Types of Insurance

Debit and Credit Card

Insurance-related vehicles in the United States can be divided into three categories:

  1. Liability Insurance: Third-party liability insurance, which only pays for the loss of the other party’s vehicle and personnel caused by the accident
  2. Vehicle Coverage: Vehicle insurance, which only pays for losses related to vehicles driven by the insurer, and includes
    1. Collision/Loss and Damage Waiver (CDW/LDW): Car damage insurance, theft, and rescue pay for all kinds of damage to the vehicle
    2. Roadside Assistance: emergency assistance, provides emergency assistance when the vehicle breaks down
  3. Medical Coverage: Self-medical insurance, which only pays for the medical expenses required for the injury of all passengers (including the insurer) in the vehicle driven by the insurer in an accident

Borrow a few examples from Chune to illustrate what each insurance does:

Scenario 1: You are responsible for rear-ending the car in front of you.

Liability: The insurance company uses Liability to pay for the car damage of the rear-end car and the person’s Medical

Medical: to pay for your injuries due to the rear-end collision, and your own Medical

CDW/LDW: to pay for the damage to your car

Scenario 2: You drive a car and hit a stone, or someone else hit and run.

Medical Insurance: Injury yourself, pay for your medical bills

CDW/LDW: Pay for your car damage

Liability is not involved here.

Scenario 3: Going out to play, the car is in the ditch or out of gas, the wheel is broken, etc.

Road Assistance is needed.

CDW: Compensation for car damage

These three types of insurance can be purchased from the rental car company when renting a car. Generally, the approximate price is Liability 20$/Day, CDW/LDW 15$/Day, Medical 4$/Day.

CDW/LDW (Car Damage Insurance): Insurance provided by credit card

Various credit cards issued in the United States often come with the benefits of rental car insurance, but all of these benefits only maintain the rental vehicle driven by the card renter, which is the CDW/LDW (Car Damage Insurance) mentioned above. Some high-end credit cards offer Roadside Assistance. For the remaining two, Liability (third-party liability insurance) and Medical (medical insurance), because there is no limit to the cost, no credit card company provides such insurance for free or for a fee.

Although known commonly used credit cards of major banks, including Amex, Bank of America, Barclaycard, CapitalOne, Chase, Citi, Discover, US Bank, etc., all offer CDW/LDW insurance for rental cars (although the insurance cap may vary slightly), However, it cannot be ruled out that some small bank credit cards do not provide such insurance:

  • All American Express, Discover, and Visa offer rental car insurance;
  • All Gold, Platinum, World, World Elite MasterCards offer rental car insurance, but some other MasterCards may not.

2.1. Secondary and Primary

There are two types of CDW/LDW offered by credit card companies: Secondary and Primary.

  1. Secondary means that when the vehicle is damaged or lost, the cardholder’s additional insurance must pay first, and the credit card company’s insurance only pays for the part that is not covered by the other insurance, such as the deductible. This is the case with rental car insurance provided by credit card companies unless otherwise stated.
  2. Primary means that the credit card company’s insurance pays first. If the card-carrying renter has other insurance, these insurances only need to pay for the part that the credit card company does not cover. Common credit cards that offer Primary Rental Insurance are:

2.2. AmEx

American Express’s Premium Car Rental Insurance (click to see AMEX’s official website instructions and registration):

This is not free, and you need to spend $15-$25 for the insurance for the entire rental car. After registration, if you rent a car with any AMEX card, you will be charged for this insurance.

2.3. Chase

  • Chase Sapphire Preferred (CSP)
  • Chase Sapphire Reserve (CSR)
  • Chase UA Explorer
  • Chase UA Quest
  • Chase UA Club
  • Chase Ritz-Carlton 
  • Chase Ink Preferred (Business)
  • Chase Marriott Bonvoy Business 
  • Chase Southwest Premier Business
  • Chase UA Explorer Business
  • Chase UA Club Business
  • JP Morgan Reserve

Among them, the terms of commercial credit card car rental insurance require that the rental car is for business purposes. If it is not a commercial rental car, it is best to avoid using these cards, so as not to argue when claiming compensation.

2.4. Citi

The rental car insurance provided by all Citi personal cards is secondary, and the primary insurance is provided by business cards:

  • CitiBusiness AAdvantage World MasterCard

There is another long-defunct card, the Citi Professional Card, which also offers Primary Insurance. However, like Chase’s Business Card, the terms of rental car insurance require that the rental car is for business purposes (the rental is for business purposes). If it is not a commercial rental car, it can be waived.

