Do I REALLY Need More Rental Car Insurance Than What My Credit Card Covers?

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Renting a car without liability insurance can be risky business.  While certain cards offer primary coverage for theft or collision damage, many folks rely on their own personal policy in the event of a claim due to injuries or damage to other vehicles.

Your personal liability insurance almost always does NOT cover your international car rentals.  So it’s a good idea to ask the insurance agent at your company if you’re covered overseas.

Million Mile Secret Agent Molly commented:

I have the Chase Sapphire Reserve, so I get primary car rental insurance but NOT liability coverage.  I have liability insurance through my homeowners policy, but my insurance agent told me this gives me coverage only when I rent a car in the US.

Is lack of liability insurance a risk when traveling overseas?  Is my only option taking the insurance offered by the car rental company in spite of the insurance through my credit card?

Depending on where you travel, you may not have to request liability coverage.  I did some digging around, and I’ll tell you what I learned!

Car Rental Liability Insurance Abroad

One great benefit of the Chase Sapphire Reserve (and a few other cards, too!) is that it offers primary car rental insurance coverage when you decline the rental company’s collision damage waiver (CDW) and pay in full with your card.  It’s not comprehensive coverage, but it’s still an excellent benefit that can save you tons of money.  Using a rental car agency’s CDW can easily cost $15+ per day!

A very important thing to note is that personal liability insurance is NOT covered by these credit cards.  Primary rental car coverage with a credit card only pays for damages to your rental car.  It does NOT pay for damage to other cars, damaged personal items, or medical care, which is covered by liability insurance.

Particularly with rentals within the US, folks may find that they have liability coverage from their health insurance, or the car rental agency is already providing a form of personal liability coverage by law.  It’s a good idea to read the fine print of your rental agreement, and check with your own insurance provider.

However, international rentals are a bit trickier.

Liability insurance is NOT always optional.  Depending on where you travel, you won’t be able to rent a car without it!

If you rent a car in Europe, your car will need liability insurance by law.  Most rental agencies include liability insurance in the advertised rental price.

For example, I emailed Europcar, and they confirmed that 3rd-party liability insurance is included in every rental.  So the price you see is the price you’ll be charged.  No unexpected liability insurance fee once you arrive!

But that’s not always the case.  Team member Harlan says he was forced to pay extra for liability insurance in Ireland, even though he used his Chase Sapphire Preferred Card for primary rental coverage.

And team member Joseph recently reserved a rental car in Cancun, where he was quoted a suspiciously low ~$6 per week.  After reaching out to the rental agency, liability coverage was mandatory, which increased the price to ~$170 per week.

To make things more confusing, some rental agencies give you liability insurance when you pay for their CDW.  In this case, you will NOT receive liability insurance if you waive the agency’s CDW and use the primary insurance on your travel credit card.

It’s EXTREMELY important to know exactly what’s included (and what’s NOT) with your credit card coverage, personal car insurance, and health insurance BEFORE you rent a car, especially overseas.  Policies can differ drastically, and certain countries may be excluded from the coverage you DO have.  Countries like Australia, Ireland, Israel, and Jamaica, are often excluded from coverage.

Is It Risky to Drive Without Liability Insurance?

It’s actually a pretty huge concern.  You could lose a LOT of money if you cause an accident without liability insurance!

Again, primary rental car coverage with a credit card only pays for damages to your rental car, NOT damage to another car, property, injuries, death, etc.  And liability for personal injuries could cost millions.

If you’re renting a car in an area you’re nervous to drive through, I recommend springing for liability insurance with the car rental agency.  If you’re worried about driving on the opposite side of the narrow roads in Ireland or London, for example, it’s worth the money.  Or if you’re visiting a city with chaotic streets and traffic laws that are viewed as more of a suggestion than a requirement, like Manila or Dhaka, you’ll want to spend the extra cash to make sure you’re completely covered.

Bottom Line

Make sure you know exactly what’s included with your credit card coverage, personal car insurance, and health insurance before you rent a car, particularly overseas.

When you decline the rental company’s collision damage waiver (often referred to as CDW or LDW), you get primary rental car insurance when you pay with certain cards.  But you do NOT get liability insurance, which covers things like damage to other cars, damaged personal items, or medical care.

If you’re interested in liability insurance, you can buy it from the rental car agency.  But it’s probably not cheap!  And oftentimes, it’s not even optional!

I do NOT see a simple solution or policy to guarantee inexpensive liability coverage with every international car rental.  But if you know something I don’t, I’d love to hear about it in the comments!