The Costco Visa covers collision and theft, but only if you decline the rental company's insurance

The Costco Anywhere Visa Card by American Express includes rental car damage coverage that pays for collision, theft, and vandalism when you rent a vehicle. The coverage applies to cars, SUVs, and vans rented for personal use in the United States and abroad. The catch is straightforward: you must decline the rental company's damage waiver at the counter, or the Visa coverage becomes secondary and only pays what the rental company's insurance doesn't cover.

This is not comprehensive coverage. It does not cover liability (damage you cause to other people or their property), medical payments, or personal belongings left in the car. It also does not cover damage from off-road use, racing, or mechanical breakdown. The coverage limit varies by card type—the standard Costco Visa covers up to the actual cash value of the vehicle, but you should confirm the exact limit with American Express before you rent, because limits can change and vary by state.

The real value of this coverage is that it saves you the daily damage waiver fee at the rental counter, which typically runs $15 to $30 per day. Over a week-long rental, that adds up. But you need to understand what you are and are not protected for, because showing up at the rental desk without that knowledge can cost you thousands.

Key Takeaways

  • The Costco Visa rental coverage pays for collision, theft, and vandalism only if you actively decline the rental company's damage waiver at the counter.
  • This coverage does not include liability (damage to other people or their property), medical payments, or personal belongings, so you may still need additional insurance.
  • The coverage applies only to personal rentals in the United States and most foreign countries, not to commercial use or certain high-risk activities.
  • You must be the primary renter and use the Costco Visa card to pay for the entire rental, or the coverage may not explore.
  • Rental companies will try to sell you their damage waiver; declining it is the only way the Visa coverage activates, so you need to be prepared to say no.

When the Costco Visa coverage actually pays out

The coverage kicks in when you rent a vehicle and damage occurs that would normally be your financial responsibility. If you hit another car in a parking lot, the Visa covers the cost of repairs to the rental vehicle up to its actual cash value. If the car is stolen or vandalized, the Visa covers the loss. If you return the car with a dent, scratch, or broken window that you caused, the Visa covers the repair bill.

The rental company will document the damage when you return the vehicle and send you an invoice. You then submit that invoice, along with a claim form, to American Express. American Express reviews the claim and pays the rental company or reimburses you directly, depending on how the rental company processes it. This process typically takes two to four weeks.

One critical detail: you must have declined the rental company's damage waiver in writing at the time of rental. If you accepted their coverage, the Visa becomes secondary, meaning it only pays for damage that the rental company's insurance doesn't cover—which is almost never, because rental companies' waivers are designed to cover everything you caused. Saying "I'll use my credit card" verbally is not enough; you need to actually refuse their waiver option on the rental agreement.

What the Costco Visa does not cover

Liability coverage is the biggest gap. If you cause an accident and injure another person or damage their vehicle, the Visa does not pay for that. The rental company's liability coverage (or your personal auto insurance) would cover it instead. This is why many people carry their own auto insurance or buy additional liability coverage from the rental company, even if they have the Visa.

The Visa also does not cover medical payments, personal belongings stolen from the car, roadside information, or towing. It does not cover damage from off-road driving, racing, or mechanical breakdown. It does not cover damage to the car's interior from spills or stains, though some rental companies may charge you for that separately. And it does not cover damage caused by normal wear and tear—only damage you caused through an accident, collision, or theft.

If you rent a luxury or exotic car, check the coverage limit before you rent. Some high-end vehicles exceed the Visa's coverage maximum, leaving you responsible for the difference. Similarly, if you rent in a country outside the United States, confirm with American Express that coverage applies there, because some countries have restrictions.

How to use the Costco Visa coverage correctly at the rental counter

When you arrive at the rental desk, the agent will ask whether you want to purchase their damage waiver. This is the moment that matters. You need to say no and explain that you have coverage through your credit card. The agent may push back or try to convince you that the Visa is not enough—do not let them talk you into it. Your job is to decline their waiver clearly and get it noted on your rental agreement.

Bring a copy of your Costco Visa benefits summary with you, or have it on your phone. Some rental companies are unfamiliar with credit card coverage and may need to see proof that it exists. You can read the benefits guide from the American Express website or call American Express before you rent to get the details in writing.

