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Heading out for some travelling?

Depending on where you’re going and what you’re doing, getting a rental car is a must – it’ll give you the freedom to go wherever you desire without depending on public transportation routes.

A big thing to consider when getting a rental car is insurance. With the right coverage, you can be spared massive costs should anything happen (knock on wood).

There are several different types of insurance offered by rental car agencies, but did you know there’s a good chance you’re already covered, either through your own insurance or the credit card you have in your wallet?

Consider this your guide to car rental insurance – what’s offered, what you may be covered for already, and how credit cards fit in the picture.

Best credit cards for car rental insurance

Here are our choices for cards that provide the best rental car coverage.

Credit Card Length of coverage Collision Damage Waiver Personal Effects Insurance Personal Accident Insurance Learn More
BMO AIR Miles World Elite 48 days $65,000 $1,000 per occurrence Up to $200,000 Learn More
American Express SimplyCash Preferred 48 days $85,000 No No Learn More
National Bank World Elite Mastercard 48 days $65,000 $2,000 per occurrence No Learn More
MBNA Rewards Platinum Plus 31 days $65,000 $1,000 per occurrence Up to $200,000 Learn More
Scotiabank American Express 48 days $65,000 No No Learn More

How rental car insurance works

There are 3 different types of insurance offered by rental car companies in Canada. We’ll give a brief overview of each one, and what your current auto insurance might already cover.

Collision damage waiver

The collision damage waiver (also known as the loss damage waiver) provides coverage in the event of damage to or theft of the rental car.

It isn’t actually insurance, it just means that if anything happens to the vehicle, the rental car company won’t come after you.

Your own personal car insurance covers this if your coverage extends to rental cars. You’ll have to call your insurer to make sure.

This coverage is the most expensive – it can run up to $30 per day, depending on the vehicle you rent.

Personal accident insurance

Personal accident insurance provides you and your passengers with a payout in case of accidental death, medical coverage in case of an accident, and covers ambulance costs.

If you have a personal life insurance policy, this would give an additional payout in case of accidental death. When inside Canada, your provincial health care would cover you for any medical costs as well.

Personal effects coverage

The last coverage, personal effects coverage, provides coverage if any of your personal belongings are stolen from the rental vehicle. If you have homeowners or tenants insurance, you may already be covered – just make sure to check with your insurer.

Personal effects coverage and personal accident insurance are sold together and cost around $7 per day.

Things to keep in mind

Although these 3 coverages are offered when you rent a vehicle in Canada, coverages vary when you go to different countries.

For instance, in the United States, supplementary liability insurance is offered. But in Canada, the rental car agencies are required by law to provide it.

As for your personal car insurance (if coverage is provided), it’ll only cover you in Canada and the United States. If you travel outside these countries, you’ll have to call your insurer and see if they can quote you a cost.

Related: Types of Credit Card Insurance (You May Not Know About)

Regular vs credit card rental insurance coverage

So, with this in mind, where do credit cards come in?

Credit cards provide 3 different types of rental car insurance. We’ll go over each one.

Collision damage waiver

The most common type of rental car insurance provided by credit cards, collision damage waiver, will allow you to waive collision damage waiver provided by the rental car companies.

There are a few things you have to do in order for your credit card’s coverage take effect:

  • You must charge the full cost of the rental to your credit card. If you use rewards points to pay for your rental, generally only credit cards that belong to the program will provide coverage. For example, if you use your AIR MILES to help pay for your rental, only an AIR MILES branded card will provide you with coverage.
  • You have to decline the coverage provided by the rental car company.

Here are some other things to keep in mind:

  • You must make sure the MSRP (manufacturer’s suggested retail price) of the vehicle doesn’t exceed what your card covers. Getting a free upgrade to a BMW or Cadillac is great, but if the MSRP of the vehicle is more than what your card coverage provides, you won’t be covered.
  • You can only rent a car for a set number of days (usually between 31-48). If your rental exceeds the number of days coverage your card provides, you won’t be covered.
  • There are vehicle restrictions – you generally won’t be covered for pickup trucks, vans that seat 8 or more, moving vans, or specialty cars. Your credit card insurance certificate will spell this out for you.
  • Finally, you must adhere to your car rental agreement and obey the law. If something happens to the car and you were in violation of your agreement (or the law), your credit card won’t cover you. If anyone else plans on driving the vehicle, make sure they’re on the agreement. Otherwise, you would lose coverage.

