The Costco Anywhere Visa Card covers rental car damage, but only if you decline the rental company's insurance and pay the full rental with the card
The Costco Anywhere Visa Card by American Express includes rental car damage coverage as a cardholder benefit. This coverage reimburses you for collision and theft damage to a rental vehicle, but it works as secondary insurance — meaning it pays only after your personal auto insurance or the rental company's coverage has paid first. You must also decline the rental company's damage waiver at the counter and charge the entire rental to your Costco card for the benefit to apply.
The coverage does not include liability (damage you cause to other vehicles or property), medical payments, or theft of personal items left in the car. It also does not cover damage from driving off-road, racing, or using the vehicle for commercial purposes. If you have a gap in your personal auto insurance or are renting a car in a country where your home policy does not extend, this card benefit can fill that gap — but you need to understand its limits before you rely on it.
Key Takeaways
- The Costco card's rental car coverage is secondary, so it only pays after your personal auto insurance has paid its share of the damage claim.
- You must decline the rental company's collision damage waiver at the counter and charge the full rental to the Costco card for coverage to apply.
- The benefit covers collision and theft damage to the rental vehicle itself, but not liability, medical payments, or items stolen from inside the car.
- Coverage does not apply to rentals in certain countries, commercial use, or damage from off-road driving or racing.
How the Secondary Coverage Works in Practice
When you file a claim for rental car damage, the Costco card's coverage pays only the amount that your primary insurance does not cover, up to the actual cash value of the rental vehicle. If your personal auto policy has a $1,000 deductible and the damage costs $3,500, your insurance pays $2,500 and the Costco card would cover the remaining $1,000 deductible. If you have no personal auto insurance at all, the card coverage becomes your primary payer, but you still must have declined the rental company's damage waiver.
The rental company's insurance counter offer — often called a collision damage waiver or loss damage waiver — is what you must refuse. If you accept it, the rental company becomes your primary coverage and the Costco card will not pay anything. This is why the decision at the rental counter matters: you are choosing to self-insure through your personal policy and the card benefit, rather than buying the rental company's protection.
To file a claim, you contact American Express directly with your rental agreement, the damage report from the rental company, and documentation of what your personal insurance paid (if applicable). American Express will then reimburse you for the covered portion. The process typically takes several weeks.
What Damage the Card Does and Does Not Cover
The Costco card covers collision damage (impact with another vehicle or object), theft of the rental vehicle, and vandalism. It also covers loss due to fire or weather. The coverage applies whether the damage was your fault or someone else's fault, as long as you were using the car legally and for personal travel.
The card does not cover liability — the cost of damage you cause to another person's vehicle, property, or injuries to another person. That is why you should never decline the rental company's liability coverage. You also do not get coverage for medical payments, uninsured motorist protection, or roadside assistance. Damage from off-road driving, racing, or using the car for commercial purposes (like rideshare or delivery) is excluded. Wear and tear, mechanical breakdown, and damage from improper maintenance are also not covered.
If you rent a car outside the United States, Puerto Rico, or Canada, the benefit does not apply. Some rental companies and some countries have restrictions that void the card's coverage, so you should contact American Express before booking an international rental to confirm whether the benefit will work.
When to Use This Benefit and When to Buy the Rental Company's Coverage
Use the Costco card's coverage if you have active personal auto insurance with collision coverage. Your home policy will handle the primary claim, and the card covers what your deductible leaves unpaid. This is the cheapest route because you avoid paying the rental company's daily damage waiver fee, which often runs $15 to $30 per day.
Buy the rental company's damage waiver if you do not have personal auto insurance, if your policy excludes rental vehicles, or if you are uncomfortable with the secondary-coverage model. You should also buy it if you are renting in a country where the Costco card does not apply. The rental company's coverage is primary, meaning it pays first and you do not have to file a separate claim with American Express.
If you are renting a high-value vehicle or a luxury car, consider whether the card's coverage limit — the actual cash value of the rental — is enough. A $100,000 rental car damaged beyond repair would be covered only up to its cash value, but the rental company might charge you a loss-of-use fee or other costs that exceed that amount. In that case, the rental company's coverage may be worth the extra cost.
