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Eight Car-Rental Gotchas Your Credit Card Insurance May Not Cover

Say you’re renting a car and you plan to rely on your credit card’s built-in collision coverage. Or maybe you’re even prepared to buy the rental company’s wildly overpriced collision damage waiver (CDW). Either way, you think you’re covered. But are you fully covered? MileCards just released a report on eight rental-car gotchas that at least some credit card collision benefits won’t cover.

“Upgrade” to SUV: “We’re out of that midsized car you reserved, but we’ll give you a Ford Expedition at no extra charge.” You might hear that from a rental agent. Or maybe you just picked out an SUV from one of those “pick any available car” lots. You might have even wanted an SUV. Although most credit cards cover smaller SUVs, some credit card collision coverage specifically excludes full-sized SUV models.

“Expensive” Cars: As is the case with SUVs, if you think driving a rented Corvette, Lexus, or BMW might be cool for a few days, better pay the CDW. Many credit cards do not cover collision damage to cars with a retail value of $50,000 or more. And, these days, lots of cars cost more than $50,000.

Vans and Pickups: You probably already know that almost no credit card coverage applies to trucks or large vans. If you’re renting a U-Haul or some other hauling vehicle, you have to buy the CDW, regardless of the credit card you use. The main exception is AmEx’s extra-cost “Premium coverage” that includes some trucks.

Flat Tires: A blowout or flat tire may not come under the definition of “damage” to a rented car, unless the tire problem is caused by an accident, in which case neither CDW nor credit card coverage is guaranteed to cover the associated expenses.

Unlocked Car: Normally, neither a rental company’s theft insurance nor a credit card will cover you if a police report or any other source notes that the car was unlocked at the time of the theft. And a related problem is that you may not be covered for theft if your car is stolen but you don’t have possession of the key.

Stuck Vehicle: The MileCard report cites an instance of a driver whose rented car was caught in a flash flood and isolated for several days. The driver got out by rescue helicopter, but the rental company demanded payment for the entire time until the car was returned. You can also be charged for extra days if your rented car is towed, for whatever reason.

Damage to Others: Neither a credit card nor a rental company’s CDW covers you for any harm you might do to any other person or damage you might do to someone else’s property. That sort of claim is handled under personal liability, not collision. In the U.S., some states require that rental companies include a minimum level of liability as part of the rental rate, but it’s almost always very small compared to the financial risk, and some states require no coverage at all. Typically, credit cards don’t cover liability, either; rental companies sell it in addition to CDW. The liability insurance most drivers are required to carry on their own cars often extends to rented cars. And some rentals through AARP rates enjoy higher than minimum liability coverage.

Prepaid CDW: In some rentals—especially outside the U.S.—partial collision coverage may be included in the base rate, but with a very high deductible. Credit card coverage almost always requires that you decline the rental company’s CDW, but card issuers’ policies on bundled CDW differ. Some card policies cover the deductible if you can’t avoid paying for some CDW; others refuse. Check with your card.

In sum, collision coverage is a minefield: The rental companies know of the loopholes in credit card coverage—and they may invent a few when they’re selling you on CDW. You can avoid most problems by buying CDW, but the prices, up to $30 per day, are wildly inflated. I continue to recommend relying on a credit card, but you have to know your card’s fine print before making a decision.

Ed Perkins on Travel is copyright (c) 2014 Tribune Media Services, Inc.

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