Primary Vs. Secondary: Vehicle Insurance Explained

When it comes to vehicle insurance, it's important to understand the difference between primary and secondary coverage, especially when renting a car. Primary auto insurance is the main coverage that pays first in the event of an accident. It usually has higher limits and covers the full cost of damages. On the other hand, secondary auto insurance, often referred to as backup coverage, kicks in after primary insurance or when the latter's coverage limit has been reached. It covers deductibles, additional damages, and expenses that your primary insurance doesn't.

When renting a car, you have the option to choose between the rental company's insurance or the rental insurance offered by your credit card company. Primary car insurance coverage is typically provided by the rental company, fully covering your damages. Secondary car insurance coverage, on the other hand, is commonly offered by credit card companies as a benefit. It's important to note that most credit cards offer secondary insurance, which may not provide sufficient coverage in the event of an accident.

Primary insurance is the initial source of coverage

When it comes to vehicle insurance, primary insurance is the initial source of coverage in the event of an accident or incident. It is the first policy to provide coverage and pays for the loss or incident first. This means that if you are in an accident, you will file a claim with the primary insurance provider before any other insurance provider.

One of the biggest benefits of primary insurance is that it covers damages from accidents, theft, or vandalism without the insured having to pay a deductible. This type of insurance also ensures that the insured's insurance premium won't increase as a result of the accident. Primary insurance typically has high coverage limits and often covers the full cost of damages.

Credit card companies sometimes offer primary rental car insurance as a benefit to their customers. This means that if a customer rents a car and is in an accident, the primary rental car insurance provided by the credit card company will cover the damages first. This can save the customer money and provide peace of mind.

It's important to note that primary car insurance through a credit card company is usually only available if the rental car is paid for with that specific credit card. Additionally, very few credit card companies offer primary car coverage, with most offering secondary coverage instead.

In summary, primary insurance is the initial source of coverage and provides valuable protection and benefits to the insured in the event of an accident or incident.

Secondary insurance fills gaps or acts as a backup

Secondary insurance acts as a safety net, filling in gaps in primary insurance coverage and offering additional protection. It is important to understand the distinction between primary and secondary insurance to ensure comprehensive protection.

Secondary insurance coverage is supplementary; it steps in when the primary insurance coverage is insufficient or does not apply. This can occur when the primary insurance has reached its coverage limits, excludes certain treatments, or does not cover specific incidents or locations. For example, if you are travelling abroad and your primary insurance does not provide international coverage, your secondary insurance will become your primary coverage for that trip.

Secondary insurance covers any remaining costs after the primary insurance has paid its portion. It is designed to fill in the gaps and provide additional financial protection. This can include covering deductibles, co-payments, and any expenses not covered by the primary insurance. For instance, if you are in an accident with a rental car, your secondary insurance may cover the deductible on your personal auto policy or any damage to the rental car not covered by your primary insurance.

Secondary insurance is typically offered as a benefit on credit cards. It is important to note that this type of insurance is not liability insurance and will not cover personal injuries or property damage caused by the policyholder. It also has limitations and may not cover certain vehicles, such as luxury or high-risk cars.

Having secondary insurance can provide peace of mind, especially when travelling or renting vehicles. It ensures that you are not left with thousands of dollars in unexpected medical or repair bills. However, it is important to carefully review the terms and conditions of both primary and secondary insurance policies to maximise coverage and minimise out-of-pocket expenses.

Secondary insurance is often called 'backup insurance'

Secondary insurance is often called backup insurance because it only comes into effect when other insurance—like primary insurance or your personal auto policy—denies the claim or meets the coverage limit. It is a specific type of rental car insurance offered by credit card companies to pay for certain damages in an accident while driving a rented vehicle.

Secondary insurance is not liability insurance. It is important to note that secondary insurance will not cover you if you cause an accident that damages another vehicle or injures its passengers. In such a scenario, you would be personally liable.

Secondary insurance covers the out-of-pocket deductible on your personal auto policy, damages not covered by personal or primary insurance, claim denial, and amounts in excess of limits. If you are travelling outside of the US, secondary insurance acts as primary coverage because your personal car insurance will likely not be accepted abroad.

Secondary insurance is a good option if you only have the minimum liability car insurance, which does not cover damage to the car you are driving or your own injuries and property loss. However, if you have full coverage—meaning liability, comprehensive, and collision coverage—secondary insurance is likely unnecessary.

Primary insurance covers theft or vandalism

Primary insurance is a valuable benefit offered by top-tier credit cards. It provides peace of mind when declining the rental company's coverage and can save you a lot of money. It also eliminates the need to file claims with your personal car insurance company, which can be a tedious process.

If you have comprehensive coverage on your auto policy, it can cover vandalism to your car, minus any deductible, as intentional damage to your vehicle is beyond your control. The deductible options for comprehensive coverage typically range from $0 to $2,000, depending on your insurer and state. If the cost of vandalism repairs is higher than your car insurance deductible, it may be a good idea to file a claim.

It's important to note that if you have a damage or theft claim, you should contact your credit card customer service. They will provide you with the necessary information to start filing your claim.

Secondary insurance is usually offered by credit card companies

Secondary vehicle insurance is usually offered by credit card companies as a backup insurance option for rental cars. This means that it only comes into effect if your primary insurance does not cover the accident or if you do not have any other insurance.

Credit card companies that offer secondary insurance include Visa, Mastercard, and American Express. However, the specific benefits and coverage can vary depending on the card issuer. For example, Mastercard covers vehicles with a capacity of nine passengers or fewer, while American Express offers secondary medical coverage and accidental death or dismemberment coverage for drivers and passengers.

It is important to note that secondary insurance from credit card companies is not liability insurance and will not cover damage to other cars or property, personal injuries, or legal responsibility for damage to others. Additionally, it may not cover luxury or exotic vehicles, motorcycles, or trucks.

Before renting a car, it is essential to understand the coverage provided by your credit card company and any exclusions or limitations that may apply.

Frequently asked questions