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Tip 1: Make Sure Your Credit Card's Collision Coverage Really Covers You
If you are among the millions of travelers who rely on the collision coverage provided by your credit card company when you rent a car, be warned: you're not completely covered.
Until recently, most credit card companies extended coverage that allowed renters to decline the rental car agency's collision damage waiver (CDW), an overpriced insurance policy covering theft or damage to the vehicle (this is separate from liability, which is usually covered under your personal car insurance policy). But many rental agencies are now making customers responsible for situations or items not covered by most credit card insurance, in effect forcing renters to purchase the CDW.
These new liabilities can include reimbursement for loss of use when a damaged vehicle is out of service being repaired (at whatever daily rate is on your agreement), tire damage of any kind (including a flat tire), and other, more nebulous charges -- such as the "loss of resale value" of a repaired car or administrative fees for "processing the vehicle."
The reason for the change is clear: rental agencies are trying to recoup lost collision-insurance sales revenue, which by some estimates amounts to more than $1 billion a year across the industry. To make their point clear, many agencies now force renters to sign a separate "CDW refusal" document that lists the charges not covered by most credit card insurance (i.e., charges the renter will be responsible for in the event the vehicle is damaged or stolen).
Credit card insurance covers most of the things listed on the rental companies' CDW, but the few items that are not covered can amount to thousands of dollars should anything happen to your rental car. (An American Express agent I spoke with agreed that these changes have rendered credit card insurance "nearly worthless.") And none of the major rental agencies offers "gap insurance" to cover the few items your credit card doesn't; this forces you to purchase the entire CDW, which in some cases can cost you as much as the car rental itself.
You don't need to purchase the CDW from the rental agency, however. Instead, try a trip insurance company such as Travel Guard (www.travelguard.com), which extends coverage to vehicles from most major rental agencies and includes a CDW that covers loss-of-use charges -- for less than half of what you'd usually pay. (Travel Guard charges $9 per day for $35,000 worth of coverage; most major rental agencies charge about $22 per day for the same.)
Bottom Line: The credit card agencies generally don't tell you what they don't cover -- until you ask them directly or have to make a claim. Don't be surprised. Call your card issuer before you rent a car and ask to be sent a copy of the insurance policy so you'll know what is -- and what isn't -- covered. |
