Rental Car Insurance Using a Credit Card in Costa Rica
We always use the rental car insurance that is included as a free service of our VISA signature credit card. For us there are a number of advantages
- It is free and saves us between $18 and $44 per day compared to various coverage options sold by the car rental agencies (see cost benefit comparison).
- It covers at least as much and usually much more than any options sold through the rent-a-car company. In our case it includes 100% accidental damage, 100% collision, 100% theft and 100% vandalism coverage with a zero deductible.
- It is though a U.S. company who deals with any Costa Rican red tape for us in case of an accident or other claim. We just hand over the accident report and the credit card company does the rest.
- The one time we had to make a claim (someone ran into the car while it was parked then fled the scene) it took a single five minute phone call, cost us $0.00 and was taken care of in a few days.
We can’t guarantee that it will be the same for everyone because coverage depends on your card agreement and all the fine print therein. We can tell you it is worth checking into.
Important Things to Know About Credit Card Rental Car Insurance in Costa Rica
You must check with your credit card company and the specific car rental agency you’re working with for coverage details but there are some things that are generally true and important to know about using VISA, MasterCard or American Express.
- If you accept or purchase any coverage sold by the rental car company (CDW, Limited Liability, Comprehensive Coverage, Zero Deductible see this link insurance explanation) then all credit card coverage is rendered null and void.
Here’s the confusing part. The government issued liability insurance (SLI) does not cancel the credit card coverage. This is because you are required by law to purchase SLI and even though you pay for it along with your car it is not sold by the rental car company it it sold by the government.
- Some car rental agencies force you to purchase their CDW or other insurance. This is not ever required by law but some companies simply refuse to rent you a car using credit card coverage. If you want to use your credit card you will need to use a different company (Alamo has always been good for us).
- Most rent-a-car representatives will try hard to get you to accept their insurance because it is the most profitable part of the contract. It may help to have a statement of your credit card insurance policy in writing.
- If damage occurs to the car the cost of repairs will be charged to your credit card and you will only be reimbursed after submitting a successful claim to cardmember services. You may be required to provide documentation like a copy of a police report.
- If you use credit card coverage (and often when you don’t) the car rental agency will “authorize” a deposit usually between $1,000 and $2,000 on your credit card to cover potential damages. You will not be charged that amount unless damages occur but it will reduce your available credit when using the card for other purchases like hotels or restaurants.
- Some cards have exclusions specifically against insuring Latin American rentals so be sure to check carefully.
Note – in March of 2016 we discovered a new clause appearing on some credit card service agreements limiting coverage to $50k or excluding “specialty vehicles” like pick-up trucks (used to be a convenient choice for surf boards).
This isn’t a problem most places but in Costa Rica car values are double and even regular vehicles might exceed $50k. The Toyota Prado Diesels we normally drive are “valued” at $92,000 in Costa Rica. Make sure your coverage is sufficient or you may be stuck buying the CDW.
When There’s a Damage Claim
We have never heard of anyone having any problems with credit card coverage. It makes sense. The credit card company wants their customers (you and me) to be happy. They spend billions of dollars a year acquiring and retaining customers and they’re not going to let some car rental agency mess up that relationship or their reputation for taking care of their customers. The credit card is also negotiating from a position of power. If they feel the repair bill is not fair they simply don’t pay until the rental agency proves it’s legit.
On the other hand we hear complaints on a regular basis about claims when the vehicle is covered by the rent-a-car agency’s insurance. Some of the most common are below.
- “But I paid $372 for the extra insurance. Why did you charge another $879 to my credit card for dent repair?” – the answer is that the extra insurance (CDW, LDW etc.) has a $1,000 deductible so you pay up front and then you pay again if the vehicle is damaged. If you don’t want to pay the $879 dent repair bill you have to buy the extra-extra insurance (Zero Liability or Full Coverage) on top of the extra insurance
- “How could a half inch scratch cost $1,114 to repair? I’m not paying for that” – sorry, you are paying for that. There’s very little an individual can do to prove that the cost of damage repairs has been inflated.
- “What do you mean you’re charging me $769 for a cracked windshield? I paid for the extra-extra full coverage insurance.” – sorry, the windshield (and usually tires) are only covered under the extra-extra-extra windshield and tire insurance.
There are some things that no policy covers
Driving on the beach or through rivers, drunk driving or driving while committing a crime are a few examples of things that will void all insurance coverage. See the fine print on the policy for details
Fording the Río Agujitas about three km from where the road south of Drake dead ends into Playa San Josecito. The suspension bridge is part of the coast trail that is the only way to get around the region on land in the rainy season.