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Visa adds rental car insurance to all cards
March 21, 2004
The news
Visa just announced that it's now including no-cost collision coverage for rental cars on all of its credit cards, including plain vanilla (not Gold, Platinum, or other premium variety) consumer cards. The new coverage is for any charges you're likely to incur if a car is damaged during the period you've rented it, including repair of the vehicle, charges for loss of use (revenue shortfall during the time the car is out of service), and reasonable towing charges. The coverage is secondary, meaning it pays only what you can't cover first through other insurance you might have. Coverage is valid for 15 days on rentals within your country of residence, or 31 days for rentals elsewhere.
Competitive response
As of March 10, MasterCard's website still indicated that its "standard" consumer cards do not include collision coverage, but all of its other consumer cards do. Most American Express cards already provide similar coverage, including standard "green" cards, as do most Diners Club and Carte Blanche cards. Diners Club/Carte Blanche continues to provide primary collision coverage—it pays the full bill without your having to use up your existing insurance coverage first.
What it means
Visa's announcement is good news for any business traveler whose primary credit card is a plain-vanilla Visa. You no longer have to shell out $10 a day or more for one of the planet's most overpriced "insurance" coverages. Given the competitive nature of the credit card business, I suspect it won't be long before MasterCard matches Visa's new feature.
If you're using a plain-vanilla consumer Visa as your main card, however, you should re-think your credit card strategy. Most "business" versions of Visa (as well as MasterCard) are a much better deal, for several reasons. First, they provide primary rental car coverage. Second, they cover all rentals when you're driving for business, including those in the U.S., for a full 31 days (when you use the card for a leisure trip, the coverage in the U.S. reverts to 15 days). And finally, business cards typically include a bundle of additional features that are attractive to small business and independent professionals, including a laundry list of business-oriented discounts, and more detailed reporting than you get with a consumer card.
The business (or "corporate") versions of other cards, which offer a range of extra features focused on business users, provide useful features, too:
- AmEx business cards also cover rental cars, but their coverage is a bit weaker than you get from business Visa and MasterCard: Coverage is secondary, and AmEx business cards do not cover rentals outside the U.S. and its territories.
- Diners Club primary coverage is available worldwide on business as well as consumer cards, for 30 days on any rental.
- Premium versions of Discover also provide secondary coverage, but only in the limited areas of the world where it's accepted (North America and the Caribbean).
Making the deal
I probably don't have to say this to many of you, but if you don't already have separate credit cards for your personal and business needs, apply for a separate business card as soon as you can. No matter how meticulous you are with your record keeping, separate cards are almost essential for accounting and tax purposes.
For your corporate uses, I strongly recommend a business card:
1. If you use your card for extensive non-travel purchases, you should probably go with MasterCard or Visa—they're accepted at far more merchandise outlets than AmEx or Diners. If your card needs are confined to travel, AmEx or Diners are fine.
2. If you rent cars extensively, choose Diners or business MasterCard or Visa, mainly for their primary rental car coverage.
3. If you're interested in earning frequent flyer credit on every purchase, if you earn a lot of frequent flyer miles by flying, and especially if you use those miles for upgrades or "free" premium-class seats, your best bets are a business MasterCard or Visa co-branded with the airline you use the most. Or, sign up for AmEx or Diners Club, both of which allow you to convert credit to several different airlines.
4. If you don't travel much and plan on earning most of your frequent flyer credit through purchases on your card—and especially if you want to use your credit for "free" trips in coach—I recommend one of the "bank buys a ticket" programs. I've heard a lot of horror stories lately about how hard it is for travelers to find frequent flyer seats, and the bank programs avoid that problem entirely.
Of course, there's lots more to selecting the right credit card—annual fees, APRs, spending limits, foreign-purchase surcharges, and such—depending on exactly how you use your card and what sort of "reward" you're seeking.
Related information:
Car rental strategy
Portable ombudsman: Avoiding extra car rental fees
Report: Credit cards for business travelers
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