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How much rental car coverage does your credit card provide?

Once, they merely symbolized status and convenience. Now, credit cards are like psychological armour, offering protection in various accident scenarios.

Most credit cards today are equipped to provide some sort of insurance coverage. In some cases, the service is free; in others, there's a fee.

Arguably the most prevalent coverage is car rental insurance, also known as collision-loss damage insurance. Not generally offered on starter cards, such as the President's Choice Financial MasterCard, collision-loss damage insurance comes gratis with "preferred". products such as the Royal Bank Visa Platinum or the Desjardins Odyssey Gold. (For current credit card rates, check out Bankrate's credit card home page.)

Collision-loss damage insurance is there should you find yourself in an accident with your rental car. In obtaining this peace of mind, you should be aware of the conditions, which are myriad.

In order to capitalize on this coverage, the entire rental transaction must be done with the same credit card. Furthermore, you must make a point of waiving the rental company's collision-loss damage insurance, which adds a few dollars per day to any rental.

Be aware of the eccentricities of the company you rent from and the district you're in. Some countries require the cardholder to purchase local insurance. As well, some rental companies may ask for a cash deposit for waiving their collision-loss damage insurance.

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Given the laundry list of conditions, it pays to study the fine print. For example, coverage is not extended to cargo vans of the variety you might rent to transport furniture (and which can be unwieldy for people used to driving compact cars). Similarly, any vehicle with a manufacturer's suggested retail price, of more than $65,000 before taxes, may not be covered.

The coverage is usually limited to one vehicle at a time and does not run indefinitely. Visa, for example, will not extend coverage to a vehicle that is rented for more than 48 consecutive days.

You've had a fender bender -- now what?
If you get into a smash-up or get car-jacked while driving a rental, collision-loss damage insurance pays the total cost of repairs up to the actual cash value of the automobile, regardless of your culpability in the incident. It also compensates the rental company for loss of use while the damaged vehicle is repaired or replaced.

It sounds nice, but as a credit-card customer, you should be aware of what happens when you relinquish the rental company's coverage.

"By waiving that option, the liability is on the cardholder, because you've chosen not to take advantage, and the car rental company has to get paid some way," says Anne McNeil, senior product manager at Visa Canada.

How an accident claim is processed varies depending on the rental company and where the mishap occurs. Some rental companies don't require immediate payment; others most certainly do. In most cases, the cardholder will have to foot the bill initially for any damages, and then file a claim through the credit-card company to the insurer. (The insurer varies depending on which member bank issued your card.)

As for how long it will take you to get reimbursed, again, it will vary. "Assuming the insurance company gets all of the paperwork, I've been told it could be 15 business days," says McNeil, but she hints that it could be longer. "That information is in the certificate of insurance of the cardholder."

Look for better coverage elsewhere
While most premium credit cards offer collision-loss damage insurance, if you are permanently insured on your own car -- and only rent, say, when you're out of town -- you may already be covered, and more comprehensively at that. You might just need to contact your insurance company and ask them to add "short-term loans" to your coverage. It's possible it won't affect your premiums.

"If ever a consumer was interested in getting that card and paying some kind of fee for a reward program that includes short-term car insurance, maybe a phone call to his car insurance would be cheaper, and better, protection," says Jean-Guy St-Amour, consumer education officer at the Financial Consumer Agency of Canada. "These general [credit-card affiliated] coverages may be insufficient when you're abroad."

What's important when considering insurance coverage, says St-Amour, is to be protected in any conceivable accident situation. "Remember that these packages are for general situations," he says, "when what we're interested in are the specifics."

Andre Mayer is a writer in Toronto.


-- Posted: Oct. 21, 2004
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