I’ve written in the past about the hidden costs of renting a car, and Laura touched on one of these – rental car insurance – yesterday. Today I want to follow that up by taking a closer look at credit card rental car insurance policies.
Believe it or not, all major credit card issuers provide you with rental car insurance coverage if you pay for the rental with your card. While I always charge my car rentals, I’ve never had to invoke the rental car insurance.
In the one instance where I did damage to a rental car, it was a business trip, and my employer had negotiated a deal where all work-related rentals got full coverage from the rental agency. Thus, I just called in to report the damage and then handed over the keys and walked away at the end of the rental.
Anyway, if you’ve been wondering about the type of coverage offered by the various types of credit cards,
Visa rental car insurance
According to Visa’s policy, you will receive coverage for both collisions and theft as long as you pay for the entire rental with your card. This coverage extends to all authorized drivers on the rental.
This coverage includes “reimbursement for damage due to collision or theft up to the actual cash value of most rental vehicles” in excess of any other insurance coverage that you might have.
As with most insurance policies, there are a ton of exclusions, including theft of personal belongings, personal injury, personal liability, loss due to off-road operation of the vehicle, and loss due to illegal activities.
MasterCard rental car insurance
According to MasterCard’s policy, you will receive coverage for collisions, theft, vandalism, and weather-related damage as long as you pay for the entire rental with your card.
Once again, this coverage extends to all authorized drivers on the rental, and it applies to amounts in excess of those covered by any other insurance that you might have.
As far as exclusions go, things like theft of personal items, personal liability, loss due to illegal activities, etc. are likewise not covered by MasterCard. In addition, the MasterCard coverage extends only to damage that occurs on paved roads.
Discover rental car insurance
According to Discover’s policy, you will receive coverage for collisions only. The coverage is once again secondary to any other insurance that you might have, and it’s limited to $25, 000.
Interestingly, this coverage extends only to the person named on the Discover card, and it’s valid only in the United States and Canada. Otherwise, the exclusions are quite similar to those of other card issuers.
American Express rental car insurance
Finally… American Express. Their coverage is similar to that of MasterCard in that it covers collisions, theft, vandalism, and weather-related damage. However, like Discover, the coverage extends only to the individual named on the card.
They also exclude “large SUVs” as well as any damage that occurs off of paved roads. Aside from that, the coverage is quite similar to that offered by other credit card companies.
What about debit cards?
It’s worth noting that debit cards do not typically offer this sort of protection. Thus, if you pay with a debit card, you’ll not only be faced with a relatively large hold placed on your bank balance, but you’ll also be foregoing free insurance coverage.
15 Responses to “Credit Card Rental Car Insurance Policies”
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John F: Just a note to let you know that I call my auto insurance co before renting. I decline all coverage with the rental company in the states and pay for an additional binder with my insurance company for loss of rent. It runs me about $5 for 30 days. Since I don’t rent ofter enough..it’s worth me calling in…otherwise it runs about $50 a year.
I was in Hawaii two years ago and had my passenger window broke into and back-pack stolen. You must notify AMEX within a short time period — I called them immediately, only to find out when I dropped off the car that the agency said they would not have reported it as a courtesy to me – but the damage was done when AMEX sent a letter to Hertz asking about the charges. That said, no, my back pack and the contents were not covered — nor were the Hertz Administrative charges of $80. However, when I called Hertz, they immediately, without question, reduced it to $40.
@ #5 Kelly
Are you sure it was the rental coverage that was dropped? I recently received an updated benefits pamplet and “Collision Damage Waiver Insurance” is clearly still in it. The Travel accident insurance was cut in half from $500K to $250K, and “delayed luggage” insurance was completely dropped.
@ #8 Sandy
You should check your card’s specific policy, but my Chase Freedom’s covers the “…United States and most foreign countries. No benefit is provided for motor vehicles in Israel, Jamaica, the Republic of Ireland, or Northern Ireland.”
I always forget about the extra coverages that paying with a credit card provides. This is one worth looking into and comparing against what the car companies offer. I don’t have cause to use a rental vehicle often, but when I do it’s often out of the country. Does the same apply when used internationally?
This is an excellent tip.
However, before you decline that waiver, you really should read the actual wording of your credit card contract. The contract will spell out exactly what is and is not covered. It can be different for each type of card, and for each issuing company.
You can get this information on the company website, or you can just call them and ask. But I’d still get it in writing.
You don’t want to make a wrong assumption about something like that — it can cost you a lot of money.
Just finished paying $706 for tree limb damage to a rental from Alamo; that’s my $500 deductible from Liberty Mutual plus $106 for “loss of value” to the car plus $100 “administrative fee”. Loss of use, probably the only reason I’d have sprung for insurance thru Alamo (and thus almost double the daily rate for car rental) was covered by Liberty. I had charged to my Discover card, which basically covers nothing unless you total a Hummer stretch limo…
I just received a letter about my Chase Freedom Visa. They are ending Car rental insurance coverage as well as changing their purchase protection coverage in August. I expect more banks will follow their lead.
This is fine for me. I pretty much stopped using their Freedom card after they changed the rewards program at the end of last year. It’s no longer worth using to me.
Chase’s credit cards aren’t that great anymore.
Nickel, I currently have a mastercard. Do they cover little things that the car insurance companies will try to nit-pick for? Such as a little crack on the windshield, a small mark on the bumper, a small tear on the seat, etc? I fell victim for something like that once, and have always bought the extra “insurance” every time I rent a car to avoid it. Does Mastercard cover that instead?
I really appreciate all your help.
I’ve also wondered about this and this is one of the reasons I love this blog…
I wonder, for anyone who has had to deal with it, if the rental companies ever dinged anyone for loss of use. That’s one of the arguments they are always using on me when I rent a car.
Nickel this is a great tip, because I know tons of people that pay for that very insurance at rental car companies, then pull out their Visa or Master Card to pay for it. I think I’ve even done that! I will definitely remember this the next time I need a rental.
I can personally vouch for the Visa’s handling of rental car insurance. I was also unaware of the coverage that automatically was included if you paid for the rental with your visa card until we rented a small hatchback in southern California and had a slight problem with parallel parking. The damage wasn’t significant but still into the few hundred dollar range. A rep from my cc company handled the conversation with the rental company as well as the damages!