Photo (cc) by Phillip Pessar
You are standing at the desk of the car rental company and the agent asks, “Do you want the collision damage waivers?”
Uh … .
The moment of confusion
For a lot of us, this is a moment of confusion. Of course you don’t want it. It’s one more expense. In fact, the price of these damage “waivers” can nearly double the cost of your vehicle rental. (Supplemental insurance coverage offered by rental car companies is called a waiver because, when you pay for it, the company agrees to waive its right to collect for damages from you.)
But should you purchase the rental car waivers anyway, just to be safe?
You probably don’t need it. The chances are good that you’re already covered — very likely by your credit card, and probably by your personal auto insurance, too.
- Shopping for a credit card? The MTN Solutions Center can help
What you may not know, however, is that some credit cards’ rental car coverage is better than others.
How it works
Card Hub’s 2014 Credit Card Auto Rental Insurance study gets down and dirty to find the best rental car coverage. Among its findings:
- Most credit cards automatically offer supplemental collision protection when you rent a car. But, to enjoy protection from your credit card’s insurance, you need to use your card to pay for the entire car rental.
- “Supplemental” means your own auto insurance will be tapped first, if it provides rental car insurance. After your auto insurance coverage is exhausted, the credit card insurance kicks in. How much of the unpaid remainder it covers depends on the credit card policy’s specifics. (Don’t assume your auto insurance includes rental car coverage. Call or read the policy to find out.)
Finding a winner
If you have a Visa, Discover or American Express card, you have rental car protection. If you have a MasterCard, it depends on which financial institution issued your card. Some issuers offer rental car protection — and some don’t.
“Rental collision protection is primarily driven by the card network and not the card issuer,” Card Hub says.
It’s easy to figure out who your issuer is. If you have a Mutual of Omaha Platinum Rewards MasterCard, for example, Mutual of Omaha is the issuer. (The largest issuer of credit cards is Chase, Card Hub says.) MasterCard is the card network.
The four major credit card networks are household names: Discover, American Express, MasterCard and Visa. Nearly half of all credit cards are Visas, Card Hub says.
Card Hub stacked the big four networks up against each other, judging their rental car coverage in a variety of areas, including:
- The proportion of a network’s cards offering rental car coverage.
- The types of vehicles excluded from coverage. None of the networks, for example, covers trucks, vehicles with open beds, off-road vehicles or antique, expensive or exotic cars.
- Other types of exclusions — for example, a limit on the number of days coverage applies or on the types of road surfaces you can drive on or countries in which you can drive.
- Thoroughness of the coverage.
- Ease of filing claims.
- Ease of finding information about the policy and understanding it.
Who’s No. 1?
Here’s how the card networks rank, according to Card Hub’s survey. To see the scoring, go to the Card Hub study and scroll down:
1. American Express — a score of 90 percent. It was tops or tied for tops in several categories, giving it the overall winning score. However, Card Hub pointed out:
American Express is the only network not to provide coverage for renting certain popular SUVs – including the Suburban and Tahoe from Chevrolet, GMC Yukon, Ford Expedition, Lincoln Navigator, Toyota Land Cruiser, Lexus LX450, Range Rover, and full-sized Ford Bronco.
2. Discover — 88 percent.
3. MasterCard — 79 percent. Here’s proof that it pays to read the fine print on your credit card contract: MasterCard covers accidents on dirt and gravel roads only if those roads are “regularly maintained,” Card Hub says.
4. Visa — 74 percent. Among Visa’s failings: It is the only network that doesn’t cover accidents on dirt and gravel roads.
Card Hub says it contacted the card networks when it had questions:
American Express, Discover and MasterCard responded to our questions and confirmed the accuracy of our data. Visa declined to clarify issues regarding its policies despite multiple attempts to contact the company.
You’re not alone
If you’re one of the many consumers who buy rental car coverage just to be safe, your confusion is understandable.
Progressive surveyed consumers and found that roughly 20 percent said they always buy waivers when renting a car. A similar-sized group “sometimes” buys the coverage. Their reasons ranged from confusion to sales pressure.
What rental car waivers cover
Here are four types of coverage offered when you rent a car and their estimated costs:
- Loss-damage waiver ($9 to $19 per day). Pays if your rental is damaged or stolen. If your auto insurance includes comprehensive and collision coverage, you’re probably covered already, but check first.
- Supplemental liability ($7 to $14 per day). Liability covers damage you cause to someone else or their property.
- Personal effects coverage ($1 to $4 per day). Compensates if your possessions are damaged in a rental car.
- Personal accident insurance ($1 to $5 per day). Covers treatment for injuries while driving a rental car. You may already have this coverage with your health insurance or from the medical coverage portion of your auto insurance.
Learn what you have
Now that you know what rental car companies are trying to sell you, find out what coverage you already have before you’re standing at the rental counter again. It’s not as difficult as it sounds. Here’s what to do:
- Call your insurance agent (or read your auto policy) and ask what your auto policy covers for car rentals. Also ask if there are any situations where your personal auto insurance will not kick in. Find out, too, if your policy has limitations on long-term rentals of a week or longer.
- Call your credit card company (or read the contract you received with your card or find it online at the card issuer’s site). Find out what your card covers and what limits there are, if any, on rental car coverage.
Have you been paying for rental car coverage that you already have? Has a car rental agent scared you into buying unneeded insurance? Tell your story in the comments below or at Money Talks News’ Facebook page.