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Credit Card Rental Car Insurance is Secondary Coverage!?

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The Consumerist posted some information about rental car insurances and credit cards with a great list of the coverages (based on whether it’s a Discover, American Express, MasterCard or Visa card). I thought that perhaps the individual issuers (like Citi, Capital One, Bank of America, etc.) might build off the base insurance so I did some more digging. It turns out that the auto rental insurances offered by your credit card is secondary coverage, not primary coverage.

When I looked at the list of auto rental insurance coverages for Citi cards, I saw that the basics matched the table on the Consumerist. However, this paragraph stood out for me:

Visa Auto Rental Insurance coverage is secondary coverage and underwritten by Indemnity Insurance Company of North America. Certain conditions, restrictions and exclusions apply. Not all vehicles and not all countries are covered. Details of coverage will be provided upon cardmembership. (emphasis mine)

The language under several of the other categories is the same… it’s secondary coverage.

Woah.

From what I understand, secondary insurance kicks in after primary insurance (your auto insurance) or when primary insurance doesn’t exist or doesn’t apply (such as on international trips). The auto insurance coverage provided by your credit card is not the same as the waivers offered by the rental car companies.

When you get the insurance from your rental car company, you’re absolved of all responsibility if something were to happen to the car (you’re still on the hook if you’re at fault and did damage to something else, but that’s a different issue). Your insurance is never called, your premium won’t go up, and it’s as if nothing happened. When you decline the insurance, damage to the car is still covered by your own auto insurance policy.

When you don’t get that insurance and rely on a credit card, when something happens the credit card company will point to the fine print that says “secondary insurance” and tell you to call your auto insurance underwriter. If the demands exceed your primary insurance, that’s when secondary insurance comes in. In other words, if you destroy a Lamborghini, your credit card insurance will kick in.

I think I read that right but for years the advice was to always decline this waiver because you have it covered between your credit card and your own insurance. Am I misunderstanding it?

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35 Responses to “Credit Card Rental Car Insurance is Secondary Coverage!?”

  1. “but for years the advice was to always decline this waiver because you have it covered between your credit card and your own insurance.”

    How is that statement not true? Whether primary or secondary, you’re covered by your own personal insurance and/or your credit card coverage. Right?

    • Natalie says:

      Everyone thinks they are covered by credit cards and insurance but rental companies will require the customer to pay a deductable from primary insurance and loss of use (pay daily for rental till car is fixed). This amount can get expensive. The credit card coverage can screw many people over who are not aware of this. It better just to take the 15 dollars/day with the rental company and have a peace of mind and good experience then having this huge bill from rental company. You will be on the phone with cc companies, insurance companies and rental companies for up to a year settling this. Sometimes what you think is full coverage really isnt.

    • ngina james says:

      That is crap that the credit card tries to smooze you by saying the offer the insurance, yet you must read the fine print to know it is seconary because they don’t offer that info,and the reps are misleading. Credit card is useless on a basic rental, I like to minimize any claims on my own insurance and save by opting out the rental agencies insurance. But that is not an option even with the credit card.

  2. Kira says:

    The distinction doesn’t really matter to me – my credit card issuer is USAA and so is my auto insurance. (They can duke it out amongst their cubicles for all I care.) Makes it easier if anything happens.
    However, before I ever had USAA, I did the same thing too. I declined because I thought that between my credit card insurance and my auto insurance, I was covered.

  3. jim says:

    It’s not true because it’s secondary, you get different types of coverage from the two things.

  4. I get that it’s not quite the same as the waiver offered by the rental company, but you still “have it covered between your credit card and your own insurance,” don’t you? Sure, you have to report the incident to you car insurance company, but you’re still covered.

  5. jim says:

    You’re not covered in the same sense I guess, the rental company waiver is superior to the credit card supplemental waiver. With the car rental waiver, you’re absolved and your insurance isn’t involved.

  6. Brad says:

    Here’s what AMEX Platinum Card refused to answer by mail and their website will not address: if you don’t own a car or just have liability coverage on an old car, does my Platinum Card kick in as primary coverage?

  7. patty says:

    Perhaps a reason to have an AMEX card
    https://www152.americanexpress.com/fsea/travel/car_rental/product.do

    Premium car rental insurance

  8. Dave says:

    It definitely is not the same as the rental car company’s damage waiver.

    If you had to file a claim under your auto insurance, you would be responsible for paying the deductible, and you might face increases in your premiums.

    Also, neither the auto insurance nor the CC company’s secondary insurance is going to cover “loss of use” which means the money that the rental car company loses out on by having the car out of service. The rental car company will ask you to write a check to cover that.

    I still turn down the rental car’s damage waiver but it is important that you know that you are taking some risk in doing this.

  9. Nate says:

    I am an Insurance Agent by trade, I recommend that my clients always get the rental car insurance for a few reasons. One, deductible and rates increasing and two, loss of use. Rental car companies will charge a large fee for their car not in rental capacity while it is being fixed. Neither your CC nor your own Auto insurance cover the lose of use of the vehicle only the damage.

