Credit Card Rental Car Insurance: You’re Covered with These Canadian Cards

Think of this scenario. You’ve landed in a new country and you’re at the car rental company. They ask you if you need insurance. You’re not sure. After a long flight, you’re tired, and the kids are complaining, so your mind is a mess. In your haste, you decide to purchase the optional collision damage loss waiver insurance because the last thing you want to do is be responsible for any charges if you’re in an accident.

The thing is, despite the peace of mind, paying for additional car rental insurance is almost always unnecessary. If you own a car and have insurance, your policy will usually cover you for car rentals. Even if you don’t own a car, there are many cash back credit cards and travel credit cards in Canada that provide you with both collision and damage coverage for rental vehicles.

What credit card rental car insurance does cover

Most credit cards offer excellent collision and damage insurance that will cover you for the cost of the rental car in the event it’s stolen, vandalized, lost or damaged – even if an accident is your fault.

Get in a fender bender? Suddenly find your parking spot is empty because someone broke into your car? In either of those cases, you’d be insured for the rental car (up to its MSRP) by your credit card.

In general, making use of the insurance on your credit card will save you from having to buy the optional collision/damage/loss waiver insurance from the rental agency (typically a cost of $16 to $23 per day) and still provide the coverage you need for the vehicle.

How credit card rental insurance works – the fine print

Credit card rental car insurance, just like any insurance policy, has its fair share of fine print, terms, and legalese to decode. Here are some of the most important things to know:

• It might seem obvious, but start by checking if your card actually comes with rental car insurance in the first place, because not all do.
• If your card does offer coverage, get familiar with its terms (typically, credit cards will cover vehicles with an MSRP of $65,000 or less for a period of between 31 and 48 days).
• Your credit card’s rental insurance won’t apply automatically, and you’ll need to: 1. pay for the full price of the rental using your credit card, and 2. explicitly decline the collision/damage/loss waiver insurance from the rental agency for your card’s coverage to apply.
• While credit card coverage usually applies around the world, that might not always be the case; like if you’re visiting a country that has a travel warning.
• Credit card rental insurance will cover almost all cars, SUVs and minivans, but it won’t cover every vehicle type (for example, exotic cars, motorcycles, trailers, and larger vehicles with over eight seats are exempt).
• Your credit card must be in good standing, otherwise, coverage won’t apply.
• Your credit card insurance won’t cover you in instances when you’re inebriated or carrying illegal goods.
• Coverage is usually intended for rental cars that have been booked for personal use, and won’t apply if you’re using the rental for commercial purposes.
• Credit card rental insurance will typically cover the primary cardholder as well as any driver who’s been given permission to use the vehicle by the primary cardholder.

Generally, if you’re renting a sedan or minivan just to get around or for a road trip out of the city, you’ll be covered through your card. To be extra safe, consider calling up your credit card company before reserving a rental car.

Last but not least, if you’re in the unfortunate situation where you have to make a claim, time will be of the essence as you’ll usually have to report a claim within 24 to 48 hours for it to be valid.

What credit card rental insurance won’t cover

While credit card insurance will provide collision, damage, and loss coverage for the rental car itself, it won’t provide third party or personal injury insurance.

That means your credit card won’t cover you for any damage caused to someone else’s property or medical costs associated with an accident (like physiotherapy or other potential hospital bills). Outside of a few exceptions (like the BMO World Elite Mastercard), most credit cards also won’t provide personal effects insurance. Personal effects is just a fancy word for valuables. So, if your rental car is stolen and your expensive laptop along with it, you won’t get any money back for your laptop.

Generally, though, if you own a car and already have an auto insurance policy, you’re probably covered for all the above and won’t need to pay out of pocket. But, if you don’t and you’re just relying on your credit card, you’ll only be covered for the cost of the rental car and you’ll need to purchase liability and personal injury insurance.

