Most use secondary insurance, which will only pay for extra costs not covered by your primary insurer
Many credit cards offer useful perks like cash back and rewards points. Some even offer free car rental insurance, which will cover you as long as you use that particular card to pay for the rental. If you have one of these cards, you need to know that its rental insurance doesn't cover as much as you might think.
Travel + Leisure notes that most credit cards provide secondary rental car insurance, not primary insurance. This means that it will pay only for extra fees and costs that your primary insurance does not. If you need to file a claim, you will still have to go through your primary insurer.
And LifeHacker notes other limitations on credit card insurance coverage. These include:
- Collision coverage alone—most credit card insurance policies will only cover collision, not liability.
- Coverage of only some vehicles—certain types of vehicles, such as trucks, vans, and exotic cars, may not be covered under the policy, and car-sharing services are usually not covered either.
- Coverage of only some countries—your credit card insurance may not cover your vehicles in certain common tourist destinations, including Australia, Italy, New Zealand, Ireland, Israel, and Jamaica.
- "Diminution of Value" not covered—there are usually several exceptions to what your insurance policy will cover, including roadside assistance. If you're in an accident and the rental car company charges you a "diminution of value" fee, your credit card insurance may not cover it.
Carefully read your credit card's terms and conditions to find out what it does and does not cover. Make sure that it will meet your needs before you have to rely on it.