Using credit card insurance for rentals causes confusion

Using auto insurance policies often included with many credit cards may result in confusion and hassle if a rental car client has an accident and tries to submit a claim using this type of policy. Despite what one might assume, Ed Perkins, Smarter Travel’s correspondent and columnist found that many renters had great difficulty getting their credit card issuer to pay for the full cost of damage to a rental vehicle following an accident. For example, it is very common that a rental company will charge a client who has been in an accident a so-called “loss of use” fee, which is aimed at protecting the outlet following the loss of revenue that may occur if a vehicle is damaged in an accident and cannot be rented until repairs have been completed. Perkins noted that he received several complaints from readers who claimed that some rental companies would charge the loss of use fee across the board, even if there were plenty of similar vehicles in the fleet and no decline in revenue occurred due to the collision. Perkins also observed that occasionally, rental companies may charge more for repairs to a vehicle than what one would expect to pay if it was brought to a private garage or repair shop.

The credit card company which provides the insurance coverage may also implement rules that complicate reimbursements and submitting a claim. For example, card issuers will require that the renter produce a copy of the original rental contract that was signed at the time of pick-up. Although customers should always keep on hand a copy of this agreement—at least until they have returned the vehicle and their card has been charged for the correct amount—some frequent customers and members of rental loyalty programs will not have to sign a contract at all, as part of the firm’s expedited booking and pick-up process.

Perkins suggests that often the only way to avoid these problems is to purchase an insurance policy and collision damage waiver from the rental company itself, when booking a car. Sometimes this may actually be necessary, because many credit cards serve as secondary insurance, meaning that these policies will cover only what another (primary) policy does not.