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Primary vs. Secondary Car Insurance: What To Know When Renting a Car

primary vs secondary car insurance
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Renting a car can be a practical way to get around when you’re traveling. Before signing an agreement, you might wonder what kind of insurance is necessary to receive coverage in the event of an accident. People may rely on their personal auto insurance policies while others buy coverage from the rental company. Some take advantage of the insurance available as a perk through their credit card providers. Regardless, it’s important to be aware of your options so you receive coverage and get the best deal. Read on to learn about primary versus secondary car insurance when renting a vehicle.

How Rental Car Insurance Works

Before we discuss primary versus secondary car insurance, it’s worth looking at how rental car insurance works. Rental companies require renters to have accidental damage coverage before signing a rental agreement. This coverage may come from the renter’s personal auto insurance policy, the rental company, or the renter’s credit card company. The type of coverage that’s available to you depends on what provider you go through and what kind of protection you want. Below, we discuss two main types of rental car insurance, primary and secondary, that can protect you from paying out-of-pocket in the event of an accident.

What Is Primary Car Insurance?

Primary car insurance is a policy that kicks in before your personal auto insurance and covers damages in the event of a rental car accident. Policies are available through rental car companies or select credit card providers and allow you to obtain coverage without having to file a claim with your personal insurance company. Providers tend to establish high maximums, meaning they cover all damages to the vehicle after an accident.

What Is Secondary Car Insurance?

Secondary car insurance is a policy that covers rental car damages that your primary and personal auto insurance don’t cover. It’s available through select credit card providers and usually requires the policyholder to pay a deductible before receiving coverage. While secondary car insurance offers less protection than other policies, it may be more desirable because of its lower premiums and widespread availability among credit card providers.

Primary vs. Secondary Car Insurance

Here are some key similarities and differences between primary and secondary car insurance:

Protections and Limitations

Primary and secondary car insurance policies protect you from damages that a rental vehicle may incur while it’s under your name. Eligible costs usually include any damages resulting from an accident or theft up to a certain amount. Whichever policy you have, it’s important to read the fine print to be aware of potential limitations.

For instance, a provider might not offer coverage if you enter into a long-term rental agreement or drive the vehicle in an excluded country. Some providers won’t cover damages if you drive on unpaved roads or wait too long to file a claim after an accident or rent. Drivers can also find themselves without coverage if they rent a specialty vehicle like a sports car, passenger van, or motorcycle.

Exclusion of Liability Coverage

Most primary and secondary coverage plans don’t offer liability insurance, which covers costs related to injuries to others and damages to other vehicles. This coverage is important to have to qualify for a rental agreement and protect yourself from exorbitant costs. Consider purchasing this coverage separately through the rental company or use your personal insurance if it has liability coverage.

Providers

Many credit card companies offer primary or secondary car insurance to attract customers who travel frequently. This perk is enticing because it saves the customer from having to purchase the rental company’s insurance and offers additional coverage in addition to the customer’s personal car insurance. It’s more common for providers to offer secondary car insurance, but some premium providers offer primary policies. If you don’t have a credit card company that offers rental car insurance,  you can purchase primary car insurance through the rental company.

Maximums and Deductibles

Primary car insurance providers set maximums, but they usually exceed the total value of the car to offer comprehensive protection. The lower maximums that secondary car insurance providers set mean that you’re more likely to pay some of the costs out of pocket. It’s also important to note that secondary car insurance usually requires you to pay a deductible before you’re eligible for coverage. Regardless of the policy you have, it’s important to read the fine print to determine the deductible you’re responsible for and the maximum.

Premiums

If you obtain primary or secondary car insurance through your credit card company, you won’t have to pay a premium as it’s a free perk. Rental companies charge fees for renters who use their primary car insurance. While the fees can add up, the comprehensive protection of primary car insurance is often worth the cost.

Note that if you’re in an accident and don’t have primary car insurance, you’ll have to file a claim with your personal insurance company. While necessary, this route is likely to increase your monthly premiums. Drivers with primary car insurance can forgo a claim through their personal insurance company to maintain their current monthly premiums.

Order of Activation

If you have multiple policies, you might wonder about the order of activation of insurance. As the name indicates, primary car insurance always kicks in first. This policy is supposed to offer comprehensive coverage and doesn’t require you to file a claim with your personal auto insurance company.

Those without primary insurance must file a claim through their personal insurance company to cover damages and become eligible for secondary coverage. This backup protection is helpful when other policies fail to cover all damages or fees associated with returning a damaged vehicle. Note that in some cases, secondary coverage may serve as your primary coverage.

Next time you rent a car, consider checking with your credit card company to see if you have coverage as a perk. If the company doesn’t provide rental insurance, or if the secondary insurance isn’t adequate, you can purchase primary insurance through the rental car company. Understanding your coverage helps you get the best deal and gives you the peace of mind you deserve as you drive a car that isn’t yours.

FIXD Research Team

At FIXD, our mission is to make car ownership as simple, easy, and affordable as possible. Our research team utilizes the latest automotive data and insights to create tools and resources that help drivers get peace of mind and save money over the life of their car.

We’re here to help you simplify car care and save, so this post may contain affiliate links to help you do just that. If you click on a link and take action, we may earn a commission. However, the analysis and opinions expressed are our own.

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About the Author

FIXD Research Team

FIXD Research Team

At FIXD, our mission is to make car ownership as simple, easy, and affordable as possible. Our research team utilizes the latest automotive data and insights to create tools and resources that help drivers get peace of mind and save money over the life of their car.

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