PRIMARY INSURANCE: What Is It & How Does It Work?

Insurance Carrier, Amount, and Credit Card Rental Insurance
Image by diana.grytsku on Freepik

Primary and secondary health insurance policies both exist to provide coverage for medical expenses. Common practice dictates that primary insurance be utilized first. The primary insurance carrier is the one who pays your medical bills before any secondary ones. Additionally, the Social Security Administration then determines the primary insurance amount (PIA) Insurance on your credit card for rental cars includes primary and secondary coverage and may assist with vehicle repairs in the event of theft or accident damage.

Primary Insurance 

In the event of a medical expense claim, the primary insurer will foot the bill first. This means that when scheduling an appointment or receiving medical care, you will not be able to specify which insurance plan will be used. Check with your primary insurer to make sure they will pay for any medical care you receive. In other words, if your primary insurer does not pay for the service, your secondary insurer may or may not.

What is Primary Insurance?

When something bad happens, the policyholder can turn first to their primary insurance, which will cover them up to a certain dollar amount. A person’s primary insurance policy provides the initial layer of defense.

In the event of a claim, the primary insurer is the one responsible for making the initial payment. Having a primary insurance policy is crucial to ensuring financial security in the event of an accident or illness. A single comprehensive insurance plan can provide coverage for numerous types of losses, including those involving people, property, and legal responsibility.

In the event of an accident or illness, your primary insurance policy will be responsible for paying the bills before any secondary policies kick in. 

In most cases, property, liability, and health care coverage will be the focus of your primary insurance policy. Primary insurance is the policy that kicks in to cover a loss before any other policies do. When the primary policy’s coverage is depleted, the excess (also known as secondary) policy kicks in to cover the remaining costs.

The most typical type of policy that both individuals and businesses purchase is primary insurance. Primary insurance is the policy that pays out first if the policyholder incurs a loss. Even if additional policies exist, primary insurance will always provide coverage first. Any additional policies would not pay out until the initial coverage limit was exhausted. 

Credit Card Car Rental Primary Insurance 

Your credit card rental car insurance may help pay for repairs to your rental car if it gets damaged in an accident or is stolen. You can get this insurance in two different types: primary coverage and secondary coverage. In the event of damage to your rental vehicle, the primary rental car coverage will take care of it before your auto insurance kicks in, so you will not have to file a claim with them.

At the very least, one premium credit card from many of the bigger banks comes with primary rental car insurance. Many of these cards have annual fees and are only good for people who travel a lot.

After your insurance covers the damage to the rental car, your credit card’s secondary coverage kicks in. Secondary coverage can sometimes become primary coverage.

Coverage Amounts

Often, the amount of coverage limits how much it costs to fix or replace a car. When talking about cars, this is usually called their “actual cash value” or their “manufacturer’s original retail price,” which could be $50,000 or $75,000. Loss of use fees can be expensive, so the card may cap your total expenses per incident.

Credit Card Rental Car Coverage Exclusions

Carefully peruse the small print of your credit card’s rental car insurance policy to learn exactly what is and is not covered. It is important to read the fine print, as some policies may exclude certain vehicles because of their value or utility. Some exclusions include:

#1. Liability insurance is Excluded

If you cause damage to another vehicle or person’s property while driving a rental car, your credit card’s insurance will not pay for it. In most cases, credit card collision damage waivers will not pay for medical bills incurred by you or anyone else in an accident. To be sure, consult your auto insurance policy or get in touch with your service provider. 

#2. Some Countries are Excluded

Different cards and issuers have different lists of countries that are not allowed. Nonetheless, the most frequent outliers are the aforementioned countries as well as Australia, Israel, Italy, Ireland, Jamaica, Northern Ireland, and New Zealand. Call your card’s customer service number before leaving to make sure your planned destination is covered when renting a car outside the US. Rentals in countries subject to U.S. economic sanctions, such as Cuba, are also likely not covered.

How to Make a Claim on Credit Card Car Rental Insurance

In many ways, the claims process is the same as it is with traditional auto insurance.

#1. Contact the Car Rental Company About Your Claim 

Contact the claims administrator immediately, but no later than 45 days or as stated in your card’s benefits booklet. The company will send you follow-up instructions that include paperwork. If secondary damage is all that your credit card will pay for, you should submit a claim as soon as possible with your auto insurance. This is because the credit card claims process might not start until you provide evidence of what your insurance policy covers. Time may be limited because you may still need to submit your paperwork by the card issuer’s deadline.