Rental car accident insurance

This insurance provides coverage in case of a vehicle accident and replaces (or can supplement) the personal accident insurance provided by the rental car companies.

Basically, you get a lump sum payout in the event of death or dismemberment, up to a set amount per accident.

This coverage is not as common on credit cards – only 29 of the cards we currently track offer it.

Rental car personal effects insurance

Rental car personal effect insurance provides coverage in case of theft of your belongings from a rental car. It can replace the personal effects coverage provided by the rental car company and provides a set amount per occurrence.

This coverage is also not as common – 36 of the cards we currently track offer it.

My personal experience

The first time I rented a car, I learned my lesson about rental car insurance.

I was in Las Vegas and was renting a card for one day to visit the Hoover Dam and do some shopping before heading back home. I had already called my personal car insurer prior to my trip to see what I was covered for in terms of car rentals (I had full coverage). My credit card at the time didn’t provide any.2020

But when it came time to rent my vehicle, I was blindsided by one point the agent made – your car insurance may only cover you for an equivalent vehicle that you own. At the time, I owned a Mazda 3 (a compact car) and was renting a Ford Taurus (full size). I hadn’t checked on this with my personal insurer, so I had to accept the waiver from the agency to be safe.

Take my personal example as a reason to be sure you know exactly what you’re covered for. Lucky for me, it was just a one-day rental – the extra costs were easy to stomach. But had I planned a longer trip, the costs would’ve added up quick.

Best credit cards for car rental insurance

If you’re looking to save on car rental costs during your travels, here are some of the top credit cards for car rental insurance in Canada.

BMO AIR MILES World Elite Mastercard

The is one of the best cards (along with the and the ) for car rental insurance in Canada.

These 3 cards provide all 3 types of insurance:

  • 48 days of coverage for collision damage, up to $65,000,
  • up to $200,000 rental car accident coverage per person (up to $300,000 total per accident), and
  • $1,000 per occurrence if items are stolen from your vehicle.

Get the full details here:

American Express SimplyCash Preferred

If you want the highest coverage amount for collision damage waiver, any American Express card that provides rental car coverage will give you an MSRP of $85,000 for 48 days.

None of their cards provide rental car accident or personal effects insurances, however.

Take the , for example. For an annual fee of $99, you’ll get the same coverage as a card that has an annual fee of $120 or more.

Get the full details here:

National Bank World Elite Mastercard

If you want the best coverage for personal effects, the offers $2,000 per occurrence – the most of any cards we track.

It also comes with standard coverage for collision damage waiver – 48 days and an MSRP of $65,000.

Get the full details here:

MBNA Rewards Platinum Plus

The is a no fee option that provides great coverage (as well as any MBNA Platinum Plus Mastercard). They offer all 3 types of insurance available.

While the collision damage waiver duration is shorter than the rest, 31 days of coverage is still enough for most people’s needs.

Get the full details here:

Scotiabank American Express

For a no fee card that provides 48 days of coverage, the is a great option.

However, it only includes collision damage waiver coverage.

Get the full details here:

Are you covered?

Before you set out for your trip, make sure to check your credit card’s insurance certificate.

Don’t have it? We’ve got your back – we track the insurance coverages for all the credit cards in our database. All you have to do is navigate to our best credit cards page, find your card issuer, and click on your card.

Then, under the insurance tab, we list out the details of your card’s insurance coverage.

Here’s an example:

Typical credit card insurance coverage

For more specific details, it’s always good to double check with your credit card issuer.

Doing proper research is key to not paying for coverage you already have.

Let us know your thoughts

Have you ever used your credit card’s rental car insurance to get out of a pickle?

How was your experience?

Let us know in the comments below.