You're standing at the car rental counter, anxious
to get on your way, but first you have to deal with the representative who's
pushing you to sign up for the agency's car rental insurance ''just in case.''
Most Americans have no idea what to do when offered collision damage waiver (CDW), the expensive add-on coverage offered -- often forcefully -- by rental car agents. Given the tricky exclusions listed in the
fine print of most credit card policies, chances are, they're even more
confused about what their credit cards cover.
We have answers to
your big questions -- and the questions you need to ask -- so you can make an
informed decision about whether to pay for the rental company's coverage the next time you rent a car.
What does my
personal auto insurance cover?
If you own a car, your personal car insurance will
likely provide collision and theft coverage, says Michael Barry, spokesman at
the Insurance Information Institute, but the coverage isn't perfect. Most auto insurers
won't cover you if you rent a car overseas, for example, or if you're using the
rental for business. So it's important to call and ask about exclusions. Many policies also decline to pay some of the additional fees
that rental car companies typically tack on to the collision bill, potentially leaving
you on the hook for hundreds of dollars. Not to mention that you'll be
responsible for paying the deductible. So that's where your credit card comes
my credit card cover?
As a perk of membership,
many credit cards offer some kind of rental car protection. Generally speaking,
they do not cover things such as personal injury or personal liability,
although you may have that coverage through your auto insurance and health insurance.
But they do typically cover collision damage and theft protection.
For most cards, the coverage
is secondary, meaning that if you
have car insurance, you have to file a claim there first (and your premium may
go up). But your credit card should step
in and pick up where your auto insurer leaves off, paying the tab for your
deductible, towing charges and other fees. However, as many frustrated
cardholders have learned, the fine print can be tricky. Credit card companies
have their own restrictions and exclusions and they, too, often refuse to pay
some types of fees levied by car rental companies.
For all those reasons, it's important
to check your coverage in advance. For details, see "Which cards are best for renting a car."
When car rental companies
are almost out of cars, they may think they're doing you a favor by giving you
a Mercedes instead of the big Ford or Chevrolet you reserved. But
because the Mercedes is valued at over $50,000, it may not be covered.
|-- Jim Tennant
The Tennant Group
Do any cards offer primary coverage?
If you have a card with primary coverage, that's the one
you should use to book your car, says Jonathan Weinberg, founder of AutoSlash, an
online booking engine for car rentals. ''Then you don't have to report the
accident to your car insurance,'' he says, ''so there's no chance your rates
will rise.'' Only a few
cards offer primary coverage. As of October 2015, they include: the United Mileage Plus Explorer,
United MileagePlus Club, Fairmont Visa Signature, Discover Escape, Ritz Carlton
Visa Signature and the Chase Sapphire Preferred card.
If you have an American Express card, you can get primary
coverage by enrolling in the company's premium rental car protection program.
Once enrolled, you pay a flat rate of $19.95 to $24.95 ($15.95 to $17.95 for California residents)
per rental. The program, which also includes some property damage and injury
coverage, can make sense for longer-term rentals, Weinberg says, since you would
pay one fee per rental rather than a daily rate like the one charged by rental
If you don't have personal auto insurance or if
you're renting a car in a country where your personal auto insurance isn't in
effect, then any card that offers secondary coverage becomes primary, so it
should theoretically cover the entire cost of the damage.
What do I
need to do to make sure I'm covered?
cards require that you do the following in order for their coverage to kick in:
- Decline the rental company's
collision damage waiver (CDW/LDW).
- Be the primary renter of the car.
- Pay for the car in full with the
card that provides the protection.
Before you rent, Barry of the Insurance
Information Institute recommends you ask your card issuer to send you its rental
car policy in writing ''because that will make it easier to resolve any
disputes down the line.'' Check for the following common exclusions to make
sure they don't apply to your situation:
Exclusion No. 1: Length of the rental
Most credit cards won't cover car rentals that
extend beyond 30 or 31 days; some have just a two-week limit. If you're
planning a long-term rental, you can break up your rental period into shorter
chunks of time to make sure you stay covered. The chart below provides some
general limits by issuer. Individual cards may vary, so always check by calling
the number on your card.
MAXIMUM LENGTH OF COVERAGE
30 days (its
premium program covers you up to 42 days if you pay the higher rate)
31 days for World
and World Elite; 15 days for other types
31 days (45 if
you're the employee of an organization that provided the card for business
days in your country of residence; 31 days outside
Exclusion No. 2: All vehicles aren't covered
Most credit card companies exclude trucks, pickup
trucks, antique and exotic vehicles, ATVs, motorcycles and large vans and SUVs
that seat more than a certain number of passengers (usually seven or eight). But car
rental consultant Jim Tennant of the Tennant Group says the exception that tends
to cause the most trouble is the limit on expensive cars, since rental agencies
are offering more luxury cars than they used to. ''When car rental companies
are almost out of cars, they may think they're doing you a favor by giving you
a Mercedes instead of the big Ford or Chevrolet you reserved,'' Tennant says. ''But
because the Mercedes is valued at over $50,000, it may not be covered.''