How to Activate the Benefit When You Rent
The Costco card's rental car coverage is automatic — you do not need to register or activate it. However, you must take two specific steps at the rental counter to make sure the benefit applies.
First, decline the rental company's collision damage waiver, loss damage waiver, or any other damage protection they offer. Tell the agent you have your own coverage. Second, charge the entire rental cost — the daily rate, taxes, and any fees — to your Costco Anywhere Visa card. If you pay part of the rental with a different card or with cash, the benefit will not apply to the portion you did not charge to the Costco card.
Before you rent, call American Express at the number on the back of your card and ask them to confirm that the rental location and country are covered under the current benefit terms. This takes five minutes and prevents a claim denial later. Keep your rental agreement, the damage report (if any), and your receipt for the rental charge.
What Happens If You Have an Accident
If you damage the rental car, report it to the rental company immediately, just as you would if you had bought their damage waiver. The rental agent will document the damage and give you a damage report. Do not sign anything that admits fault or waives your right to file a claim with your insurance or the card.
Next, file a claim with your personal auto insurance if you have collision coverage. Your insurer will investigate and pay their portion. Once you have that settlement, contact American Express with the rental agreement, the damage report, your insurance settlement letter, and an itemized repair estimate from the rental company. American Express will review the claim and reimburse you for the remaining damage, up to the vehicle's actual cash value.
If you do not have personal auto insurance, file the claim directly with American Express using the same documents. American Express will pay for the covered damage, but the process may take longer because they will conduct their own investigation.
Comparing the Costco Card to Other Cards' Rental Coverage
Many premium credit cards offer rental car damage coverage, but the structure varies. Some cards, like the Chase Sapphire Reserve, offer primary coverage — meaning they pay first, before your personal insurance. Others, like the Costco card, are secondary. Primary coverage is more valuable because you do not need personal auto insurance to be protected, but cards that offer it usually have higher annual fees.
The Costco card has no annual fee, which makes its secondary coverage a useful backup if you already have auto insurance. If you do not have auto insurance or if you frequently rent cars in countries where your home policy does not apply, a card with primary coverage or a higher annual fee might be worth the cost.
Some cards limit coverage to rentals under 31 days; the Costco card does not specify a length limit, though American Express reserves the right to exclude rentals they consider commercial or long-term. Check your card's current benefits guide to confirm the exact terms, as American Express updates benefits periodically.
Frequently Asked Questions
Does the Costco card cover rental car insurance if I have no personal auto insurance?
Yes, the card's coverage becomes primary if you have no personal auto insurance. However, you must still decline the rental company's damage waiver and charge the full rental to the Costco card. The coverage pays for collision, theft, and vandalism damage up to the vehicle's actual cash value, but not liability or medical payments.
What if I rent a car and my spouse drives it — does the coverage still apply?
Yes, the coverage applies to anyone driving the rental car with your permission, as long as they are a licensed driver and the rental agreement lists them as an authorized driver. The coverage is tied to the card and the rental, not to who is behind the wheel.
Can I use the Costco card's coverage if I rent a car in Mexico or Canada?
Coverage applies in Canada and Puerto Rico, but not in Mexico. If you are renting in Mexico, you must buy the rental company's coverage or have a personal auto policy that extends to Mexico. Contact American Express before booking any international rental to confirm coverage applies.
If the rental company charges me a loss-of-use fee after an accident, will the Costco card cover it?
No, the card covers only collision damage, theft, and vandalism to the vehicle itself. Loss-of-use fees, administrative fees, and other charges from the rental company are not covered. This is another reason to consider the rental company's damage waiver if you are renting a high-value vehicle.
Do I need to notify American Express before I rent a car?
You do not need to notify them before every rental, but calling to confirm coverage applies to your specific rental location and country is a good practice. If you do have an accident, you must contact American Express promptly with your rental agreement and damage report to file a claim.