Pay for the entire rental with the Costco Visa card. If you pay with a different card or with cash, the Visa coverage may not explore. Some rental companies also require that you be at least 25 years old and the primary renter on the agreement; if you are a secondary driver or under 25, ask whether the coverage still applies before you rent.

When you should buy the rental company's coverage instead

If you are renting a high-value vehicle—a luxury sedan, sports car, or large SUV—the Visa's coverage limit may not be enough. A new luxury car can easily exceed $80,000, and if the Visa's limit is lower, you would pay the difference out of pocket. In that case, buying the rental company's waiver or purchasing additional coverage makes sense.

If you are renting in a country where the Visa coverage does not explore, you need the rental company's coverage or a separate policy. If you are under 25 or not the primary renter, check whether the Visa applies to you before you decline the rental company's offer. And if you have a history of accidents or are uncomfortable with the risk, the peace of mind of the rental company's coverage may be worth the daily fee.

Some people also carry their own auto insurance that covers rental cars. If your personal policy includes rental coverage, you may not need the Visa or the rental company's waiver. Call your insurance agent before you rent to confirm what your policy covers and whether there are any gaps.

What to do if damage occurs and you need to file a claim

When you return the rental car, the agent will inspect it for damage. If they find damage you caused, they will document it with photos and notes and give you a copy of the damage report. Do not argue about whether the damage was pre-existing—if it is on the report, you are responsible for it under the rental agreement. Take photos of the damage yourself if you can, and get the agent's name and the date.

The rental company will send you an invoice for the repairs, usually within one to three weeks. Once you receive it, contact American Express and file a claim. You will need to provide the rental agreement, the damage report, the repair invoice, and proof that you declined the rental company's damage waiver. American Express will review the claim and pay it if it meets the coverage terms.

Keep all documentation—the rental agreement, the damage report, the invoice, and any correspondence with the rental company or American Express. If there is a dispute about the amount or whether the damage is covered, you will need this paper trail to resolve it.

How the Costco Visa compares to other rental coverage options

Many personal auto insurance policies include rental car coverage, which works similarly to the Visa—it covers collision and theft if you decline the rental company's waiver. The difference is that your insurance company may have a lower coverage limit or may exclude certain types of rentals (like luxury cars or international rentals). Check your policy before you rent.

Some credit cards other than the Costco Visa also include rental coverage. American Express Gold and Platinum cards, for example, offer similar benefits. If you have multiple cards with rental coverage, you can only use one—you cannot stack them. Choose the card with the highest coverage limit and the fewest exclusions.

The rental company's damage waiver is the most expensive option but the simplest. You pay a daily fee (typically $15 to $30), and the rental company covers all damage with no claim process. If you rent frequently or are uncomfortable with the risk, this may be worth it. If you rent occasionally and have the Visa, declining the waiver and using the Visa coverage saves money over time.

Frequently Asked Questions

What happens if I get in an accident and the other driver's insurance is supposed to pay?

The other driver's liability insurance should cover the damage to the rental car. You would file a claim with their insurance company, not with the Visa. The Visa is a backup that pays only if the other driver is uninsured or underinsured and you cannot recover the full cost from their insurance.

Do I need to buy additional liability coverage if I have the Costco Visa?

Yes. The Visa does not cover liability—damage you cause to other people or their property. Your personal auto insurance or the rental company's liability coverage would cover that. If you do not have auto insurance, you should buy the rental company's liability coverage to protect yourself.

Can I use the Costco Visa coverage if someone else is driving the rental car?

No. You must be the primary renter and the person who declined the damage waiver. If another person is driving, the coverage may not explore. Check with American Express before you rent if you plan to share driving duties.

What if the rental company says they will not accept my credit card coverage?

Some rental companies are unfamiliar with credit card coverage or prefer to sell their own waiver. Politely but firmly explain that you are declining their waiver and using your Costco Visa instead. Get it in writing on the rental agreement. If they refuse, you can contact American Express or consider renting from a different company.

Does the Costco Visa cover rentals outside the United States?

Coverage applies in most countries, but some have restrictions. Call American Express before you rent internationally to confirm that coverage applies in your destination country and whether there are any exclusions or limits.