Experienced travelers have learned the hard way that all credit card rental car insurance is not created equal. Each credit payment network, like Visa and Mastercard, started offering rental car insurance coverage as a perk to attract new clients and retain their valuable cardholders. The expense of repairing rental cars started to weigh on their profits, so they have changed the rules somewhat and every cardholder would be wise to understand the coverage, the exemptions, and how to qualify for coverage from each of the different credit card payment networks.
Coverage Details
Most auto insurance companies work with their policyholders to insure against most eventualities that could cost money. The credit card payment networks are more interested in saving money than paying claims so the cardholders must be educated about the actual coverage offered.
- The credit payment network offers the rental car insurance instead of the bank that issued the credit card.
- Repair or replacement of the stolen or damaged rental cars as the secondary insurer behind the driver’s car insurance carrier for their personal vehicle.
- Towing charges from the scene of the accident to the nearest authorized repair facility that is recommended by the rental car agency.
- Each payment network has a specific limit of insurance for repair or replacement of the rental car, which is usually $50,000, but the driver should confirm the actual limit prior to denying the additional insurance offered by the rental car company.
Exemptions from Coverage
With each iteration of the program definition benefits are removed, so the cardholders must stay current on their knowledge of credit card rental car insurance coverage. When changes are made, cardholders must be notified, but most people do not read the fine print.
- The cardholder might be charged for the loss-of-use fees charged by the rental agency for the time that the car is out of service because of the damage incurred.
- Rental periods longer than 30 days will not be insured under the credit card plan.
- Certain rented vehicles are excluded from these basic insurance plans, including: campers, exotic cars, cargo vans, pickup trucks and limousines.
- Activities that are considered high-risk will also be exempted including all off-road driving.
- Rental cars in certain countries are exempted by each of the networks, so the documentation must be verified prior to renting a car in one of the excluded countries.
Qualifying Requirements
In order to qualify for the credit card rental insurance, all of the following statements must be true:
- The rental car agency’s collision waiver was declined at the time that the rental contract was signed.
- The driver must be the same person who signed the rental car agreement.
- The rental contract must be paid in full with the credit card that provides the rental car insurance coverage.
Summary of the Payment Networks
Every credit card network manages their rental car insurance program differently depending on any number of factors. Cardholder classifications are the driving factor behind the cost of these programs to the cardholder who wishes to rent a car and have a secondary insurance policy.
- Diner’s Club – Cardholders are offered a no-cost primary coverage insurance policy for all rental car contracts.
- American Express – If the cardholder wishes to purchase a primary coverage policy for the length of the rental car agreement, the fee is $24.95. Otherwise, American Express provides secondary coverage for the expenses the cardholder’s car insurance company does not cover.
- Visa – Cardholders of every classification are offered the rental car insurance coverage up to the actual value of the vehicle as it was manufactured. Visa is more flexible in paying administrative and loss-of-use fees.
- MasterCard – Premium cardholders are given this benefit, but standard cardholders are not allowed to use this program even under a fee-based program. The rental car contract cannot be longer than 15 days. Reimbursement limits are set on the actual value of the vehicle.
- Discover – Only the premium cardholders are offered the rental car insurance program through Discover. This provider is one of the least likely to pay administrative and loss-of-use fees in the event of an incident.
Recommendations to Confirm Coverage
Simply walking up to the rental car counter, denying the collision waiver, and driving off in the rental car might be a very expensive series of decisions. Every rental car company is different and the credit card rental insurance must be determined along with auto insurance coverage to mitigate the risk of an incident. The cardholder must take some specific steps to ensure that coverage exists at a sufficient level before deciding if they should choose rental car insurance:
- Prior to departing for vacation contact your auto insurance agent and ask questions concerning coverage of rental cars including the limitations. Have your auto insurance documentation available so that you can see the coverage statements in writing.
- Contact your credit card company and ask similar questions about rental car coverage and the limitations. Ask about exclusions that apply to the type of vehicle and the destination where the car will be rented.
- At the rental car counter, decline the rental car agency’s collision waiver. Pay for the contract in full with the correct credit card that will provide the rental car insurance coverage (almost all travel credit cards offer some kind of rental car insurance benefit but be sure and read the fine print carefully). List all of the drivers on the contract to make sure every driver is covered under the insurance.
- Drive the rental car safely on paved roads. Any accidents that are proven to be your fault because of negligence can invalidate the insurance coverage.
Take Action to Document Incidents
If an incident occurs and the rental car is damaged, the insurance companies will take a defensive posture in order to minimize their expenses. Most disputes will be heard and addressed if the driver of the rental car will provide substantial documentation and file all the necessary paperwork. Deductibles and extraneous fees might be the responsibility of the insured, but exorbitant and unproven expenses should be disputed appropriately with all involved parties.
Author: Emily