The best credit cards for rental car insurance in Canada

BMO World Elite Mastercard

• Rental car coverage: Damage or theft of your rental car plus any valid towing charges, lost or stolen personal effects, and accidental death and dismemberment
• Coverage amount: A rental car with an MSRP of up to $65,000, personal effects coverage of $1,000 per person (maximum of $2,000), and $300,000 for accidental death and dismemberment
• Covered period: Up to 48 consecutive days
• Conditions: You must use your card to pay for the full or partial cost of the rental vehicle and decline the rental agency’s damage waiver; claims must be made within 48 hours of an incident

In-depth: BMO World Elite MasterCard Travel Insurance

The BMO World Elite Mastercard offers coverage up to $65,000 in damages. A major advantage to this card’s travel insurance plan is that it also offers coverage up to the actual cash value of your personal effects (up to $1,000 per insured person for a maximum of $2,000). The insurance also provides accidental death and dismemberment benefits of up to $300,000 while occupying a rental car for one accident. This is quite extensive coverage compared to other cards.

In order to receive coverage, you don’t need to pay the full cost of the rental using your card although you must pay a partial cost to receive coverage. Coverage extends to cars, sports utility vehicles, and vans as long as they’re for private use, seat no more than eight occupants, don’t exceed at “¾ ton” rating, and aren’t designed for recreational use.

American Express Cobalt

• Rental car coverage: Damage or theft of your rental car
• Coverage amount: A rental car with an MSRP of up to $85,000
• Coverage period: 48 consecutive days
• Conditions: You must use your card to pay the full cost of the rental vehicle and decline the rental agency’s damage waiver; claims must be made within 48 hours of an incident

The American Express Cobalt made our list of the best credit cards in Canada under the overall rewards cards category, but it also has some impressive travel benefits. Car Rental Theft and Damage Insurance is included as long as you fully charge your rental to your American Express Cobalt Card. You’re covered for damage or theft of your rental car with an MSRP of up to $85,000. In case you’re wondering, Royal & Sun Alliance Insurance Company of Canada are the underwriters.

Scotiabank Gold American Express

• Rental Car Coverage: Covered up to the vehicle’s actual cash value plus any valid loss of use charges, towing charges, and administrative charges resulting from damage or theft
• Coverage amount: Rental car with an MSRP of up to $65,000
• Coverage period: Up to 48 consecutive days
• Conditions: You must use your card to pay the full cost of the rental vehicle and decline the rental agency’s damage waiver

In-depth: American Express Gold Rewards Travel Insurance

What’s great about the Scotiabank Gold American Express card is that it offers coverage up to the vehicle’s actual cash value plus loss of use charges, reasonable towing charges, and administrative charges that could result from damage or theft. The coverage extends to cars, sport utility vehicles, and minivans provided they seat no more than eight occupants including the driver, and they are used for private use only. As an added perk, you can also get 25% off at participating Avis locations.

Home Trust Preferred Visa

• Rental car coverage: Damage or theft of your rental car
• Coverage amount: A rental car with an MSRP of up to $65,000
• Coverage period: 48 consecutive days
• Conditions: You must use your card to pay the full cost of the rental vehicle and decline the rental agency’s damage waiver

What sets the Home Trust Preferred Visa apart is that it offers 48 days of car rental insurance and cash rewards (1% on everything) while not charging cardholders an annual fee. The icing on the cake: it’s one of the few cards that don’t come with foreign transaction fees, so you won’t rack up additional charges when using your card to make purchases in a foreign country, like, let’s say, when refilling your rental car’s gas tank while on vacation abroad.

Scotiabank Passport Visa Infinite

• Rental Car Coverage: Covered up to the vehicle’s actual cash value plus any valid loss of use charges, towing charges, and administrative charges resulting from damage or theft
• Coverage amount: Rental car with an MSRP of up to $65,000
• Coverage period: Up to 48 consecutive days
• Conditions: You must use your card to pay the full cost of the rental vehicle and decline the rental agency’s damage waiver

The Scotiabank Passport Visa Infinite offers the same rental car insurance policy and coverage terms as the aforementioned Scotiabank Gold American Express Card for vehicles with an MSRP of $65,000. This card’s rental insurance policy extends to almost all car types – from four seater sedans to minivans – and covers up to the vehicle’s actual cash value plus loss of use charges, reasonable towing charges, and administrative charges that could result from damage or theft. It’s also worth highlighting that the Scotiabank Passport Visa Infinite offers 25% off the base rate on rental car bookings at eligible AVIS locations and charges no foreign transaction fees (which can help you save further if you’re embarking on a road trip outside of Canada).

