Costco has become a go to spot for travelers looking to save on rental cars, but the insurance side of those discounts can get confusing fast. Between Costco Travel packages, the Costco Anywhere Visa by Citi, and your own auto and travel policies, it is not always obvious what is actually covered, what is not, and when you can safely decline the rental counter’s expensive add ons. This guide walks through how Costco related rental car insurance really works, what coverage you can expect, and how to protect yourself without overpaying.
For a broader explanation of how the Costco rental car program works overall, including pricing, eligibility and booking rules, see our Costco Rental Car Program explained guide.
How Costco Rental Cars Work Behind the Scenes
Costco itself does not rent cars or sell auto insurance. When you book through Costco Travel, you are reserving with major rental brands at negotiated member rates. The reservation sits with companies such as Alamo, Avis, Budget, or Enterprise, and their standard rules and contracts apply at pickup.
Costco Travel’s own rental car terms spell this out clearly: all rentals are subject to the rental company’s rules and regulations, and auto insurance is the responsibility of the registered driver. That means the contract you sign at the counter is what ultimately governs what happens in an accident, not the Costco name on your reservation.
Because Costco is acting as a broker rather than a rental company, the rates you see typically exclude optional insurance products. Taxes, surcharges, and optional coverage such as collision damage waivers are either added by the rental company at pickup or declined by you. The headline Costco rate often looks low in part because these add ons are not built into the price.
For travelers, the key implication is that you cannot assume any automatic collision or liability coverage just because you booked through Costco. Protection must come from your own auto policy, a credit card benefit, or a separate travel insurance product that includes rental car coverage.
Costco Travel Insurance and Rental Car Coverage
Separate from Costco Travel’s car rental bookings, members can buy trip insurance plans that include rental car damage benefits. These plans are administered by third party insurers and are designed to wrap several protections together, including trip cancellation, interruption, emergency medical, evacuation, baggage, and rental car damage.
Most Costco branded travel insurance plans include some level of rental car protection, and many offer a rental car damage upgrade up to around 50,000 dollars. This coverage generally pays for damage to a rental vehicle from collision, vandalism, weather events, fire, or theft, up to the limit of the policy. Some plans label this as a collision damage waiver equivalent, but it is technically travel insurance rather than a waiver written by the rental company.
A key advantage often highlighted by travel insurance reviewers is that Costco’s rental car coverage is primary on many of its plans. Primary means a covered claim is paid by the travel insurer without involving your personal auto policy. That can help you avoid a claim on your own insurance and possible premium increases, as well as cover you if you do not own a car and have no personal policy to fall back on.
There are important limitations. Costco travel insurance rental car coverage typically does not provide liability insurance for injuries or damage to other vehicles or property. It is focused on the rental car itself and certain associated fees while the car is being repaired, up to the plan’s limit. Coverage may also exclude certain countries, such as Ireland or parts of Latin America, and vehicle categories like exotic cars, motorcycles, or trucks. To understand exactly what is covered, you have to review the policy certificate for your specific trip.
Costco Anywhere Visa by Citi: Rental Car Insurance Benefits
For many Costco members, the most relevant rental car protection comes from the Costco Anywhere Visa Card by Citi. Unlike many Citi cards that dropped travel protections several years ago, this card has continued to include rental car insurance when you use it to pay for your vehicle.
The Costco Anywhere Visa typically offers coverage for physical damage or theft of a rental car when you charge the full cost of the rental to the card and decline the rental company’s collision loss or damage waiver. Coverage amounts cited by consumer finance sites often fall in the 50,000 dollar range toward repairs or the cash value of the vehicle, whichever is less. Some coverage summaries list higher potential limits, but the exact figure is determined by the official Guide to Benefits that comes with your card.
Within the United States, the Costco Visa’s rental coverage usually operates as secondary insurance. Secondary means your personal auto policy, if you have one, pays first. The card then reimburses your deductible and certain remaining eligible costs up to the card’s limit.
Outside the United States, secondary coverage from many cards effectively becomes primary if you do not have another policy that applies, and guidance from financial comparison sites suggests this is generally true of the Costco Visa as well. Still, cardholders should confirm the primary or secondary status for international rentals directly with Citi, because benefit guides can change.
There are notable exclusions. The Costco Visa rental benefit covers the car itself, but not liability for injuries or property damage to others. It typically does not cover rentals used as cars for hire, peer to peer car sharing platforms, or certain vehicle types such as luxury or antique cars.
Consumer Q and A sites also report that loss of use fees charged by a rental company when a vehicle is out of service are not explicitly covered under the card’s benefit language. As with any credit card insurance, you must read your current Guide to Benefits and keep a copy with you when you travel.
What Costco Does Not Cover: Gaps You Must Plan Around
Because Costco is mainly a facilitator rather than an insurer, it is important to understand where the gaps are so you do not assume you are more protected than you really are. The first and most important gap is liability. Whether you book through Costco Travel, buy Costco trip insurance, or rely on the Costco Visa, liability coverage for injuries to others or damage to their property is limited or altogether missing.
