So you think you're covered. Damage, theft, personal effects - hey, you've even
worked with your insurance agent to make sure you're covered in case of liability.
Good for you. And yet, too many people who think they've done the responsible thing
end up surprised when, after an accident, their insurance company won't foot the
bill for something the rental car companies call "loss-of-use".
Loss-of-use is a fee imposed by the rental car company on the customer to cover
its lost income while the vehicle is out of commission from an accident--even when
the accident may not have been the customer's fault.
Loss-of-use, along with various "administrative fees" imposed by the rental car
companies, usually come as a huge surprise to unsuspecting renters. These charges
can quickly add up. While buying the Loss Damage Waiver (LDW) or Collision Damage Waiver (CDW) sold
by rental car companies means you're off the hook completely in case of mishaps,
it may not be the most cost effective solution. There are ways to bulk up your personal
coverage. This way, you won't have to overspend when you pick up your next rental
car. Here's a checklist:
1) IS YOUR STATE ON YOUR SIDE?
Never assume your personal auto insurance policy covers you for anything when you
rent a car. Always read it over. Even if it sounds like you're free and clear, remember
this: Many policies don't address loss of use issues when you rent.
In some states, lose of use coverage is automatically covered by a renter's personal
auto policy. These states are: Alaska, Connecticut, Louisiana, Minnesota, New York,
North Dakota, Rhode Island and Texas.
Make sure you know before you refuse the insurance offered at the counter.
2) BUT WHAT ABOUT MY CREDIT CARD?
Yes and no. Yes, some cards that insure you when you rent a car have you covered.
Others do not. If you hold a standard card and rent cars frequently, that card should
be a Visa. The latest fine print states that you are covered not only for collision
and damage, but also towing and "valid" administrative and loss-of-use charges.
What's valid? Rentals under fifteen days in your home country, or thirty-one days
outside your home country. You need to use the card for the entire transaction,
as well. (No swiping with one and paying with another.) Additionally, Visa explicitly
states that it uses fleet utilization logs (documents that show the company's business
truly suffered as a result of your accident) to help sort the claim. Be warned -
some companies jealously guard these logs and sorting out responsibility can often
MasterCard holders should look very closely at their policies; the brand's "MasterRental"
coverage that comes with your card does offer loss-of-use coverage for charges that
are "reasonable and customary." There are, however, plenty of qualifiers and exclusions
in the fine print of the coverage document - again, read it. Also note that like
most credit card insurance policies, this coverage is secondary to your existing
American Express holders should seriously consider subscribing to the company's
Premium Car Rental Protection package. Standard
cardholders are sometimes alarmed to learn that the automatic coverage can be a
bit scanty. We're big fans of the aforementioned premium plan offered by American
Express. This policy, a bargain at $24.95 for the rental
period (some time restrictions apply), explicitly states that it will cover you
in case of loss-of-use, with stipulations that are similar to Visa's. Make sure
to read the paperwork they'll send you when you sign up.
Bottom line: Some credit card policies have your back. Others do not. Know which
one is in your wallet.
3) DON'T GIVE IN AT THE COUNTER
It happens time and time again -- agents will often successfully prod customers
into buying the insurance that's offered over the counter. Don't be surprised; as
companies struggle to find ways to bring in new revenue, the pressure is on agents
to sell. If you've read your policy and it says you're covered, don't give in. If
you haven't, our best advice is to buy the over-the-counter coverage, suck it up
and, for the love of God, be prepared the next time.