American Express Gold Rewards Card

• Rental Car Insurance: Covers up to the vehicle’s actual cash value plus any valid loss of use charges resulting from damage or theft
• Coverage amount: A rental car with an MSRP of up to $85,000
• Coverage period: Up to 48 consecutive days
• Conditions: You must use your card to pay the full cost of the rental vehicle and decline the rental agency’s damage waiver

In-depth: American Express Gold Rewards Travel Insurance

The American Express Gold Rewards card offers similar coverage as the Scotiabank Gold American Express card in that they both offer full coverage up to the vehicle’s actual cash value plus any valid loss of use charges resulting from damage or theft. This card covers vehicles with a manufacturer’s suggested retail price of under $85,000 in its model year. This includes cars, sport utility vehicles, and minivans, provided they have a maximum gross vehicle weight of 2,680 kg (5,966 lbs.), seat no more than eight occupants, and are for private use only.

Scotiabank American Express

• Rental Car Coverage: Covered up to the vehicle’s actual cash value plus any valid loss of use charges, towing charges, and administrative charges resulting from damage or theft
• Coverage amount: Rental car with an MSRP of up to $65,000
• Coverage period: Up to 48 consecutive days
• Conditions: You must use your card to pay the full cost of the rental vehicle and decline the rental agency’s damage waiver

Despite charging no annual fee, the Scotiabank American Express doesn’t skimp out on benefits and ranks among the best credit cards for rental car insurance in Canada. Similar to alternative cards on this list with annual fees, the Scotiabank American Express offers the same coverage period of 48 consecutive days for most private vehicles costing up to $65,000. Not to mention, using this card at eligible AVIS locations will also entitle you to upwards of 25% off the base price of rental car bookings.

TD Cash Back Visa Infinite

• Rental Car Coverage: Covers up to the vehicle’s actual cash value plus any valid loss of use charges resulting from damage or theft
• Coverage amount: Rental car with an MSRP of up to $65,000
• Coverage period: Up to 48 consecutive days
• Conditions: You must use your card to pay the full cost of the rental vehicle and decline the rental agency’s damage waiver

Along with offering 48 days of collision damage and loss insurance, the TD Cash Back Visa Infinite stands out for its strong earn rate of 3% cash back on gas. So, not only will you save on rental car insurance but at the pump too. Plus, you can knock an additional 5% to 10% off the base price when reserving a car from eligible Avis and Budget agency locations.

Honourable Mentions

While all our top choices highlighted above provide credit card rental coverage for up to 48 consecutive days, our list of honourable mentions below didn’t quite make the list because they offer coverage for 31 days. But, we thought they deserved a shoutout nonetheless because they’re great no fee credit cards that offer coverage despite the fact they’re free to carry.

PC Optimum World Elite

• Rental Car Coverage: Covered up to the vehicle’s actual cash value plus any valid loss of use charges, towing charges, and administrative charges resulting from damage or theft
• Coverage amount: Rental car with an MSRP of up to $65,000
• Coverage period: Up to 31 consecutive days
• Conditions: You must use your card to pay the full cost of the rental vehicle and decline the rental agency’s damage waiver

Triangle World Elite Mastercard

• Rental Car Coverage: Damage or theft of your rental car
• Coverage amount: Rental car with an MSRP of up to $65,000
• Coverage period: Up to 31 consecutive days
• Conditions: You must use your card to pay the full cost of the rental vehicle and decline the rental agency’s damage waiver

The bottom line:

Regardless of which credit card you have, you can maximize your benefit from the car rental insurance provided. Before renting a vehicle, make sure that the rental agency will allow you to decline the collision damage waiver without making a deposit. Also check the rental car thoroughly for any scratches, dents, or damages before taking possession of the car. This will ensure you aren’t blamed for any damages prior to you taking possession of the vehicle.

Also read:

• The Best Credit Cards for Travel Insurance
• Rental Car Insurance: The Ultimate Guide
• Best No Fee Credit Cards in Canada

*This blog is for educational purposes only and isn’t legal advice. Check your credit card policy and rental car agency terms for details.