The Ultimate Guide to Credit Card Rental Car Insurance in Canada

By Arthur Dubois | Published on 21 Sep 2022

It’s no secret that driving is expensive in Canada. Look at renting a car. Did you know that by law you need to have rental car insurance? You can buy your own, but a great credit card comes with great rental car insurance.

In fact, credit cards can make driving less expensive. Some credit cards save you money on gas. Other cards give impressive rental car insurance coverage.

However, it’s hard to know exactly which credit cards have good insurance coverage. To make your hunt for a credit card with good rental car coverage easier, we’ve compiled a list of our top picks. Since they all offer their own coverage and non-insurance perks, there’s sure to be something for everyone and every lifestyle.

Car rental insurance is not created equal

First of all, you quickly realize that not all car rental insurance plans are equal. There are generally four types of rental car insurance:

  • Liability coverage (LI)
  • Collision or loss damage waiver insurance (LDW/CDW)
  • Personal accident insurance (PAI)
  • Personal effects coverage (PEC)

Each type of insurance covers different liability coverage. Therefore, it’s important to understand the differences to ensure that you’re properly covered.

Liability coverage (LI)

Liability coverage is the most basic type of rental car insurance. If you get into a crash that is your fault while driving the rental car, liability coverage will take care of any associated costs related to:

  • Other vehicles
  • Damaged property
  • Legal disputes.  

However, the insurance will not cover damage to your rental car. Since this type of insurance is so important, Canadian law requires it of all rental car drivers. As a result, it’s generally, though not always, included in car rentals. Some personal auto insurance plans also include rental LI. You can also choose to purchase additional LI. Unfortunately, credit cards generally do not provide LI.

Collision and loss damage waiver (LDW/CDW)

Collision damage waiver insurance, also called loss damage waiver insurance, covers any fees if your rental car is stolen or damaged in an accident. While rental agencies usually offer this type of insurance as an add-on, your credit card may include it automatically.

However, in order to qualify for your credit card’s LDW/CDW protection, you’ll need to decline signing your rental agency’s LDW/CDW waiver. In most cases, this means that you’ll need to show proof of coverage to the agency.

Personal accident insurance (PAI)

In the event that you are in a car crash, personal accident insurance covers medical bills and associated costs for yourself and your passengers. Generally, PAI plans have limits for different claim categories like medical coverage for injuries, accidental death, etc., so it’s important to check each plan’s specifics before signing any papers. PAI is generally an optional add-on, but like CDW/LDW, your credit card may already provide sufficient coverage.

If someone robs your rental car, personal effects coverage (PEC) can replace the value of your possessions. Depending on the plan, PEC insurance insures items that belong to the primary driver, any additional drivers, or all passengers.

Be sure that you fully understand what your PEC insurance includes. Like LDW/CDW and PAI plans, PEC insurance is optional and generally sold by rental car agencies. Similarly, a few credit cards also provide it though it’s a relatively uncommon credit card perk.

Which credit cards offer the best rental car insurance?

When choosing a car insurance policy, make sure that the one you choose covers all of your needs. The same applies here. Each card has different coverage caps. In fact, only one card offers CDW/LDW, PAI, and PEC. Ultimately, you determine which card is the best fit for your rental insurance needs and overall lifestyle. If you’re having trouble choosing a card, you can also use our online credit card comparison tool.

Scotiabank Gold American Express Card

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LDW/CDW coverage: The Scotiabank Gold American Express card provides LDW/CDW insurance that covers full cost of cars that are valued up to $65,000, so long as you decline your rental agency’s LDW/CDW coverage and have rented the car for 48 days or less.

PAI coverage: While this credit card doesn’t offer car-specific PAI insurance, it does provide emergency medical insurance. As long as you are all under age 65, you, your spouse, and your dependent children are insured up to $1,000,000 each for the first 25 days of your trip. Seniors age 65+ are eligible for the medical insurance on the first three days of the trip.

If you’d rather have a credit card with travel perks than extensive rental insurance, the Scotiabank Gold American Express card is a great pick. While the card only offers LDW/CDW rental car insurance, its PAI-adjacent emergency medical insurance is still incredibly helpful—especially since it’s more broadly applicable.

Plus, the Scotiabank Gold American Express card comes with lots of other benefits, including airport lounge access, travel emergency medical insurance (which may come in handy when you are renting a car on vacation), trip cancellation insurance, and flight delay insurance. Since the annual fee and qualifying income threshold are relatively low, it may even be more affordable to sign up for this card rather than pay additional insurance premiums.

Scotiabank Passport Visa Infinite

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LDW/CDW coverage: The Scotiabank Passport Visa Infinite card’s LDW/CDW insurance covers the full cost of cars that are valued up to $65,000. To qualify, you’ll need to decline your rental agency’s LDW or CDW coverage. Also, the rental period cannot exceed 48 days.

PAI coverage: This credit card offers emergency medical coverage if you are outside your province of residence. You, your spouse, and your children are eligible for $2,000,000 in coverage for either the first 25 days (if under 65) or 3 days (if age 65 or older) of your trip.

