Why You Should Never Redeem Car Rental Awards


One of the most valuable uses of  your credit card is the car rental insurance that is included when you reserve and pay for a car with your credit card.    Using a credit card is much easier than trying to secure a rental using deposit made with cash or a debit card, and you are able to decline all of the optional insurance.

The Car Rental Award Paradox

As a reward credit card guru and a guy who likes to travel for free, I have always wanted to close the loop on free travel by paying for my air, hotel, and rental cars with loyalty point awards.     Yet as the son of a personal injury attorney, I have been reminded many times of the lengths insurance companies will go to deny a claim.

The problem is that the rental car coverage provided by your credit card indicates that you must reserve and pay for the rental with the said card.    If that is the case, are you covered by the rental agreement when you redeem an award to rend a car?   Certainly you are using your card for the reservation and the deposit, as well as charging any taxes and fees not covered by the award, so it would seem that you are covered.   This has been the subject of much speculation over at Flyertalk.

The Truth Is Revealed

To get the definitive answer, I reached out to my contacts at American Express a couple months ago.    I just now received the answer to this and some other important questions.    It turns out that car rental awards from loyalty programs are NOT COVERED by American Express, even if you reserve the rental with your credit card and pay for any taxes and fees with it.    For that reason alone, I will never be redeeming an award for a rental car.    Rental car awards are not very good from a dollars saved per point spent standpoint anyways, and if you throw in the necessary insurance one would have to purchase, it will never be worth it.    Renting without insurance would be insane.

More Truths About Rental Car Insurance

My father recently rented a car with his Platinum Amex.    The car had some damage, which we later realized was pre-existing.    In the mean time, we were left wondering if his expensive Amex Platinum included their exceptional premium insurance. I have since heard back from Amex that it DOES NOT.    So all you Platinum card holders be aware that you have no more coverage than holders any other colored Amex, unless you opt for and pay for their premium coverage.  That means you dad.

Another really difficult thing about rental car coverage from Amex as well as Visa and Mastercard, is the sheer volume of exclusions.   If you take the time to read the policy, you may be surprised to learn that you were not covered on several occasions in the past.  Exclusions include any kind of  SUV, luxury or sports car as well as all sorts of popular tourist destinations that begin with the letter I, such as Ireland, Israel, and Italy.   Let’s just say that it is not that hard to get an upgrade to an excluded class of vehicle, and that I will be more vigilant in declining such upgrades in the future.

Clear As Mud

I would like to thank American Express for helping to clear this up.    Yet if it took me a couple months to receive an answer from American Express’s media relations people, how is anyone supposed to know this stuff before they rent a car?    No doubt there are all sorts of people who rented cars with awards thinking that they were covered, only to find out after an accident that they were not.

In the mean time, I have asked Amex to clarify some other aspects of their rental car coverage, including what happens when you rent a car that is discounted with a “free day” coupon.

I will let you know as soon as I hear back from them.

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