Q: Does my credit card cover rental car insurance?

A: There are number of misconceptions floating around out there about rental car insurance credit card coverage. In fact, from my experience most don’t understand how it works exactly. I will go over the details but always check with your credit card company before renting to confirm… as we all know “terms and conditions are subject to change.”

How it works…
First of all it’s important to note that in order to qualify, you will have to decline the rental car company’s insurance and pay for the rental in full using your applicable credit card. This credit card car rental insurance is secondary; meaning that it only pays out what your primary auto insurance doesn’t cover. Usually that means they will pay the deductible on your personal car insurance. What if you don’t have regular car insurance? Then typically, but not always, the credit card coverage will kick in right away for the very first dollar in damage.

What’s covered…
Coverage varies by card (which we will discuss more in a moment) but typically it only applies to damage resulting from collision. That means if you get in an accident, it’s probably covered. But if someone keys your car, you might be stuck paying for it (if you don’t have primary insurance which covers it).

Vehicle exclusions…
If you’re renting a Taurus or a Camry, then you should be okay. But anything other than your run-of-the-mill passenger car and you may not be covered. For example, pickup trucks are never covered. Exotic and luxury cars, antique vehicles, full size vans, motorcycles, and some SUVs are not covered. So to play it safe, rent a basic car and always double check with your card issuer to make sure.

Let’s take a look at typical credit card car rental insurance coverage. Please note this information may be outdated and incorrect, so you will definitely need to check with your credit card car rental insurance policy before renting to know for sure:

American Express
Cards: all American Express credit cards and charge cards
Duration: up to 30 days
Amount of Coverage: varies by card, the charge cards (Gold, Platinum, Centurion) seem to offer the most
Excluded Countries: Jamaica, New Zealand, Australia, Israel, Ireland, Italy. If you have a small business American Express, coverage is only applicable for rentals in the United States.

Discover
Cards: all Discover credit cards except for student versions
Duration: up to 31 days
Amount of Coverage: up to $25,000
Excluded Countries: none, as long as rental car company in that country allowed you to pay for the rental in full using your Discover card

Visa
Cards: all Visa credit cards included
Duration: up to 15 days in your country, up to 31 days when renting outside of your home country
Amount of Coverage: up to the actual cash value of most rental eligible cars
Excluded Countries: Ireland, Northern Ireland, Israel, Jamaica

MasterCard
Cards: only included on MasterCard Gold, Platinum, World, World Elite credit cards
Duration: 15 days for Gold and Platinum, 31 days on World and World Elite
Amount of Coverage: whichever is less: $50,000 per accident, current market value, actual repair costs
Excluded Countries: none for MasterCard World and World Elite, for Gold and Platinum the exclusions are Ireland, Israel, Jamaica, and where it is not permitted by law.

The fine print…
As you can imagine, all of these credit card car rental insurance policies come with loads of fine print. Be on the lookout for fees which are not covered. For example, most will cover “reasonable towing” fees, however loss-of-use fees (while the car is being repaired or replaced) may not be covered if the rental company doesn’t provide your credit card company with proper documentation. “Administrative fees” with MasterCard are not covered. Discover cards don’t cover any of these fees whatsoever.

Other exclusions…
If you didn’t pay for the rental car in full with the credit card, you definitely won’t be covered. Driving while you are under the influence will most likely invalidate your credit card car rental insurance also. Vandalism is rarely ever covered and theft of vehicle isn’t always included. Be sure and check to see which driver(s) will be covered. There may be other exclusions depending on the issuer.

Does it really protect you?
As you can see, there are quite a few loopholes and fine print which create gaps in coverage. This is why it’s so important to check with your rental car credit card insurance policy (and not rely on this article) to determine the exact coverage you have.

My personal recommendation
If you don’t have comprehensive insurance on your own car, then I would definitely be skeptical of these secondary insurance coverage policies that credit cards offer. Unfortunately rental companies charge anywhere from $20 to $25 (plus tax!) for each day of insurance coverage if you buy it from them.

However if you have an American Express, you can buy optional primary insurance for just $24.95 per rental from AmEx directly. That basically means if you’re renting a car for longer than a day, it’s cheaper to get it through your AmEx card. The other added benefit is that it is for primary coverage (not secondary) so if you back up into a concrete post, you won’t have to worry about the vehicle repair claim negatively impacting your regular insurance history, since it won’t be reported to them (as long as the cost of the claim doesn’t exceed your AmEx rental coverage). Don’t have an AmEx card to do this? Then I recommend you check out the highly rewarding no annual fee AmEx Blue Sky card.

Note: This site has an advertising relationship with American Express.