 |
|||||
 |
|
 |
|||
 |
|||||
When renting a car, most rental companies will try to sell you on taking out additional rental car insurance to the tune of $10-$25 per day, in some cases almost doubling the rental fee. Many people are nervous about refusing this insurance, not realizing that claims involving rental cars in most cases are covered by their regular auto insurance policy, plus an unlikely ally: their credit cards.
If you refuse the Collision Damage Waiver (CDW) offered by the car rental company, and instead charge the entire rental fee to your credit card, many credit card issuers will have you covered. If you are in an accident or the car is stolen, many credit card issuers will pick up extra costs not covered by your primary auto insurance, including the deductible, administration fees, and towing fees. Further, if you have an older vehicle and dropped the collision coverage from your regular auto policy, in many cases, it may be covered by your credit card issuer. In addition, some credit card companies may cover things not covered by regular car insurance, such as car rentals in foreign countries.
To be covered for rental insurance on credit cards, be sure to charge the full reservation and rental fee to one credit card; avoid paying for the reservation online with one credit card and then providing another card for incidentals when picking up the car. To be eligible for coverage, you must be the primary renter of the car; and have declined the collision damage insurance offered by the rental car company.
Not all credit cards have the same coverage, so read through your card terms or call the card issuer to understand which coverage applies to you credit card account. For example, for Discover, American Express, and MasterCard credit cards, car rental benefits are reserved for premium cardholders. Visa has options for those with Visa Standard, Visa Rewards, Visa Premium Rewards, and Visa Signature cards.
Most lenders won’t cover a car rented more than 30 days, and some have policies for only 15. Usually the coverage is capped at $50,000, but Visa provides reimbursement up to the actual cash value of the vehicle as it was originally manufactured. Discover offers $25,000 of coverage for personal rentals, and $50,000 for business. While most card companies have fixed policies depending on the credit account, American Express allows you to purchase more coverage. A one-time fee of $24.95 will get you covered up to $100,000 for up to 42 days of rental. The coverage includes up to $15,000 of excess medical expenses.
No credit card company will offer coverage for cars over 20 years old or exotic cars, so no DeLoreans or Masaratis. Credit card issuers cover ‘reasonable’ towing fees to the nearest facility, but none covers items damaged within the car, and only one card issuer offers a policy for personal damage: American Express. In addition, card issuers don’t cover claims related to violations of the auto rental agreement, such as accidents happening while driving under the influence.
Where the added insurance offered by credit card companies on car rentals is most useful is typically in covering the extra administrative fees charged by rental companies in the event of a collision or theft. Car rental companies charge many obscure fees, such as a “loss-of-use” fee to cover lost income while the rental car is being repaired, as well as a “diminished value” fee, for reselling the vehicle later on. These are typically not covered by personal car insurance policies, which will only pick up the tab for damage repairs as well as personal injury claims.
However, while many card issuers cover these extra administrative fees, it may take some leg work to get the reimbursement. For example, to get covered for “loss-of-use” fees, you may need to get the rental company to provide a “fleet utilization log” to show that they had no other cars available in the lot. This takes time and persistence, and it is important to acquire the documentation quickly, because most card issuers require paperwork to be turned in 45 days from the incident.
In short, to take full advantage of the rental car coverage provided by credit cards, it’s necessary to do your home work to make sure you fully understand your card’s policies. In addition, policies and coverage change often, so before trips, regularly check in with your credit card company to verify your coverage.