#2. Prove Your Financial Loss

When an accident occurs, you will receive a claim form to fill out and send back within 60–90 days. This paperwork may include: 

  • For damages, please provide the following: a copy of the police report (if applicable), an accident report form, an itemized estimate and final bill for repairs, photographs of the damaged vehicle, receipts, and correspondence from the rental agency.
  • Checkout and check-in receipts for the rented vehicle, a copy of the rental agreement, and receipts for any payments made towards the rental agency’s claim constitute payment.
  • Your Insurance Plan and Agreement: The driver’s license, insurance card, and other insurance documentation you have on file

#3. Receive Claim Payments for your Losses 

Depending on the policies of your credit card company, the time it takes for you to get paid for losses that have been verified can range anywhere from 15 to 90 days after the documentation has been received. 

Visa, Mastercard, and American Express are just a few of the major credit card companies that provide rental car insurance to their cardholders. However, each card’s protections may be different depending on the financial institution that issued it; even cards from the same issuer may have varying degrees of coverage.

When it comes to rental car theft or damage, credit card coverage typically kicks in after your auto insurance. Credit cards usually only cover you for a certain amount of time. For instance, your Visa card may cover car rentals for up to 31 days abroad and 15 days domestically.

Automobiles like expensive or rare cars, motorcycles, trucks, and big vans are often not covered by credit card insurance. In addition, credit card protections typically only apply to rentals made through conventional car rental agencies, not car-sharing services like ZipCar or peer-to-peer rentals. Make sure you check with your credit card company if you frequently use these services and find out that they do not provide coverage.

How Does Credit Card Car Rental Insurance Work?

If you pay for the whole rental car with a credit card, you can only use the card’s rental car insurance. In most cases, you can use your points to get free car rentals. Cardholders are almost always required to be the primary renters, though additional drivers may be covered if listed on the rental agreement. Last but not least, it is standard practice to decline the CDW and LDW offered by the car rental company.

If your credit card covers rental cars, it may pay for repairs after an accident or theft. There are two types of this insurance: primary and secondary.

Primary vs Secondary Car Rental Insurance

In the event of damage to your rental vehicle, the primary rental car coverage will take care of it before your auto insurance kicks in, so you will not have to file a claim with them. Larger financial institutions usually have one premium credit card that provides primary rental car insurance. The majority of these credit cards have annual fees and are geared towards frequent travellers, though a few do not.

Your credit card’s secondary rental car insurance kicks in only after your primary auto policy has paid for any damages to the rented vehicle. There are special cases where secondary insurance can replace primary.

How does Rental Car Insurance Work?

If you want to take advantage of your credit card’s insurance, you must charge the entire cost of your rental car to the card that provides insurance, rather than using a combination of cards. If the car rental agency offers you any waivers or extra insurance when you pick up your vehicle, politely decline them.

Your credit card should cover rental cars, and most of the time, there are no fees or deductibles for making a claim. Your credit card’s rental car insurance will contribute towards the cost of repairs if an accident or other covered loss causes damage to your rental vehicle. Card-based coverage usually only covers you for 15 to 30 days in a row. Where you rent the car usually determines the limits; longer limits are more common abroad.

What is Covered by Rental Car Coverage?

Even though policies’ precise wording may change, they almost always include protection against loss or damage due to theft or collision. Vandalism and natural disasters may be reimbursed. Check with your insurance company to see what is and is not covered.

Your auto insurance policy will cover costs beyond what the credit card company will, in the event of an accident. Credit card companies will not pay for the following forms of auto insurance claims:

  • Other vehicles or property damage
  • Injuries to anyone—including you 
  • Loss or theft of personal property
  • Your legal responsibility for harming others
  • Damage, deterioration, or mechanical failure
  • Drivers without insurance

Primary Insurance Amount 

If a retiree chooses to start collecting benefits at the traditional retirement age, that benefit is known as the “primary insurance amount” (PIA). At this point, neither an early retirement fee nor a delayed retirement bonus applies.

The PIA is calculated by adding together three individual percentages of the average index monthly salary. The amounts depend on the worker’s passing away, becoming disabled before age 62, or reaching age 62.

Social Security Administration retiree benefits are based on a person’s average indexed monthly earnings (AIME), which is calculated by taking their 35 highest earning years and adjusting them for national wage growth.

The Social Security Administration then determines the primary insurance amount (PIA), which is the monthly benefit a worker receives if they choose to start receiving benefits at full retirement age, using this AIME and a progressive replacement rate formula.

