If you are planning on renting a car, you will need to decide how to insure it. If you go with the insurance available through the rental company, they will cover all your damages. Others may choose to go with the rental insurance available through their credit card company. Knowing the difference between secondary and primary car insurance is important when making your decision.
What is Secondary Car Insurance Coverage?
Secondary car insurance coverage is a type of insurance you use to cover your rental car. It is often available as a credit card benefit. If you are in an accident in a rental car, your secondary car insurance coverage will pay for the damages. If the auto accident meets policy limits, then your personal insurance company will pay the rest.
Secondary car insurance coverage does usually come with a deductible. This is what you will have to pay out of pocket before the insurance company will cover any of your damages. Secondary car insurance also often has payment limitations. This means that they will only cover a portion of the damages. According to Mybanktracker, consider your secondary car insurance as a backup. It is not the first provider to reach out to if you're in an accident, but it is available if you do need additional compensation.
Most credit cards with rental insurance offer secondary insurance. While this is a good way to save money on your rental, it may not offer you enough payment if you're in an accident. If it doesn't cover all of your damages, you will need to turn to your personal insurance company, which could lead to an increase in your monthly rates.
What is Primary Car Insurance Coverage?
Primary car insurance coverage covers damages in a rental vehicle before accessing any other secondary types of auto insurance. If you're in an accident, you will file a claim with the primary insurance provider before your personal insurance. One of the biggest benefits of this is that your insurance premium won't increase because of the accident.
Primary car insurance coverage covers damages from an accident, as well as theft or vandalism. It is important to note that very few credit card companies offer primary car coverage. When you opt-in for the insurance offered with the rental company, this is usually a form of primary car insurance. This insurance will fully cover your damages.
Who Pays What Following a Car Accident?
It can be helpful to know what each insurance pays, and when, following a rental car accident. If you're in an accident and have primary, secondary, and personal car insurance, you can expect the following payments:
- Primary insurance: Primary insurance will pay your damages first. The limits of a primary insurance policy are usually high and will often cover the full cost of your damages.
- Secondary Insurance: Secondary insurance will pay for damages if you don't have a primary insurance policy. This usually requires a deductible cost.
- Personal insurance: If secondary insurance is not enough to cover the cost of damages, then your personal insurance company will cover the rest.
In some cases, your credit card company may also cover your deductible with secondary car insurance coverage. This varies from company to company.
How to Access Secondary Car Insurance Coverage
If you're in an accident, here is how you will access your secondary car insurance coverage:
- File a claim with your personal insurance company: First, you will need to file an insurance claim with your personal insurance plan. You will also need to wait and see how much they pay for your damages.
- File a claim with your secondary insurance provider: If your personal insurance company does not pay out enough to cover your damages, then you can file a claim with your secondary insurance. Your personal insurance company may also cover all damages and then request reimbursem*nt from the secondary provider.
It is always a good idea to notify both your personal insurance and credit card company of the accident as soon as possible. They can direct you on what steps to take to ensure you file accurately.
How Do I Know If My Credit Card Covers My Rental?
Some drivers may wonder if they need to notify their credit card company that they intend to use the secondary coverage. Even if you have rental insurance included with your credit card, you will need to do a few things:
- Check your insurance coverage: Before renting a car, it is a good idea to check how much rental car coverage is available with your credit card. It is also important to find out if your credit card company offers primary or secondary insurance. Many credit cards only offer secondary insurance, which may be limited as to how much it covers.
- Decline the company's insurance: To use your credit card insurance, you will need to decline the company's insurance. They may require that you sign a collision damage waiver.
- Make sure you are listed as the primary driver: If multiple people will drive the vehicle, make sure you are listed as the primary driver. If the credit card is in your name, you'll need to be the primary.
- Use your credit card for payment: In order for the credit card company to cover you, you will need to pay for the rental with that credit card.
According to BusinessInsider.com, many drivers choose to utilize their credit card benefits because insurance is often cheaper this way. Adding on insurance to a rental car can increase the cost significantly.
However, it is important to keep in mind that primary car insurance available through the car rental company may cost more temporarily but may offer you more coverage if your credit card only offers secondary coverage. It can also save you money by not having to worry about increases to your premium if you have to file an insurance claim.
Secondary car insurance may be a temporary cost saver when renting a car. However, it is important to consider who will cover your damages if you're in an accident, and how much they will cover when deciding which insurance to use.
Check this out if you need additional information, resources, or guidance on car insurance.
Sources:
https://www.businessinsider.com/personal-finance/credit-cards-with-primary-rental-car-insurance
https://www.caranddriver.com/car-insurance/a36040546/no-deductible-car-insurance/
https://www.caranddriver.com/car-insurance/a36014178/cheapest-monthly-car-insurance/
Hearst Autos Research
Hearst Autos Research, produced independently of the Car and Driver Editorial staff, provides articles about cars and the automotive industry to help readers make informed purchasing choices.
