By Michelle Crouch
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 in.
What does 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.