Reader Question: Rental Car Insurance Coverage Through American Express Credit Cards – What To Look For?

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Today’s Reader Question is about having proper insurance coverage for your rental car while literally being on the road and the differences that various credit card products offer.

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It started about a decade ago when credit card companies began to offer their cardholders insurance coverage for rental cards as part of the general service package pertaining to a particular credit card product, something that comes with significant savings compared to purchasing insurance from the rental car companies.

In fact these new service options from credit cards have taken a significant portion of revenue out of the car rental companies pockets even though not everybody knows about this particular benefit or still feels more comfortable buying insurance for any particular rental – and sometimes with good reason.

We received a reader question from Tom who holds a U.S. based American Express Premier Rewards Gold Card (Charge Card Product) and recently discovered that the card doesn’t really have that much coverage at all despite the glitzy advertisements. He asked us what to look out for when it comes to rental car insurance coverage from credit card providers.

At first let’s have a look at the U.S. American Express products and insurance options, called Car Rental Loss And Damage Insurance (you find all card policies here).

The list contains 52 (!!) cards from the Amex portfolio and there are different conditions and wordings in many of them. All I can say is to better read them carefully to make sure you won’t leave the rental car lot without coverage despite using the card you think provides you will all insurance needed.

For one there is the description:

This product provides secondary coverage. This means it pays eligible benefits not paid by any primary insurance that you have.

This is already a huge blow because that means Amex doesn’t provide primary coverage, they only pay what other insurance companies you hold don’t cover. This isn’t the case with all cards as there are products that provide primary coverage. You also have the option of purchasing a special plan from Amex so it will act as your primary insurance provider with less restrictions.

But that isn’t all:

This policy does not cover some vehicles, e.g. off-road vehicles, limousines and antique cars, (as described in the Terms and Conditions), Any vehicles rented in Australia, Italy, and New Zealand.

The definition of ‘Off Road Vehicles’ and ‘Limousines’ isn’t specifically elaborated on in the policy. Last week Hertz gave me a Range Rover and a few years ago an (ugly) Lincoln Town Car. Would those be excluded as well?

And furthermore (for the Premier Rewards Gold Card):

What is Covered: If Damage to or Theft of a Rental Vehicle occurs while coverage is in effect, the Plan will pay a benefit up to a maximum of $50,000 per Rental Agreement.

US$ 50,000 is a really low ceiling for a rental car especially as soon as you get to Europe. That’s 43,500 Euro which pretty much means even a Midsize Luxury Vehicle such as BMW 5, Mercedes E Class and Audi A6 wouldn’t be fully covered anymore as the price for those vehicles exceeds the limit. In comparison, the U.S. based Platinum Card has a US$ 75,000 limit which is also not very good.

Here is the policy for the Loss and Damage Insurance of the Amex PRG taken from their website:

Download (PDF, 632KB)

You are able to upgrade your American Express Card coverage for Rental Cars through their Premium Car Rental Protection Plan (access here).

This can be a reasonable choice if you have a longer rentals and want to have peace of mind. But it’s sort of a let down for a credit card (charge card) product that prides itself on being a premium product, ideal for the frequent traveling card member.

To be clear, this product deficiency isn’t the case for all American Express products worldwide. Since the reader is from California I only looked at the U.S. based products (the German cards provide a better coverage) but in general I can only recommend to read insurance policies carefully before relying on them.

Conclusion

I’m a frequent rental car customer even though I don’t rent as much as several years ago where I had 2-3 rentals a week. At the moment I use a credit card that provides primary coverage for all of my rentals, the German Lufthansa Mastercard with a small deductible. However it also has exclusions for certain vehicles (luxury brands) and a ceiling of 75,000 Euro per car. When I rent as a Sixt Diamond in Germany and get offered a BMW7 or Mercedes S Class I usually have to decline because that price would exceed the limit.

For the reader I can only recommend to probably look for a different U.S. based credit card that has primary rental coverage. Chase is very good here, their Sapphire Preferred/Sapphire Reserve and Ritz Carlton Rewards Card have that benefit. Citi Prestige also provides Primary Insurance internationally but only secondary insurance for U.S. domestic rentals.

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