Liars, damn liars, and (some) car rental agents

When you try to use your credit card to cover collision damage to a rental car, the rental agent may lie to you about the coverage your card provides. Last week, I received emails from two readers reporting on the same scam at two different rental companies: Agents told them that although their cards covered damage to the vehicle, they didn't cover the additional "loss of use" fee the car company would collect for the rental revenue lost while a damaged car was out of service. That statement is a flat-out lie.

When you rent a car, you're on the hook for any damage done to that car during your rental, plus loss of use, so you have to find some way to cover your risk. Rental companies, of course, are happy to sell collision damage waiver (CDW) or loss and damage waiver (LDW)—essentially the same thing—to absolve you of that risk. But it's a rip-off, and arguably the world's worst travel buy: You pay $15-$25 a day (or more) for coverage that probably costs the rental company less than a dollar out of pocket.

Fortunately, it's one rip-off you can avoid:

• Your regular auto insurance may cover you in a rented car. Check your policy.
• Even if it doesn't, many credit cards offer collision protection, at no extra cost, when you use the card to rent a car.

Rental companies hate credit-card CDW, since it deprives them of revenue that is almost pure profit. Although managements maintain deniability at the corporate level, deep-throat former agents tell me that they're under heavy pressure from local supervisors to sell CDW—pressure that sometimes encourages them to lie to customers.

The truth of the matter is simple: If your credit card covers collision damage, it includes loss-of-use (and towing) charges, too. Here's what the card companies say:

• Visa's statement (for all cards) is typical: "Visa Auto Rental CDW reimburses you for covered damage or theft to a rental vehicle while it is your responsibility as well as valid administrative and loss-of-use charges imposed by the auto rental company and reasonable towing charges."
• AmEx and Diners (almost all cards): As with Visa, if your card covers CDW, it also covers loss of use.
• MasterCard (some cards). Whether your MasterCard covers CDW depends on the issuing bank, but if it does cover CDW, it also covers loss of use.

For rentals in your home country, most credit card CDW is secondary: you first have to make a claim through your own auto insurance, and the card pays only what your regular insurance won't. Outside your home country, coverage is primary, meaning the card pays the entire claim, so you don't have to involve your other insurance at all. One of the big plusses to Diners Club (and a few specially negotiated AmEx, MasterCard, and Visa cards) is primary CDW on all rentals, including those in the U.S.

If you normally use a personal AmEx card, but like the idea of primary coverage, AmEx's optional "Premium Car Rental Protection" provides primary CDW, plus ADD (accidental death and dismemberment) insurance and secondary medical and personal property insurance when you use your card for a rental. Premiums start at $19.95 per rental, regardless of length ($17.95 for California residents); higher-coverage, higher-cost options are available. Once you enroll (no fee), coverage applies automatically each time you rent. This would be a much better product if it dropped the ADD, medical, and property benefits and instead added additional secondary liability coverage, but it's still attractive if your rentals usually last two days or more. Enroll online or call 800-858-5947 and mention offer code 449.

Of course, if you're likely to rent five or more times a year, you might as well apply for a Diners Club card—$95 a year—even if you use it for nothing but its primary rental car coverage.