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About Renting a Car in the US
If you live in the US, renting a car is often hard to avoid. If you get into an accident and have to use your own insurance, not only do you have to deal with a deductible, but your future premiums may also increase substantially. Meanwhile, the Collision Damage Waiver (CDW) offered by rental car companies is usually quite expensive, often as much as ~$20 per day, which can add up quickly on a longer rental. Fortunately, many US credit cards offer CDW coverage. As long as you pay the full rental cost with one of these cards and the cardholder is the primary renter, you can get complimentary CDW coverage. This article introduces and compares the CDW benefits offered by these cards.
If you have questions about other aspects of car rentals, you can also check out this article on our site:
What Are CDW, Liability, and SLI?
CDW stands for Collision Damage Waiver. Strictly speaking, it is not insurance. However, if you purchase CDW and the rental car is involved in an accident, your responsibility for damage to the rental vehicle can be waived, so it is often loosely referred to as rental car insurance.
The first thing to understand is that credit card CDW benefits come in two forms: Primary CDW and Secondary CDW. The difference is that the former applies regardless of other insurance, while the latter is only effective if you can prove that you have no other form of coverage. The vast majority of credit cards offer Secondary CDW. These benefits are only useful if you do not have your own auto insurance, or if your insurance does not cover rental cars, which is relatively rare. On top of that, the claims process is often extremely complicated, so in practice Secondary CDW is usually not very useful. This article discusses Primary CDW only.
Second, CDW only covers damage to the rental car itself. It does not cover damage to the other party’s vehicle or bodily injury/death suffered by others in the accident. Those items are covered by liability insurance. If you normally own and drive a car, your own insurance company’s liability coverage generally extends to accidents that happen while driving a rental car. In some states, rental car companies are required to provide a certain amount of liability coverage. In those states, the rental rate includes the cost of that coverage, but because the coverage amount is usually just the minimum required by state law, it is generally not a good idea to rely on it.
SLI (Supplemental Liability Insurance): this is essentially the part of auto insurance that covers damage or injury to other people.
What Insurance Should You Buy When Renting a Car?
Just find the situation that matches your own:
- If you own a car, have full coverage, and have a credit card with primary coverage
- Just rent with the card that offers primary coverage, and remember to decline any insurance offered by the rental car company.
- If you own a 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 any credit card to rent, but accept the risk that if something happens you will need to file a claim with your own insurance.
- If you own a 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 required by your own insurance policy if something happens.
- If you own a car, only have liability coverage, and have a credit card
- This is the easiest case: just rent with your credit card and remember to decline any insurance offered by the rental car company.
- If you own a car, only have liability coverage, and do not have a credit card
- You should just buy the rental company’s LDW.
- If you do not own a car, but do have a credit card
- You should buy the rental company’s SLI, then rent with your credit card.
- If you do not own a car and do not have a credit card
- You should buy both the rental company’s SLI and LDW.
Which Cards Offer Primary CDW?
Below is a list of common credit cards that offer Primary CDW (we are ignoring cards like JPM Pd):
| Issuer | Credit Card | Annual Fee | Primary CDW | Cost |
|---|---|---|---|---|
| Chase | Sapphire Preferred | $95 | Yes | Free |
| Chase | Sapphire Reserve | $95 | Yes | Free |
| Chase | Ink Cash | $0 | Yes, for business rentals | Free |
| Chase | Ink Preferred | $95 | Yes, for business rentals | Free |
| Chase | Ritz-Carlton | $395 | Yes | Free |
| Chase | Southwest Premier Business | $99 | Yes, for business rentals | Free |
| Chase | UA Explorer | $95 | Yes | Free |
| Chase | UA Explorer Business | $95 | Yes, for business rentals | Free |
| Chase | UA Club | $450 | Yes | Free |
| Chase | UA Club Business | $450 | Yes, for business rentals | Free |
| Citi | Thankyou Premier | $95 | Yes, outside the US | Free |
| Citi | AAdvantage Business | $95 | Yes, for business rentals | Free |
| Discover | Escape | $0 | Yes | Free |
| AMEX | All credit cards/charge cards | Varies | Yes | $24.95/$19.95 |
How Should I Choose a Credit Card for Car Rentals?
As you can see, among the cards listed in the table, once you exclude cards that are Business Trips Only and remove some uncommon cards or cards people typically would not keep long term, the main options left are basically Chase Sapphire Preferred, Chase UA Explorer, and AMEX cards.
If you already keep Sapphire Preferred long term, then of course it is recommended for car rentals. In addition to the free CDW, you can also earn 2x UR points. If you have cards like Chase UA or Chase Ritz-Carlton, they are also solid choices for rentals.
If you do not have any of the cards that offer free CDW, then you may have to consider AMEX cards. All AMEX cards come with Secondary CDW, and you can upgrade that to Primary CDW for a fee on this page. For each rental period (up to 42 days), the cost is $24.95/19.95 depending on the coverage amount. California residents pay slightly less: $17.95/$15.95.
You should estimate how often you rent cars each year. If you rent four or five times annually, it may make more sense to keep Sapphire or Chase UA long term instead. After all, Sapphire itself offers strong value because UR points can be transferred to various airlines and hotels, while Chase UA at least offers a free checked bag.
Other Things to Keep in Mind
There are also a few additional points worth noting:
Renting Outside the US
In general, your own auto insurance only covers accidents in the US, sometimes also including Canada and Mexico. So when you rent a car in other countries, you effectively become an uninsured person, and in that case Secondary CDW functions much like Primary CDW. That means the specific card you use matters less. Citi Thankyou Premier is somewhat special: within the US it only offers Secondary CDW, but outside the US it provides Primary CDW whether or not the cardholder has local auto insurance, making it especially suitable for international rentals.
However, not all cards offer worldwide CDW coverage. Among the cards listed above, most do not provide CDW in Israel, and AMEX at least does not provide CDW in Australia, Israel, Ireland, Italy, New Zealand, and Jamaica. These six countries are also commonly excluded by other cards’ CDW benefits, possibly because of local laws. Sapphire has the broadest coverage, including Israel. Be sure to read the benefit guide carefully before renting, and call the issuer if necessary to confirm that the CDW benefit is valid.
Vehicle Type Restrictions
Ordinary sedans and SUVs that people usually rent for everyday use are typically covered by the complimentary CDW offered by credit cards. However, unusual vehicle types such as motorcycles, trucks, other specialty vehicles, and various luxury cars are generally not covered. Credit card coverage also usually comes with a vehicle value cap. Again, it is best to read the benefit guide carefully before renting, and call the bank if necessary to confirm that the CDW benefit applies.
Rental Duration Limits
AMEX cards allow up to 42 days per rental, while various Chase cards and Discover Escape allow up to 31 days per rental. For most people, that is more than enough.
Other
Finally, do not forget that you must pay the full rental cost with a single card, and you must decline the rental company’s CDW. In addition, the cardholder must be the Primary Renter. Anyone else who will drive the car must be listed at the time of rental as an Additional Driver(s). If an unlisted driver gets into an accident, that violates the rental agreement, and no insurance will pay the claim.
Do you have any experience with rental car insurance? Feel free to leave a comment and share with us!