Both MasterCard and Discover specifically note
that they won't cover a car worth more than $50,000; Visa says it doesn't cover
''expensive'' cars, and AmEx says its coverage varies by card. If you are
planning to rent a luxury car, AmEx's premium coverage specifically notes that
it covers cars worth more than $50,000.
Exclusion No. 3: Some countries aren't
Many card companies have specific countries that are
excluded. Check the chart below, but also call your card issuer before you go:
| COUNTRY EXCLUSIONS
Jamaica, Italy, Australia and New Zealand
Ireland, Israel and Jamaica, and where
prohibited by law (World and World Elite have no exclusions)
Escape card: Australia, Ireland, Israel, Jamaica, and New Zealand. No other card has country exclusions
Jamaica, Northern Ireland
If you're traveling to those places, consider
using one of these cards, which have no country exclusions: most MasterCard World
and WorldElite cards, Discover cards (except Escape), most Citi travel cards (including Thank You Preferred and AAAdvantage) and all Chase cards.
Weinberg recommends taking a written copy of your
credit card rental car policy when you rent outside the U.S. Overseas rental
agencies often require you to pay for their CDW unless you have documentation showing
other exclusions I should be aware of?
Read the fine print. Some policies won't cover you if
you drive on unpaved or gravel roads; others won't cover you if you wait too
long to file a claim. Also, make sure anyone who may drive the car is listed on
the rental contract. ''If you rent a car in your name and then your spouse is
driving and has an accident, companies will use that as a way to deny coverage,''
If I have full
coverage, will I be responsible for any extra fees?
Unfortunately, it's possible. Rental car agencies
often charge ''loss-of-use'' fees to cover the revenue they lose while a
damaged car is in the shop, and those fees can total hundreds of dollars.
American Express, MasterCard and Visa (but not
Discover) say they will pay those fees as long as the rental car agencies
provide documentation, usually a ''fleet utilization log,'' verifying they
actually lost money because the damaged car was out of service. Here's the
problem: rental companies consider those logs confidential; they argue that,
legally, they don't have to provide them. So while your rental company and
credit card company play the blame game, you can end up on the hook for the
bill. (Note: In some states, such as New York and
Wisconsin, car rental companies aren't allowed to charge loss-of-use fees. In
others, auto insurers are required by law to pay those fees.)
What about car-share services?
American Express, MasterCard and Discover say
their rental car coverage extends to car sharing services such as Zipcar and
Getaround under the same terms and conditions as normal rental cars. Visa initially said its coverage did not extend to those services, but changed its policy in March 2015 after it settled a class-action lawsuit filed by a Zipcar user who was denied coverage.
Fortunately, credit card companies have become more willing in recent years to pay loss-of-use fees, rental car claims administrators say. Some now accept repair estimates as documentation instead of fleet utilization logs. "They've created standards to determine how much they'll pay based on the repair cost," says Andrew Sutter, president of damage-recovery company Total Fleet Solutions. "So maybe four hours of damage repair equals one day of loss of use that they'll pay."
In addition to loss of use, rental companies may charge two
other fees that may not be covered: administrative fees and ''diminution-in-value''
or diminished value fees, designed to cover the inherent loss of value to the
car because it's been damaged. "Most credit card companies have a cap on administrative fees, and almost none of them pay diminished value,” Sutter says. "I am still having to go back and bill the customer sometimes when we’ve exhausted every other avenue with the credit card company. "
card companies more willing than others to pay those extra fees?
Rental car claims administrators in three different
states told CreditCards.com that Visa is the most willing to pay up, followed
by American Express. "Visa without a doubt will pay loss of use, and that's not always the case with MasterCard and AmEx," says Coppere Williams, senior claims specialist at Khoury-Alternative Claims Management, a damage-recovery company based in San Antonio. "They will also cover an administrative fee without batting an eye. They are very reasonable."
What should I do if I'm billed for those fees?
Start by asking the rental car company if it would
be willing to waive the fees. Rental car claims administrators sometimes agree
to drop some charges if they've been paid for everything else. Then go to your
insurer and credit card company, emphasizing what a good customer you've been. ''If
you put enough pressure on them,'' Weinberg says, ''they'll usually pay out in
So should I
get the rental car insurance or not?
See related: Renting a car with debit or cash? Expect to try harder
As always, you will have to weigh the risks and
benefits. Despite the many exceptions and exclusions, it is possible to get
full coverage through your personal auto insurance and credit card, but you'll
need to choose your card carefully, read the fine print and be willing to fight
for coverage of any fees. But if all you want is peace of mind, and you don't
mind the expense, the rental car company CDW/LDW coverage may be the way to go.