    Always get the coverage, it is worth it in the long run.

  10. Scott says:

    Dave, you are mistaken about the “loss of use”, at least with MasterCards MCASSIST:
    http://www.citibank.com/us/cards/gen-content/en.htm

    It covers loss of use.

    It also says that if you don’t have insurance it becomes your primary insurance. You must decline the rental company’s Loss/Collision damage coverage to qualify. If you do have insurance, the credit card covers the deductible.

    • dicejam says:

      Agree with Scott. Even visa has similar policies to cover ‘reasonable’ Loss-of-use

      http://usa.visa.com/personal/cards/benefits/bft_dmg_waiver_personal.html

      One of the coverage benefits goes like this.
      “What is covered?

      Subject to the terms and conditions in this Guide to Benefit, Visa Auto Rental CDW reimburses you for the deductible portion of your personal automobile insurance, valid administrative and loss-of-use charges imposed by the rental car company, as well as reasonable towing charges resulting from covered damage or theft of the rental vehicle while it is your responsibility. If you do not have personal automobile insurance or any other insurance covering this loss, this benefit reimburses you for the covered damage or theft as well as valid administrative and loss-of-use charges imposed by the auto rental company and reasonable towing charges. Only vehicle rental periods that neither exceed nor are intended to exceed fifteen (15) consecutive days within your country of residence or thirty-one (31) consecutive days outside your country of residence are covered. “

  11. Dave says:

    Scott, you’re correct. I reread my Visa terms and they also cover loss of use. I must have been thinking of “diminished value”, which is the reduction in value of the rental car due to its having been in an accident.

  12. Dan Ray says:

    Thanks for mentioning the Consumerist article, which, by the way, was entirely based on the original research here at CreditCards.com, where I’m the editor. The original article, at http://www.creditcards.com/credit-card-news/rental-car-insurance-policies-1273.php also points out this is secondary coverage: ” If you get in an accident while driving the rental, your auto insurance policy will likely pay most of the damage, but your credit card company provides secondary coverage. It covers whatever your primary auto insurance doesn’t, paying whatever is left and going toward your deductible.”

    What I found most interesting were the country exclusions. Australia? Nah. Not covered. Iraq? Sure, no problem. Hmmmm…

  13. Brad says:

    If I’m paying $450 a year for an American Express Platinum Card (I do) I assume it becomes primary without owning a car or any collison coverage. Mastercard covers loss of use? You have to be kidding? What am doing using a prestigeous card like AMEX Platinum that doesn’t? Everybody has Mastercard. Who wouldn’t use it on a rental? You think I’m ever going to use my AMEX card again on a rental? There’s no loss of use. If somebody wants a successful website: do one with all the credit cards and what they cover with rentals side by side. It is funny how AMEX refuses to address loss of use or when primary coverage kicks in on their websites. “Phone us and we’ll start stuttering, uh well, umm, check your policy, agent…”

  14. Frugal Babe says:

    I used to be a branch manager at major a car rental company. Selling the damage waiver was a huge part of our business. We had sales meetings and contests between branches, and plenty of praise heaped on employees who could sell it well. It is undeniably a big money-maker for car rental companies. That said, I’ve seen plenty of renters get to walk away from a very sticky situation because they took the damage waiver. And I’ve seen plenty of others having to deal with their insurance companies, credit card issuers, and the car rental company long after the rental ended, because they didn’t take the waiver.
    I haven’t rented a car in ages, but when I do, I call my insurance agent and add full coverage to my policy for the time while I’ll be renting (I tell them why, and they’re fine with it). Then I decline the waiver. If I were renting overseas, especially in a country where they drive on the left, I’d take the waiver in a heartbeat. Same goes for rentals of trucks or cargo vans that I’m not used to driving.

  15. Brad says:

    Why would you even bother with full coverage when a simple gold mastercard covers primary when you have zero collision coverage? It even covers loss of use. I feel sorry for the poor souls believing rental car companies that their waiver is great. It only is great if you smash up a car and don’t want your insurance company to find out. AMEX premium can do that at $25 per rental but my $450 a year Platinum Card doesn’t cover loss of use but my $0 a year Mastercard does and kicks in primary. Don’t rent from a hotel site. These clowns give out cars with lots of scratches and broken plastic that they try to bill you for if not noted. I get cars for $99 a week and run them to L.A., over 1,000 miles each way. I can’t believe people use their cars to travel out of state. 115 degrees loaded running I-15 by Baker California is what I want for my car. I ran one car to Miami, up to Mass. and over to Denver and gave it back to a bad rental car company once. They went crazy.

