TLDR
-
When you sell an asset or investment for more than it cost you, you have a capital gain
-
Today, 50% of capital gains are taxable for all individuals and businesses
-
As of June 25, the capital gains tax inclusion rate is set to increase from 50% to 66.67% for all capital gains realized by corporations and trusts, and for capital gains over $250,000 realized by individuals
Renting a car can be an exciting part of your travel plans or a practical solution for a short-term need. However, navigating the insurance options when you’re standing at the rental counter can feel overwhelming.
Before agreeing to pay for extra coverage, find out if you already have protection through your credit card. Many credit cards offer car rental insurance as a benefit, but coverage varies. Understanding the specifics is key to making the right decision.
By getting familiar with the car rental benefits that come with your credit card, you could avoid unnecessary expenses while ensuring you’re fully covered on the road.
What is car rental insurance?
There are typically four types of car rental insurance. Each offers distinct benefits and coverage.
Collision Damage Waiver
Collision Damage Waiver (CDW) is also known as loss damage waiver or physical damage waiver. It usually covers damage to the rental car caused by an accident, theft or vandalism. However, it might not cover all types of damage.
Liability Insurance
Liability insurance can protect you if you injure someone or damage another person’s property while driving the rental car. The legal minimum is often included with your rental car. However, it is a good idea to have at least $1 million to $2 million in coverage.
Personal Accident Insurance (PAI)
PAI is optional insurance for accidental death, injury or dismemberment. It covers the driver and all passengers in your rental vehicle for medical and rehabilitation costs and other expenses, like lost income. It also pays out a lump sum if there is a death.
Personal Effects Coverage (PEC)
PEC provides coverage for any personal belongings that might be stolen from the rental car.
Worth noting here: If you own or lease a car of your own, your current car insurance policy may extend to a rental car in Canada or the United States if it covers vehicles you don’t own. Read the fine print on your own insurance policy to see if it provides coverage where and when you want to rent a car. Coverage may not be available if you plan on driving a rental vehicle internationally.
Types of car rental insurance that come with a credit card
If your personal car insurance policy doesn’t provide full coverage, your credit card may come with car rental insurance.
Coverage can vary significantly across cards, so review the terms of the car rental insurance that comes with your credit card before you make any assumptions about coverage. You might even find your credit card doesn’t offer rental car insurance — not all cards do.
How credit card coverage applies
Typically, rental car insurance on your credit card covers the following:
-
Damage to the car in the event of accident, theft or vandalism — in other words, the collision damage waiver or loss damage waiver offered by the rental car company
-
Some coverage for towing expenses and administrative fees
-
Loss of use — coverage that compensates the rental company for the time the car is out of service while damage is repaired
To be covered by your credit card, you must pay for the rental with the credit card that includes the benefit. In many cases, you also need to explicitly decline the collision coverage at the car rental agency in order for your credit card coverage to apply.
Primary versus secondary insurance coverage
Most credit cards provide secondary coverage. This means the coverage takes effect only after your personal car insurance policy is applied. So, if there is an accident, theft or other damage to the rental car, you would first need to file a claim with your car insurance provider before turning to your credit card’s coverage. In this case, your personal policy will do the heavy lifting, but your credit card coverage could still come in handy: It might pay the deductible you would have to pay on your personal insurance that results from filing the claim.
If you don’t have a personal car insurance policy, a credit card’s secondary insurance will step in to cover the claim. However, coverage can vary based on the terms and conditions of your credit card. It’s essential to check your card’s policy to see if it will provide coverage if you don’t have personal car insurance.
Some credit cards offer primary insurance coverage. If your card is one of them, you can bypass your personal insurance entirely and file a claim directly with your credit card provider by calling the phone number on the back of your card.
Limits to credit card rental insurance
If you plan to use the car rental insurance provided by your credit card, be sure to read the fine print— there are a few limitations that come with this coverage. Here are some common ones:
-
Your credit card may not cover every vehicle type (for example, exotic cars, motorcycles, trailers and larger vehicles with more than eight seats). Trucks are typically excluded vehicles, so your card may not cover pick-up trucks.
-
Your credit card insurance will specify a maximum car value and rental time period. For example, many cards only cover vehicles with an MSRP of $65,000 or less, although some will cover vehicles with an MSRP of up to $85,000. Car rental time periods will max out at 31 or 48 days.
-
If you’re under the influence of drugs or alcohol or carrying illegal goods while driving, your coverage will not apply.
-
Your coverage may not apply if you’re using the vehicle for commercial purposes.
-
Car-sharing apps like Turo, Uber and Lyft are not covered by credit card car rental insurance.
-
You typically must state who will be driving the car to ensure all drivers are covered.
-
Your credit card must be in good standing.
If you’re traveling internationally or across the border
Renting a car while traveling? Your personal car insurance policy may cover you in the U.S. However, you likely need a separate policy when driving in all other countries. If you plan to drive across the border, be sure to ask the car rental company about their policies regarding cross-border travel, as some may restrict it or charge additional fees.
If you’re renting a vehicle overseas, it’s best to speak with your insurance provider and credit card company to understand your options and what additional coverage you may need to add. Learning about the car insurance requirements in the country you’re visiting is an important step to take. For instance, some car rental agencies (especially overseas) require proof of insurance coverage before they’ll hand you the keys. In this case, you’ll need to get in touch with your personal car insurance provider and/or your credit card insurance provider for a confirmation of coverage letter.
Your credit card may come with all the car rental insurance you need, but before you rent a car, it’s important to understand exactly what is covered by your credit card and what steps you need to take to ensure it applies. Take a look at the benefits guide that came with your card, or review your coverage online so you can be confident you’re sufficiently covered.