In the United States, state minimum liability coverage is typically provided either by your personal auto policy extending to rental cars, or in some cases built into base rental rates to meet local legal requirements. These minimums are often quite low and can be quickly exhausted in a serious accident. Neither Costco Travel’s brokered reservations nor the Costco Anywhere Visa card are designed to fill that liability gap. If you want higher limits, you may need to buy supplemental liability insurance at the car rental counter, or carry a robust personal auto policy that extends generously to rentals.
Another gap involves extra fees that rental companies love to charge after an incident, such as loss of use, diminished value, or administrative processing fees. Some travel insurance products explicitly cover certain fees while the car is being repaired, but many credit card benefits, including the Costco Visa, do not address them directly. That can leave you negotiating line items with the rental company or your insurer when a claim is filed.
There are also geographic limits. Costco’s rental car damage add ons through travel insurance may not be available in certain countries, and some credit card policies exclude coverage in locations that are considered high risk or where local laws conflict with policy terms. If, for example, your Costco travel insurance plan specifically excludes rental car coverage in Ireland or Mexico, you may need to buy the rental company’s proprietary coverage in those markets even if you would normally rely on a card in the United States.
Primary vs Secondary Coverage When You Book Through Costco
Much of the confusion around Costco rental car insurance stems from how different products interact. The most important distinction is primary versus secondary coverage. Primary coverage pays first up to its limits without requiring you to file with another insurer. Secondary coverage only pays after a primary policy, such as your personal auto insurance, has responded.
If you buy a Costco travel insurance plan that includes rental car coverage labeled as primary, that protection can stand in front of your personal auto policy when you rent. In practice, that means a covered collision could be handled entirely by the travel insurer up to the policy limit, sparing your personal policy from involvement. For frequent renters or those worried about premium increases, this can be valuable.
By contrast, when you rely on the Costco Anywhere Visa card alone within the United States, you are usually working with secondary coverage. In an accident, you first make a claim with your auto insurer, then seek reimbursement from Citi for your deductible and eligible remaining costs. If you do not have a personal policy at all, many card benefits function as primary by default, but that scenario comes with the significant drawback of having no liability protection beyond what the rental company or local law automatically includes.
Some travelers layer these protections. For example, you might have a Costco travel insurance plan with primary rental coverage and still pay for the car with the Costco Visa. In a covered claim, the primary travel insurance would respond first, and the card’s secondary benefit would only potentially come into play if there were eligible costs beyond what the travel policy handled. To keep things manageable, it is wise to decide in advance which product you want to treat as your main coverage and understand how its claims process works.
Practical Strategies for Costco Members at the Rental Counter
Before you even search for cars on Costco Travel, it helps to take stock of what coverage you already have. First, contact your auto insurer to confirm whether your personal policy extends collision and liability coverage to rental cars, and if so, under what conditions and limits. Ask specifically about loss of use, administrative fees, and any international limitations.
Next, review the latest Guide to Benefits for the Costco Anywhere Visa card, or any other card you might use to pay for the rental. Make sure you understand whether the benefit is primary or secondary in the places you plan to drive, what vehicles are eligible, and how long of a rental is covered. Most credit card protections only apply up to a set number of days and exclude certain business uses.
If you are booking a larger trip through Costco Travel that involves flights, hotels, or cruises in addition to a rental car, consider whether a Costco travel insurance plan that includes rental coverage makes sense for you. Compare the plan limit, which is often around 50,000 dollars for rental car damage, against the value of vehicles you are likely to drive. If you are comfortable with the limits, the added value of trip cancellation, emergency medical, and evacuation coverage may justify the premium.
Armed with this information, you can walk up to the rental counter with a clear strategy. In many cases, a traveler with a strong personal auto policy and the Costco Visa may confidently decline the rental company’s collision damage waiver, knowing that between their own insurer and secondary card coverage, the vehicle itself is adequately protected.
However, if liability limits are low or you lack any personal coverage, paying extra for the rental company’s supplemental liability insurance can still be a prudent move, even if it raises the overall cost beyond Costco’s bare rental rate.
How to Handle a Claim When Things Go Wrong
If you are involved in an accident or your rental car is stolen, the steps you take in the minutes and days that follow can determine how smoothly any insurance claim proceeds. Start by making sure everyone is safe and, if required, contacting emergency services. Then follow the rental company’s instructions for reporting an incident, which usually include documenting damages, taking photographs, and filling out an accident report form.
As soon as practical, notify whichever coverage you intend to use. That may be your personal auto insurer, the claims administrator for your Costco travel insurance plan, or Citi’s rental car benefit center for the Costco Anywhere Visa. Policies and card benefits typically require notice within a set period, often 30 to 45 days from the incident, even if you do not yet have a final bill from the rental company.
Keep meticulous records. Save your rental agreement, Costco Travel confirmation, proof that you paid with the relevant credit card, any police reports, repair estimates, and itemized invoices from the rental agency. If you declined the rental company’s collision damage waiver at the counter, document that as well. Claims administrators will want to see that you followed their rules for coverage to apply, including paying with the correct card and declining duplicative coverage.
Be prepared for some back and forth between the rental company, your insurer, and any card or travel insurance benefits you are using. It is not unusual for a rental company to bill for damages first, then for insurers to review and negotiate those charges.