PIA Formula

For 2023, the PIA calculation takes 90% from the first $1,115, 32% from earnings over $1,115 but under $6,172, and 15% of monthly earnings over $6,172. Following that, it will be rounded down to the next whole dollar. That is: 

  • 90% of the first $1,115 of his/her average indexed monthly earnings, plus
  • 32% of his/her average indexed monthly earnings over $1,115 and through $6,721, plus
  • 15% of AIME over $6,721 

Bear in mind that as the average wage index rises each year, these bend points do as well. For those turning full retirement age in 2023, the PIA cap is $3,627.

In 2024, these amounts are as follows: the first $1,174, the amount between $1,174 and $7,078, and the amount over $7,078. The PIA formula for 2024 uses these amounts as its “bend points.”  

You can find the table for retirement ages and maximum family benefit formulas, as well as the dollar amounts known as “bend points,” on the Social Security Administration’s website.

Primary Insurance Carrier

The term “Primary Carrier” refers to either the insurance company that underwrites an insurance policy that covers physical damage to the Collateral or the insurance company that offers liability coverage to any person who is responsible for the Collateral suffering a Constructive Total Loss. Both of these types of insurance companies are “primary insurance carriers.”

Can You Switch Primary and Secondary Insurance?

People can change their primary insurance to secondary insurance. All they have to do is tell the company that provides their secondary insurance that they no longer want their primary insurance to cover them.

What Is the Purpose of Secondary Insurance?

The purpose of a secondary health insurance policy is to fill in the financial and service gaps left by your primary policy. Additional health plans, such as those for cancer, vision, and dental care, are examples of the types of coverage that secondary insurance can fill in for when primary coverage falls short.

Who Qualifies as the Primary Insured?

The main insured or applicant is usually the person who fills out and signs an insurance application. This person is usually the policyholder, and their name will appear on the page that lists the premiums due after the policy is issued.

Is Medicare Always Primary Insurance?

When you have more than one type of health insurance, Medicare coverage will typically take precedence as your primary insurance. On the other hand, Medicare coverage might be secondary in certain circumstances.  

Is It Worth Having Two Health Insurances?

Having more than one health insurance plan can lessen the amount of money you have to pay out of pocket for medical expenses. When it comes to submitting claims for medical treatment, having access to two different health plans can be beneficial. Having two different health insurance plans can increase the amount of coverage that you receive.

Why Do Insurance Companies Inquire About Your Other Coverage?

There are numerous reasons why health insurance providers inquire as to whether or not you have other types of coverage. The evaluation of risk is an important factor. Benefits coordination is another factor.

To assess your risk, calculate precise premiums, and provide any discounts that may apply, auto insurers will inquire about your current policy. To find out if you have coverage now and what your coverage history is. A review by the insurance company will reveal any potential coverage gaps or claims that may affect the new policy.

What Is the Difference Between Primary Insured and Named Insured?

A named insured is a person or business that receives all of the insurance policy’s protections and has its name listed at the top or on the first page of the insurance contract. This individual is the primary insured as well as the policyholder. Any policy benefits and protections are due solely to the named insured.

How Do I Know if My Credit Card Has Car Rental Insurance?

If you want to know if your card provides rental car insurance, look at the card’s benefits brochure. If you have access to your card account online, you can try logging in to see if the list of perks is there. Finally, if you have any further inquiries regarding your card’s benefits, you can always call the number listed there.

Does My Credit Card Cover Third-Party Liability?

No, the insurance that credit cards offer only covers damage to the rental car and not to other people.

What Does Basic Rental Car Insurance Cover?

The guide to benefits that came with your credit card will tell you which insurance is primary and which is secondary. When you have primary auto coverage, which is not very common, your credit card coverage pays your bills before your vehicle insurance. In the event of an accident, you will not be responsible for filing a claim or making a deductible payment to your insurance provider. 


In the event of a claim, the primary insurer will foot the bill up to the deductible amount before the secondary insurer begins paying. It is a nice perk that most premium credit cards cover primary liability for rental cars. It can be comforting to know you are safe, even if you do not buy the rental company’s insurance. If you like the freedom of renting a car when you travel, the insurance that comes with your credit card can be a great deal. Before you go to the rental counter or apply for a card, familiarize yourself with these benefits.

  3. Business Umbrella Insurance: What Is It & Who Should Get It?
  4. INSURANCE CARRIER: The Ultimate Guide


Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like