  16. Brad says:

    If you want to know why American Express doesn’t put in print or have phone operators that can explain Loss Of Use, just read those 2 articles. What a mess. I don’t rent from those Budget/Hertz/Avis since their rates are always the highest due to their primary sales being to business clients who charge off on the expense accounts. Visa is like a Chinese Fire Drill. Case by case, incredible. Throw that card out on a rental. I guess I’ll rent with the ones that provide, or might provide, loss of use logs on their cars. Phone up American Express and ask if they cover loss of use or if you have primary coverage when you don’t have collison coverage or even own a car. The mumbling and deflecting is priceless. You can’t get the time out of them.

  17. Anonymous says:

    For the record, I don’t own a car or have my own auto insurance, and always use my Amex card to cover the LDW on rental cars.

    The one time my car sustained damage (a rock struck the windshield, cracking it all the way across) Amex completely covered the damage. They really did take care of things nicely.

    Once I had put Amex & the car company in communication, I never had to deal with it again until Amex sent me a summary of what they had paid out. And BTW, Dollar Rental Car had charged Amex for about 3 other things that were NOT damaged, ever (door panel, etc. completely made up).

    As for Loss of Use, it’s my recollection that Amex doesn’t cover it now, but that they used to. Not sure though.

  18. Jose says:

    I have an Amex BLUE card and the rental car coverage indicates that “loss of use” is covered. The website states: “Loss of use charges are covered for accidents, which occur on or after May 1st, 2006 when properly supported by the Rental Company.”

  19. Deepak says:

    from my research – the issue with ‘loss of use’ with AMEX cards is that they will cover it when they get the proper ‘car rental logs’ from the rental agency. The agency refuses to give it to AMEX, and in turn AMEX declines loss of use charges, leaving the consumer (us) holding th ebag. AMEX knows that the rental agency will niot give it their logs, but still advertises as covering ‘loss of use’ knowing full well that they will never have to pay on it.

  20. munchkin says:

    Does anyone know how long a period of time a car rental co. has to establish liability? I damaged the front bumper on the rental car. When I returned the rental car, the agent inspected the car but didn’t say anything about any damages. It’s been over a week, and I haven’t heard a word from the car rental co. How much longer can I expect to remain on edge?

    • Anon says:

      My friend rented an Enterprise car that we drove from Boston to Pitt to Chi to Indy and traced that route back in a long weekend. My drunk friend hit the curb and punctured the tire in Chi. We had a tough time getting it fixed at 2AM. Next day, we jumped on top of the car and left the roof in a bad condition. I screwed up the sliding door by banging it shut really hard. We ended up scot-free.

  21. Caiden Wilson says:

    Good post Jim. The car insurance is very important for you and your car. Some of the insurance company also offers the payment through credit cards and it provides certain discount for such schemes where some of them may not. The car insurance has schemes or policies where you can also save money on car insurance even if you borrow or lend a car from your relatives or friends. You can also insure it for single day or for month or for weekends too. This is really a great idea and this is really very helpful. onedaycarinsure.co.uk

  22. maura says:

    what happens in my case. i do not have an auto policy. does my credit card act as first insured?
    an i assume if my card offers this benefit i can decline coverage from the rental agent?

  23. Harry Hutton says:

    Do not trust your American Express Platinum Business Card to kick in if you are outside of theUnited States. I had a small scratch on the outside of my Avis rental in Madrid, Spain. Repair cost was 550 euros plus 18% VAT for a total of 649 euros (can’t wait for VAT to arrive here). The Avis people filled out all the forms for me to apply to Amex for coverage. No problem they told me. Amex always covers and quickly. Whoops! Coverage is for US only, not even Canada is included. Claim denied.
    I went back to info on CreditCardForum, no geographical limitation mentioned. It specifically called it an included benefit.
    Then back to Platinum Benefits on the Amex site. No geographical limitations listed. Then I talked to Amex Office of the Chairman Ken Chenault. “You are a long term valued customer (20+ years) but this is out of our hands. It is an insurance matter.”
    To me it sounds like false and/or misleading advertising.
    Any advice as to how to proceed?

  24. Pat says:

    Some of you people need to get your facts straight. Lol. I have been an American Express customer for a few years and they were very clear with me about the car rental coverage that automatically comes with my card. And they also clearly explained the Premium Car Rental Protection coverage that’s available for a per-rental charge of $24.95. They explained right off the bat that the coverage that comes with my card is secondary, which essentially means that it will pay the deductible that my personal insurance will make me pay. And if someone doesn’t have personal insurance, then the American Express coverage becomes primary. For the higher level coverage that you pay $24.95 per rental for, the coverage is primary, which mean you’re personal insurance company is not even involved and never will know you even had an incident with your rental car (unless you tell them). And as far as loss of use, American Express DOES cover that as long as the car rental company sends documentation proving the loss of use. By the way, the rep I spoke with at American Express didn’t fumble at all, or hestitate, or try to change the subject. She was very nice, casually explained everything, answered all my questions directly, and, before ending the call, even made sure I didn’t have any other questions or concerns. That’s my experience.

    • Nick says:

      I had a similar experience talking to Amex on the phone. I think they must have gotten the message on handling their rental coverage policy.


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