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Million Mile Secrets reader Vivian writes:
I am in between purchasing a new car and don’t have personal car insurance. I’m going on a business trip in California, which requires liability insurance. Which specific credit cards provide auto liability insurance?
Please help me as the cost to me would be $15 a day over 6 weeks for auto liability from the auto rental agencies!
What’s Liability Insurance?
If you’re at fault in an accident, liability insurance covers damage to the property and injuries of others involved in the accident.
Your injuries should be covered under your health insurance plan, but it’s best to call and make sure.
However, any damage to the rental car will NOT be covered. So you will have to pay for any damage to the rental car out of your own pocket. Unless you purchase Collision Damage Waiver (CDW) insurance from the rental car company or get primary rental car insurance through your credit card.
Rental car companies usually cover the state minimum required liability insurance, but this is unlikely to provide significant protection.
Also, if your employer is sending you on a business trip, they should usually provide you with insurance. But best to check with them!
What’s Primary Rental Car Insurance?
The highest level of rental car coverage you can get with credit cards, is primary insurance. Primary insurance is offered with several Chase cards, like the Chase Sapphire Preferred, Chase Ink Bold (business rentals only), and Chase Ink Plus (business rentals only). You can also see my list of more cards with primary rental car insurance.
Primary insurance covers damage to the rental car, but does NOT cover injuries to others and their property. Personal liability car insurance will usually cover damage to other property, cars, and others’ injuries.
These 2 types of insurance compliment each other. This is why some folks can waive the insurance offered by the rental car company when they pay for their rental car with a card that offers primary coverage.
Having a personal car insurance policy usually means that you’re covered when you drive another car. But always double-check!
Because Vivian doesn’t have personal car insurance, only the rental car damages will be covered when she waives the insurance from the rental car company and uses the primary insurance from her credit cards.
She will still be liable for the injury of others and damages to other cars and property. This could potentially cost her MILLIONS!
Don’t Take the Risk!
Vivian can avoid taking such a big risk, by signing-up for supplemental insurance from the rental car company. However, at ~$15 per day for 6 weeks this will cost her ~$630.
Vivian may be able to save money by signing-up for a non-owners car insurance policy instead. Non-owners car insurance provides liability insurance for folks who don’t have their own car, but still drive occasionally.
If Vivian has non-owners car insurance and pays for her rental with a credit card that provides primary car insurance, she may have liability coverage.
Vivian can call around for pricing to see if this is cheaper than paying for 6 weeks of insurance through the rental car company.
Certain credit cards will give you primary rental car coverage, when you pay for the rental with your card. But primary Collision Damage Waiver (CDW) insurance only covers damage to your rental car.
If you don’t have personal car insurance, you could be liable for the injury of others and their vehicles. Totaled cars, ambulance rides, etc. will get extremely costly!
I love to save money wherever I can, but insurance is 1 place I don’t recommend folks cut corners, because the risk is too big.
So if you don’t have your own car insurance, it’s best to pay for the insurance offered by the rental car company. And folks who rent cars frequently may save money by signing-up for a non-owner’s car insurance policy.