Credit Cards

What Credit Cards Cover Car Rental Insurance

By David Krug David Krug is the CEO & President of Bankovia. He's a lifelong expat who has lived in the Philippines, Mexico, Thailand, and Colombia. When he's not reading about cryptocurrencies, he's researching the latest personal finance software. 4 minute read

It’s common knowledge that tourists should resist the temptation to shell out more money for rental car insurance than they need to. A credit card’s insurance policy could safeguard you if something goes wrong with an online transaction.

This advice is true in most respects, yet it fails to account for critical aspects of insurance.
Many visitors find out the hard way that credit card insurance doesn’t cover them if they’re involved in an accident while abroad.

Six Common Situations in which you may believe you are safe, but you are not

  1. Sorry, but that type of vehicle is not permitted.

Your credit card’s rental car insurance contains a large list of automobiles that are not covered. In many cases, luxury and exotic automobiles are not permitted. A Ford F-150, on the other hand. When the automobile rental agency ran out of my preferred vehicle class, they gave me a free upgrade to a Ford truck.

I didn’t know till much later that my credit card wouldn’t let me rent a truck because of the open cargo bed. Also not included are some types of vehicles. Sports vehicles like the Ford Mustang are frequently seen in rental car fleets, but are typically not covered by other plans.

  1. There is no coverage in that country.

While you probably won’t be protected if you hire a car in a region of the world plagued by crime and lawlessness, what about in places like Italy? The country of Italy has been mostly tranquil ever since Mussolini’s downfall, but credit card companies still have issues offering insurance there and in a few other major tourist spots.

All four major credit card networks do not cover purchases made in Italy, Ireland, Northern Ireland, or Israel. This is also the situation in Jamaica, New Zealand, and even Australia.

  1. That Road Isn’t Counted

It’s not easy to get a hold of a copy of the credit card company’s rental vehicle insurance policy when you use it. Even if you do manage to get your hands on a copy, driving on a dirt road would not invalidate your insurance policy. You’ll discover a condition that says you’re not covered if you break your rental car agreement in any way.

It’s true that most rental car contracts ban venturing into dirt roads. In rural parts of the United States, where nearly all roads are unpaved, it is nevertheless possible to hire a car. However, if the collision takes place on an unpaved road, the credit card company’s insurance will not pay out.

  1. There is no coverage for a Loyalty Award Program.

Although I am all for loyalty programs and free vacations, I will never use a reward for a rental car. The credit card rental car insurance is only effective if the full rental is reserved and paid for using the same credit card. You are responsible for all costs associated with your rental car if you choose to use an award from your airline’s frequent flyer club or the rental car provider itself to get a free rental.

  1. Congratulations, You are protected, but

Even if you didn’t use your frequent flyer miles to rent a pickup truck in Jamaica so you could go off-roading, you still ended up in a car accident. Here in the USA, on a paved road, your credit card-purchased small automobile was wrecked.

Don’t think you can get away with it. You shouldn’t put too much faith in that insurance policy.
Despite this, the automobile rental company will continue to pursue you for administrative costs and loss of usage. They will insist, falsely, that all of their cars are rented out at all times and that it is impossible to hire out a vehicle with damage to the door.

Therefore, they will charge you the maximum daily cost for every day they can justify not letting you own their expensive vehicle. Then, they’ll tack on a few hundred for overhead. If you think your credit card company will pay the costs and come to your aid, you could be disappointed to hear them shrug and say they won’t.

Bottom Line

Fortunately, I have never really damaged a rental car, so I have not had to worry about any of these terrible restrictions. To be sure, I know my time will come. And when it occurs, I want to be well-versed in credit card insurance policies so that my claim isn’t unfairly refused.

Is your credit card company refusing to pay for your rental vehicle insurance? What went wrong that caused your claim to be turned down? Which insurance policy did you like most from well-known credit card issuers? In the comments, please tell us what you think and how your experience relates to this.

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