Patience and organized paperwork will serve you better than assuming Costco’s involvement will automatically smooth every wrinkle. At the end of the process, you should receive written confirmation of how much each party paid and whether any balance remains your responsibility.
The Takeaway
Costco can be an excellent way to secure low rental car rates, but the Costco name does not by itself guarantee comprehensive insurance protection. Instead, you are working with a mix of your personal auto policy, optional Costco travel insurance, and the benefits built into the Costco Anywhere Visa Card by Citi. Each of these pieces plays a different role, with different limits and exclusions.
In practical terms, Costco travel insurance can provide primary protection for damage to the rental car itself, while the Costco Visa often serves as a valuable secondary safety net, particularly for international rentals. What they generally do not supply is robust liability coverage or blanket protection from every fee a rental company might charge after an incident.
The smartest strategy for Costco members is to treat rental car insurance as a layered puzzle: understand what your own auto policy covers, decide whether a Costco travel insurance plan makes sense for your itinerary, and then use the Costco Visa to unlock card benefits where they fit. By piecing together these protections before you ever step up to the rental counter, you can confidently decline unnecessary add ons, know when supplemental liability is worth the price, and travel with a clear plan for what to do if something goes wrong on the road.
FAQ
Q1: Does booking a rental car through Costco Travel automatically include insurance?
Booking through Costco Travel does not automatically include collision or liability insurance. The rental rate usually excludes optional coverage, and auto insurance remains the responsibility of the driver. You must rely on your personal auto policy, credit card benefits, or a separate travel insurance plan that includes rental car coverage.
Q2: What rental car coverage does the Costco Anywhere Visa Card by Citi provide?
The Costco Anywhere Visa typically offers coverage for damage to or theft of a rental car when you pay for the rental with the card and decline the rental company’s collision damage waiver. Within the United States it usually operates as secondary coverage, supplementing your personal auto insurance, while outside the country it may function as primary if no other policy applies. It does not provide liability coverage for injuries or damage to other property.
Q3: Is Costco travel insurance rental car coverage primary or secondary?
On many Costco travel insurance plans, rental car damage coverage is primary, meaning the travel insurer pays a covered claim for damage to the rental vehicle without requiring you to file first with your personal auto insurer. You should confirm the primary status and coverage limit in the specific policy certificate for your trip.
Q4: Do Costco related rental car protections cover loss of use fees?
Some Costco linked travel insurance products may cover certain rental charges while the car is being repaired, but credit card benefits such as the Costco Anywhere Visa generally do not explicitly cover loss of use or administrative fees. Whether these fees are paid often depends on the exact policy wording and the outcome of negotiations between the rental company and the insurer.
Q5: If I do not own a car, can I rely only on Costco and my credit card for insurance?
If you do not have a personal auto policy, a Costco travel insurance plan with primary rental coverage or the Costco Visa’s benefit may provide protection for damage to the rental car itself. However, you could still be underprotected for liability to others. In that situation, purchasing the rental company’s supplemental liability insurance is often recommended to avoid serious financial exposure.
Q6: Should I still buy the rental company’s collision damage waiver if I use the Costco Visa?
Many travelers who have both a solid personal auto policy and the Costco Visa choose to decline the rental company’s collision damage waiver, since they effectively have overlapping coverage for damage to the rental car. That said, if you prefer a simpler experience in the event of a claim or you lack other coverage, paying for the waiver may still make sense, particularly in higher risk destinations.
Q7: Are there countries where Costco related rental car coverage does not apply?
Yes, certain Costco travel insurance plans exclude rental car coverage in specific countries, and some credit card policies also list prohibited destinations. Countries such as Ireland or parts of Latin America are common examples in the industry. Before traveling, review both your travel insurance certificate and your credit card’s benefit guide to see whether any geographic exclusions apply to your itinerary.
Q8: What types of vehicles are excluded from Costco rental car protections?
Both travel insurance and credit card rental benefits typically exclude coverage for exotic or high value vehicles, large vans, motorcycles, trucks, and vehicles used for commercial purposes. Peer to peer car sharing rentals and cars used as vehicles for hire are often excluded as well. Always confirm that the specific car class you plan to rent is eligible under your chosen coverage.
Q9: How do I activate rental car coverage with my Costco Visa or travel insurance?
To activate coverage with the Costco Anywhere Visa, you must pay for the entire rental with the card and decline the rental company’s collision loss or damage waiver. For Costco travel insurance, you generally need to purchase a plan that includes rental car coverage for the dates of your trip, then list your rental as part of the insured travel. In all cases, keep documentation showing payment method, rental dates, and any waivers you declined.
Q10: What should I do immediately after an accident in a Costco booked rental car?
After ensuring everyone’s safety and contacting local authorities if needed, notify the rental company and follow its reporting instructions. Take photos, gather contact details from any other drivers or witnesses, and retain all paperwork. Then promptly contact the claims administrator for your personal auto insurer, Costco travel insurance plan, or Costco Visa card benefit, depending on which coverage you intend to use, and provide the requested documentation within the required timeframe.