Best credit cards for rental car insurance in Canada

Imagine this scenario: you’ve just arrived at the airport and plan to rent a vehicle for a month at your new destination. The rental company agent asks if you’d like to purchase optional Collision Damage Waiver (CDW) insurance for your rental car. At $30 per day, it comes to $900 for the entire month. Getting rental car insurance is definitely a good idea, but do you require this additional insurance coverage? Before you dish out money on this waiver, check your credit card coverage, as it may already offer coverage for rental cars.

What rental car coverage does your credit card provide?

Most Canadian credit cards offer collision and damage insurance, explains Patrick Sojka, founder of RewardsCanada.ca, a credit card and loyalty rewards resource in Canada. If the rental car is damaged in a collision, stolen, or vandalized, the CDW covers the loss. For damage to personal property or bodily injury, you will require coverage from a third-party like your personal auto insurance or that purchased from the car rental company. Most Ontario auto insurance companies offer Ontario Policy Change Form (OPCF) 27: Liability for Damage to Non-owned Automobile(s), an optional endorsement that applies your personal auto insurance policy when driving a rental vehicle. If you choose to add this endorsement, be sure to compare car insurance rates to make sure you’re getting the best rate with your added coverage.

“Most credit cards in Canada provide primary coverage on their collision damage waiver coverage, as opposed to secondary coverage offered by credit cards in the U.S.,” Sojka says. “In the event of a collision, you can go through the credit card collision coverage first.”

He cites an example of a collision, where he backed into the column of an underground parking lot and called up his credit card company, and subsequently, damages were taken care of by the credit card company.

“On the other hand, if you have secondary credit card coverage in the event of a collision, you'd have to go through your personal auto insurance first.”

Some cards provide personal effects coverage, which protects your belongings in case the rental car is burglarized. Some cards also provide accidental death or dismemberment coverage, which protects you in case of death or injuries.

Best credit cards for rental car insurance

While most credit cards offer the same rental car insurance coverage with little difference in the benefits, here are our picks for the best credit cards in Canada:

• BMO™ Ascend World Elite^®* Mastercard^®*: This card provides coverage for the cash value of your personal effects (maximum of $2,000) and coverage for accidental death and dismemberment (up to $300,000). You can pay for the partial cost of the rental car using the credit card. Vehicles costing more than $85,000 with a rental period exceeding 48 consecutive days are not covered.
• Scotiabank^®* Gold American Express^® Card: This card automatically provides CDW insurance when you pay for the entire cost of the rental with your card and decline the agency’s CDW. If the rental car is damaged or stolen, you will be covered for the amount that you are liable to the rental agency up to the actual cash value of the vehicle. Vehicles costing more than $65,000 and with a rental period exceeding 48 consecutive days are not covered.
• CIBC Dividend Platinum^® Visa^* Card: This card provides coverage for CDW when you pay for the full cost of the rental by your card and decline the agency’s CDW. Vehicles costing more than $65,000 with a rental period exceeding 48 consecutive days are not covered.
• PC^® World Elite Mastercard^®: This card provides coverage for CDW when you pay for the entire cost of the rental by your card and decline the agency’s CDW. If the rental car is damaged or stolen, you will be covered for the amount that you are liable to the rental agency up to the actual cash value of the vehicle, plus any administrative or towing charges resulting from damage or theft. Vehicles costing more than $65,000 with a rental period exceeding 31 consecutive days are not covered.
• Tangerine World Mastercard^®: This card provides coverage for CDW when you pay for the full cost of the rental by your card and decline the agency’s CDW. If the rental car is damaged or stolen, you will be covered for the amount that you are liable to the rental agency up to the actual cash value of the vehicle, plus any administrative or towing charges resulting from damage or theft. Vehicles costing more than $65,000 with a rental period exceeding 31 consecutive days are not covered.

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

When renting a car, two things you should be aware of are the Manufacturer’s Suggested Retail Price (MSRP) and the length of coverage. Most credit cards cover vehicles with an MSRP in the range of $65,000 to $85,000 and for a period of 31 to 48 days.

Sojka advises customers to be vigilant of the MSRP, particularly because cars are becoming more expensive. “Most Canadian credit cards do not cover MSRPs higher than $85,000.”

“If you are offered an upgrade by the rental company, you won’t be covered for a car that costs more than $85,000.”

Similarly, if you rent a car for 50 days and the card provides coverage for 48 days, the entire rental period will not be covered. “You will not be covered from the start of your rental period,” he says. Most cards typically require a calendar-day gap before renting again for the next period of 31 or 48 days.

There are also some exclusions to insurance coverage through your credit card.

Some countries, like Ireland, Italy, and Jamaica, have mandatory laws where you must get car rental insurance. “If travelling to Italy, you have to purchase CDW insurance from the rental car company,” he says. “Make sure that your credit card will cover you in your destination.”

High-end sports cars like Ferrari or Lamborghini are not covered, while some luxury cars like Mercedes or BMW, may be covered.

“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,” he 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.”

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.

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