentals on a few recent trips. And I also discussed the best credit cards to use for international rentals if you want to use your credit card for insurance. Now I’m going to talk about domestic rentals and insurance.

First as a recap, there are two main types of auto insurance for rentals: liability and collision. Anyone in the United States who has insurance on a car they own will also have liability insurance on a rental car in this country. Also, credit cards pretty much don’t offer liability insurance. So if you don’t have it, this post won’t help you figure that out.

For collision insurance I’ve been wondering which of my credit cards would be the best one to use. It turns out there are two answer to this question:

A. They’re all pretty much the same, if they offer auto insurance. Just pick one to optimize for points/miles/cash back and you’ll be fine.

B. It’s very nuanced and requires much study to figure out which one will be best for you.

And really both answers are true.

The thing is, there are differences between what cards will cover, but they only apply to the fringe cases, and for me anyway, these cases are mostly irrelevant.

From CarHub's 2016 survey of credit card insurance options (http://www.cardhub.com/edu/rental-car-insurance-credit-card-study/)

From CarHub’s 2016 survey of credit card insurance options (http://www.cardhub.com/edu/rental-car-insurance-credit-card-study/)

Look at that chart: those are not very big differences! That’s what I mean when I say they’re all pretty much the same. And in fact the things that are driving those differences are mostly irrelevant to me, and probably most renters.

If you’re doing any of the following you might want to do a deep dive into benefit comparisons:

  • Renting an exotic car, truck, or full size SUV
  • Renting a car for more than 15 days
  • Driving offroad
  • Concerned about loss-of-use costs (i.e. if the car is totaled you will need a back up rental immediately)

Another difference that might be really useful if you do get in an accident is using a card that offers primary insurance instead of secondary. It took me a lot of reading to figure out why this matters. If you deny the rental agency’s coverage, you will be covered regardless of whether you use a credit card that offers primary or secondary coverage. But if the card offers primary insurance they won’t first ask your auto insurance company (the one you use with the car you own) to pay. Obviously your insurance company will deny the claim because they don’t cover rentals, but they might use this claim to raise your rates. So secondary insurance could have costly repercussions.

Many business cards offer primary insurance, and a handful of personal ones do too. Almost all of them are from Chase. Here’s a list someone compiled. 

Amex also offers primary coverage for purchase at a very reasonable rate. All American Express cards offer premium primary coverage for a flat rate of $19.95 or $24.95 ($15.95 or $17.95 for California residents) for a rental period of up to 42 days (up to 30 days for Washington State residents). The more expensive option includes higher thresholds for medical expenses and coverage like accidental death and dismemberment.

After all this research what credit card will I use for auto rentals in the U.S.?

I concluded that most of the time my best best is using a card that gets a bonus for transportation spend, like my Citi ThankYou Premier card. For longer trips, or those I deem somehow a bigger risk, I might spring for the Amex premium coverage.

And for the record, I did once have an accident while using a credit card for coverage and it was actually super easy to get things paid for. I believe it was an Amex but this was so many years ago I can’t remember for sure. The car was totaled and I submitted the claim and it was paid without any hassle or even any further questions. Getting my medical insurance to pay my hospital bill was, on the other hand, a two year ordeal.