Especially during the busy summer travel and vacation season, lots of credit card consumers will be faced with an often-perplexing question or choice. Should they go ahead and pay extra for auto insurance when renting a car, or decline it and hope that they are covered by their credit card membership’s insurance program?
Sometimes the cost of a daily rental car insurance premium is a huge additional expense that can escalate the cost of auto rentals into the stratosphere. But without it, if there is an accident, the renter could wind up owing a car rental company the price of a brand new car. So when a car rental representative poses the question it can be a little intimidating or downright scary, although you may already have plenty of coverage in the event of an accident because of your regular auto policy plus the coverage provided by your credit card company.
The trick is to sort it all out before you get to the car rental counter, so here is some information to help you feel more educated and informed – and hopefully save some money.
Credit card rental car insurance typically covers damage caused to a rental car by a collision or the theft of the vehicle, and it is designed to augment your main auto insurance policy coverage – and to pay that policy’s deductable.
If you do not have any car insurance you have to ask yourself two questions. First, are you even legal to drive? In many states across the USA you cannot operate a motor vehicle without minimum coverage, so if you own a car but do not have insurance, you may need to go out and buy some. The other question to answer is whether or not your credit card company will cover you in the event that you do not have any other car insurance. You will need to contact your credit card company or carefully read the small print on your cardholder agreement to find out for sure.
Note that the level of coverage will be determined by not just which credit card company your card was issued by, but also by the type of card membership you happen to have. A standard Visa, American Express, or MasterCard may have less perks – and less car rental insurance coverage – than would a preferred or VIP type membership such as those represented by a Gold or Platinum version of the card.
If your card does indeed offer car rental coverage then it will typically kick in as soon as you sign the contract to rent the vehicle – as long as you are careful to pay for the rental with that particular credit card. You can then decline the additional rental company coverage or “collision damage waiver.” Should you get into an accident then you will want to contact your credit card company as soon as possible and give them a written report of the accident and a request for your insurance claim.
The length of time you are covered for each rental transaction may also vary by credit card company, so that is another detail to verify. Some companies will cover you for 15 consecutive days, for example, whereas others may cover you for an entire month. Some rental agencies may also charge additional administrative fees for processing an accident report, and if that is the case then the credit card insurance policy may not fully reimburse you for all of those miscellaneous charges. Keep in mind, too, that if you rented the car outside the USA then special exclusions may apply. There are also exclusions for certain kinds of vehicles like sports cars, luxury SUVs, or antique automobiles – just as there will be on almost any kind of car insurance policy.
You may also run into problems or a denial of your claim if you violated any provisions of the rental agreement – such as driving the car on unpaved roads, exceeding the speed limit, or driving behind the geographical region specified in your contract. If the police report states that you were driving while under the influence of illegal drugs or alcohol then forget about it. You certainly will not be covered by the credit card insurance, because you were engaged in illegal activity at the time of the accident.
As usual, the best approach before signing any kind of legally binding contract is to carefully read it and then ask any questions you have about the terms and conditions. But don’t expect to get straight answers, because legal matters are usually pretty convoluted and they may be hard for the clerk at a rental car agency to understand or explain. The customer service rep on the phone at the card company may also be confused about what kind of coverage is included – especially since you are likely to end up talking by phone to a card company representative based in India or Pakistan. If you are really worried – or you frequently rent cars – you may want to invest some time in doing research, tracking down the right person to give you precise answers, or even running the issue past a qualified lawyer.
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