Like the Scotiabank Gold American Express card, the Passport Visa Infinite only provides LDW/CDW car rental insurance and emergency medical coverage for your family. However, it does include automatic membership in the Visa Airport Companion Program’s Infinite tier, which comes with a 24/7 concierge service, extensive discounts on flights and luxury hotels, luxury lounge access, access to virtual doctors no matter your location, and more. As a cardholder, you’ll also get exclusive discounts on car rentals.

American Express Cobalt

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LDW/CDW coverage: The American Express Cobalt’s LDW/CDW insurance covers full cost of cars that are valued up to $85,000. To qualify, you must rent the car for 48 days or less and decline the rental agency’s LDW or CDW coverage.

PAI coverage: The Cobalt card comes with emergency medical expenses insurance that covers you, your spouse, and your children up to $5,000,000 per person for the first 15 days of your trip (so long as you are under 65). 

Depending on your lifestyle, the American Express Cobalt card is one of the most useful cards on this list. While its monthly fee is slightly more expensive than some of the other options, you’ll earn 5x points on food (restaurants and grocery), 3x points on streaming services, and 2x points on travel and transit.

In other words, if you like to have fun, this is the card for you. When staying at partnered hotels, you’ll also receive room upgrades and amenity credits, up to $100.

American Express Gold Rewards Card

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LDW/CDW coverage: If you decline your rental agency’s LDW/CDW option, the American Express Gold Rewards Car will cover theft and damages on any car worth up to $85,000, so long as the rental period is 48 days or less.

PAI coverage: You, your spouse, and your dependent children are each insured up to $5,000,000 on the first 15 days of your trip, so long as you are under the age of 65. Additionally, the Gold Rewards Card comes with up to $500,000 of accidental death and dismemberment insurance, so long as you purchase your trip tickets with the credit card.

If you’re simply looking for the card with the best rental perks, the American Express Gold Rewards Card is one of our top contenders. In addition to its impressive LDW/CDW and PAI insurance coverage. The card also provides members with Hertz Gold Plus Rewards membership; allowing them access to free class upgrades on cars rented for 5+ days. It also waives the fee for an additional driver. Cardholders also receive an annual $100 travel credit and a $50 NEXUS renewal statement credit every four years, among other travel-related perks.

Tangerine World Mastercard

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LDW/CDW coverage: Your Tangerine World Mastercard comes with LDW/CDW coverage for vehicles valued up to $65,000, so long as the rental period is less than 31 days long and you declined your rental agency’s LDW/CDW coverage and waver.

While the Tangerine World Mastercard doesn’t offer too many car rental perks, it’s a great option for flexible cash back: you can choose which purchase categories you’d like to earn 2% cash back on, then earn 0.5% on the rest of your purchases.

If you’re a frequent traveller or are always driving around, the Hotel-Motel, Gas, and Public Transportation and Parking options could lead to substantial savings. Plus, you’ll have access to Mastercard’s Travel Rewards and Travel Pass, which allow you to access travel lounges, enjoy bonus cashback, and more.

PC Financial World Elite Mastercard

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LDW/CDW coverage: The PC Financial World Elite card provides LDW/CDW coverage for rental cars worth $65,000 or less that have been rented for 31 days or less. To qualify, you must decline your rental agency’s LDW/CDW waiver.

PAI coverage: The card comes with up to $1,000,000 in emergency medical insurance for the first 10 days of your trip. You, your spouse, and any dependent children are all eligible for coverage.

While the PC Financial World Elite Mastercard has shorter insurance coverage periods than most of the cards on this list (e.g. the LDW/CDW coverage is only good for 31 days instead of 48), it comes with bonus point earnings that make it ideal for frequent drivers.

When shopping at PC grocery stores (e.g. Loblaws, No Frills, Fortinos) or booking trips with PC Travel, cardholders will earn 30 Optimum points per dollar. The card also comes with 30 Optimum points per litre of gas purchased at Esso or Mobil gas stations, and 45 points per dollar spent at Shoppers Drug Mart. Depending on your shopping habits, you can add up Optimum points quickly and enjoy extra discounts on your next vacation.

Rogers World Elite Mastercard

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LDW/CDW coverage: The Rogers World Elite Mastercard provides LDW/CDW insurance for any car valued at $65,000 or less that has been rented for 31 days or less. To qualify, you must not sign your rental agency’s LDW/CDW waiver.

PAI coverage: This card includes up to $1,000,000 in emergency medical coverage for either the first 10 days (if the individual who requires medical care is under 65) or the first 3 days of a trip (if the individual is between the ages of 65-75). You, your spouse, and your dependent children are all covered under the insurance. 

Although the Rogers World Elite Mastercard is a Canadian credit card, it really shines when making purchases in US dollars. The card generally offers 1.5% cash back, but any purchases made in USD are eligible for a 3% cash back rate.

Cardholders are also enrolled in Mastercard Travel Pass which includes access to 1,300 airport lounges worldwide. However, since you have to spend $15,000 on the card annually, we’d only recommend it if you’re frequently travelling to the United States or really love to shop online with US retailers.

Arthur Dubois is a personal finance writer at Hardbacon. Since relocating to Canada, he has successfully built his credit score from scratch and begun investing in the stock market. In addition to his work at Hardbacon, Arthur has contributed to Metro newspaper and several other publications