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
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
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
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
You've had a fender bender --
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
"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