2.5. Discover Escape card (cannot be applied for) and Diner’s Club card.

Specifically, we can look at the following two situations:

2.6. Case 1, I don’t have CDW/LDW (car damage insurance)

This situation includes that I don’t have a car at all, so naturally, I don’t need to buy car insurance, and I have a car with myself, but to save money, I didn’t buy CDW/LDW.

In this case, the primary and secondary insurance of the credit card is the same for you, both are primary because you only have this insurance.

Therefore, when renting a car, you can not buy the CDW/LDW (decline CDW/LDW) of the car rental company, and the CDW/LDW provided by the credit card will take effect automatically. The only thing to watch out for is to make sure the credit card you are using has this perk!

2.7. Case 2, I own a car and have CDW/LDW (car damage insurance)

In this case, if you use a credit card that provides Primary Insurance, the insurance company of the credit card company will pay first in the event of an accident, because your own insurance company does not need to pay at all or only pays a small amount of money, and will not pay for your insurance costs. influential.

If you use a credit card that provides Secondary Insurance, your own auto insurance company needs to pay a relatively large amount first, and the credit card company’s insurance company only pays the remaining difference or Deductible. Because your own auto insurance company lost too much money, your insurance premiums may go up.

So in this case, it is best to use a credit card that provides Primary Insurance to rent a car.

In addition, the paperwork required for the secondary insurance claim is much more troublesome than the primary, so if there is a primary, it is better to use the primary.

Roadside Assistance (emergency assistance): There are also credit cards to provide this service!

Many credit cards provide this service, and this service is not limited to rented cars. Any vehicle that needs emergency rescue can use this service as long as the cardholder is on the scene. But this service is usually not free. Most credit cards, such as low-end cards issued by Chase, Bank of America, Citi, and Discover, provide Roadside Assistant services for a fee, ranging from $50-$100 each time. The service content is similar, including the following items:

  1. Change tires (flat tire change, but you must have your spare tire)
  2. 10 miles free towing up to 10 miles
  3. Jump starts
  4. Drive lock (Lock-out service, the car key must be in the car)
  5. Delivery of up to 2 gallons of fuel

However, some cards with higher annual fees offer these services for free. These cards include (only the more common ones are listed here):

3.1. Amex

Free, use up to 4 times a year – the terms say it doesn’t matter what the rental car is, although we know someone has used it on a rental car and Amex doesn’t verify this, but use it with caution!

  1. Platinum Series ($450-$475 annual fee)
  2. PRG ($195 annual fee)
  3. Delta Reserve ($450 annual fee)
  4. Business Platinum ($450 annual fee)
  5. Business Plum ($250 annual fee)
  6. Business Gold Rewards ($175 annual fee)
  7. Delta Reserve for Business ($450 annual fee)

3.2. Citi

Completely free, unlimited rides – rental cars are not excluded from the terms

  1. Prestige ($350-$450 annual fee)
  2. AAdvantage Executive (Annual Fee: $450)

3.3. Chase

Reimbursement of $50, up to 4 times per year

  1. Ritz-Carlton (Annual Fee: $395)
  2. Liability (third-party liability insurance) and Medical (self-medical insurance): No credit card provides these two types of insurance

Because there is no credit card to provide these two types of insurance, there can only be these two sources: the driver’s car insurance; buying directly from the rental car company.

Add an exception: AMEX’s premium Car Rental Insurance offers $15,000 of Secondary Medical Insurance, which is small but can be used as a supplement.

If you don’t buy it from a rental car company, in the event of an accident, the driver’s car insurance needs to pay for it. This may lead to higher car insurance premiums for rental car drivers.

Buying from a rental car company is the most worry-free, it just costs a little extra. Especially when several classmates and friends travel together, the best way is to buy from a car rental company and share the cost to avoid disputes after the accident and even friends can’t do it.

The last one is that there is no such insurance at all. Do it at your own risk!

One thing to note is that in some states in the United States, it is illegal to drive without Liability, so some car rental companies will provide the most basic insurance by default. But the amount of this insurance is so low that in the event of an accident, it is often useless. These vary from state to state, and because the situation is too numerous and complex, we won’t go into detail here.

By aamritri

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