Credit Cards and Car Rental Insurance: Are You Protected?

We’ve covered the myriad of car insurance issues when you rent a car many times. One of the basic tenets of renting a car has always been that if you charge the rental to your credit card, it’s possible that you likely have sufficient insurance coverage between your normal auto policy and the coverage being offered by the card issuer. A new report by CreditCards.com indicates that it may be time to rethink that idea.

According to the report, car rental companies have begun adding extra fees – ones they’ve had on their rental agreements for years – that they incur when a customer damages a rental car, such as fees for taking a rental car out of commission, which results in lost income for the rental agency.

These extra fees aren’t covered by anyone. Your auto insurance company will not pay them, as they’ll only handle damages. And the aforementioned credit card companies won’t pay for them either, leaving consumers on the hook to pay these fees out of their own pockets.

Getting the coverage you need on a rental car may be possible with the combination of your auto policy and your credit card issuer, but it is always important to read the fine print of any contract. So you need to know what your credit card issuer will and will not pay for in the event you wreck an automobile you’ve rented.

Since many of us don’t read that fine print, which in this case, would be listed under “exclusions” to the insurance protection offered by the credit card companies, we’re covering some of the bigger exclusions here. They cut a wide swath, so they cannot be ignored.

The big five (Visa, MasterCard, American Express, Discover and Diners Club) all exclude certain types of vehicles from their coverage. While we can see the need to exclude high performance vehicles, exotic cars and motorcycles from such coverage, we cannot say the same for excluding pickup trucks – a vehicle that every credit card company excludes from coverage.

Many of the credit card issuers also refuse to cover SUVs and luxury models as well. So if you’re renting something beyond the typical family sedans most car rental places have as their primary rentals, you probably will not have the standard insurance policy of your credit card protecting you.

Another across the board exclusion is the length of time the insurance is in effect – as in how long you can rent the car and be covered. These limits range from the industry low of 15 days by Visa, up to 45 days for Discover. Discover’s 45 day policy only covers commercial accounts, though.

Certain countries are excluded from coverage as well, so if you’re renting a car overseas, you’ll need to know if the country you’re in presents such problems. Discover is the only card issuer that doesn’t have countries excluded from coverage, and the other four issuers all exclude Jamaica, Ireland and Israel. Some issuers go well beyond those three nations.

Finally, each card’s insurance policy has a policy limit, just like auto insurance. Visa’s coverage is limited to actual cash value of the rental car, whereas Diners Club offers coverage up to $100,000. Discover offers a maximum payout of just $25,000.

Don’t fret – it is possible to ensure you have the proper amount of insurance coverage without resorting to purchasing the expensive, non-insurance plans offered by all car rental companies. A little research and reading (and remembering) the fine print of your credit card agreement can give you peace of mind that you’re covered if you wreck a rental car.