Best credit cards for rental car insurance in Canada

Gearing up for your great Canadian road trip this summer? If you’re planning on renting a car, the right credit card can save you hundreds of dollars in rental car insurance and simplify your travel plans.

Credit card rental car insurance is a common benefit provided by many credit cards, offering coverage for damages, theft, or other costs associated with a rental vehicle when you use the card to pay for the rental. 

These cards can even include perks like personal effects protection or accidental damage coverage. However, factors like vehicle value limits, length of coverage, and eligibility rules vary between cards.

Here’s what you need to know about how these cards work.

What does credit card rental car insurance cover?

While the specifics of credit card rental car insurance depend on the issuer and card type, here’s a breakdown of what is typically included:

Collision Damage Waiver (CDW) or Loss Damage Waiver (LDW)

This type of coverage protects against theft, vandalism, or damage to the rental car. However, it does not cover bodily injury, personal property, or third-party liability. For these, you’d need coverage from your personal auto insurance policy or additional insurance through the rental agency.

Most credit cards offer secondary CDW coverage. This means that if an incident occurs, your personal auto insurance policy would be used first to handle the claim. Any remaining costs, such as deductibles, could then be covered by your credit card’s insurance. 

If you do not have a personal auto insurance policy, the credit card’s secondary coverage will act as the primary coverage, stepping in to handle the claim.

Theft protection

If your rental car is stolen, theft protection covers the replacement cost of the vehicle. This can offer peace of mind when you’re on the road.

Towing fees and loss of use

Some credit cards reimburse fees for towing services or compensate the rental company for the income lost while the car is being repaired.

Read more: What auto theft prevention devices should you use?

What to consider before using your credit card for rental car insurance?

Before relying on credit card rental insurance, it’s important to understand its terms. You have to review key details like vehicle exclusions, rental period limits, and maximum coverage amounts to ensure adequate protection.

Here’s the key considerations to keep in mind: 

1. Coverage limitations

Many credit cards restrict coverage to vehicles with a Manufacturer’s Suggested Retail Price (MSRP) under $65,000 to $85,000. If the rental vehicle exceeds this limit, you’ll need alternative coverage. Be cautious if the agency offers an upgrade to a luxury car, as such upgrades may invalidate your coverage.

2. Length of coverage

Rental car coverage typically lasts for 31 to 48 consecutive days. If your rental exceeds the coverage period, the entire rental will not be covered—even from the start. To avoid gaps, consider returning the car briefly and re-renting it, assuming your credit card allows consecutive rentals with a break in between.

3. Geographic restrictions

Some countries, like Ireland, Italy, and Jamaica, mandate that car rental insurance be purchased locally. Make sure your credit card covers rentals in your destination by reviewing the policy details before travelling.

4. Vehicle eligibility

Exclusions often apply to high-end sports cars (like Ferraris and Lamborghinis), some luxury cars, trucks, vans, and rental vehicles like U-Hauls.

“When travelling through western Canada it is relatively easy to rent a pickup truck as most people are going out to oil or mine sites on business,” Sojka says. “Your credit card won’t cover pickup trucks, so if customer service offers you a pickup truck, be aware that you’re not covered. U-Haul rentals are not covered either.”

If you plan to rent any vehicle outside standard sedans or SUVs, confirm eligibility with your credit card provider.

5. Other coverage benefits

Some credit cards offer additional benefits, such as personal effects coverage (protection for belongings inside the rental car) or accidental death and dismemberment coverage for injuries or fatal accidents during your rental period. Check if these features apply to your card.

Sojka recommends customers read the fine print on their credit card information packet to check what type of rental car coverage the credit card provides, exclusions, and the terms and conditions. You can also compare credit cards to see what other benefits they offer, to make sure you are getting the most out of your credit card.

Read more: Do you need to buy rental car insurance?

What are the best credit cards for rental car insurance?

Many credit cards offer rental car insurance. However, here are our top picks for the best credit cards in Canada for rental insurance and what they cover:

BMO™ Ascend World Elite®* Mastercard®*

• Personal effects coverage: Coverage for the cash value of personal belongings in the rental car, up to $2,000.
• Accidental death and dismemberment: Compensation of up to $300,000 in case of injuries or fatalities while using the rental car.
• Rental eligibility excludes vehicles over $85,000 MSRP and rental periods exceeding 48 days.

Scotiabank®* Gold American Express® Card

• Automatically includes CDW coverage when you pay for the full cost of the rental with this card and decline the rental agency’s CDW.
• Covers damages up to the vehicle’s actual cash value.
• Vehicles costing more than $65,000 or rentals exceeding 48 days are excluded.

CIBC Dividend® Visa Infinite*

• Covers CDW when the rental cost is paid with the card, protecting up to the vehicle’s actual cash value.
• Also includes towing and administrative charges resulting from theft or damage.

• Exclusions apply for vehicles over $65,000 and rental periods beyond 31 days.

  Tangerine World Mastercard®

• Provides full CDW coverage if you pay the rental cost with your card and decline agency CDW.
• Covers rental cars valued up to $65,000 MSRP and rental periods up to 48 days.
• Includes valid loss-of-use charges.

PC® World Elite Mastercard®

• Provides CDW insurance for rental cars when you pay the full cost using this card.
• Covers liability for damages, theft, and towing up to the vehicle’s actual cash value.
• Rental periods exceeding 31 days and vehicles over $65,000 are not eligible.

Learn more: Which credit card program in Canada is the best for you?

How to use your credit card insurance 

It’s important to understand how to make the most of your credit card’s rental car insurance to guarantee a smooth process. Here’s what to keep in mind:

• Decline the agency’s CDW: For your card coverage to activate, you must decline the rental agency’s insurance.
• Use the card for full payment: Rent the car with the credit card that provides coverage to activate the benefits.
• Check exclusions: Review the fine print for any vehicle or destination restrictions that could affect your coverage.
• Keep documentation: Retain proof of payment, the rental agreement, and other documents in case of a claim.

Using credit card insurance for rental cars is a smart way to save money and stay protected. However, consider factors like vehicle price limits, rental duration, and country-specific restrictions. Choose a credit card that matches your travel needs and review the terms carefully to avoid surprises.

Read next: Does your car insurance cover you when travelling out of province?