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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. raj says:

    Patty & Pat: thanks for your input on the amex premium coverage…in fact you can even get it for $20 for lesser coverage….I signed up !

  2. Kyle L says:

    There is still a lot of red tape with the American Express Card. It doesn’t cover every vehicle. If the rental is longer than 14 days it’s not covered. If the rental is damaged from Hail or Vandalism it’s not covered. I am still waiting to hear back on theft of the vehicle but it sounds like they won’t cover that either. Better off to pay the Damage Protection at the Rental Company and not worry about the red tape. We had a customer think he was covered with his Amex Card but he was on day 15 and side swiped a pole and he was left with a 10k bill. Better to use rental company coverage and avoid red tape.

  3. Bingo says:

    My insurance agent also explained that if the rental car is damaged and you have it on your own policy and credit card, usually neither your policy or card provider will pay for any down time of the vehicle going forward – by that I mean the rental car company can bill you rent for the time it is in a repair shop.

  4. george says:

    If you are a resident of Minnesota, Rhode Island, North Dakota, and possibly NY or TX, beware of relying on credit card insurance instead of damage waiver. These states treat rental car claims as a liability claim, usually with no deductible. Therefore, the credit card coverage is worth nothing. You are going to have to report to your primary carrier
    and be prepared for premiums to go up. Better to elect rental car company’s damage waiver.


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