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  • By Jordan W. Charness

    “$14.99 a day!” exclaimed Peter. He was filling out the rental agreement for a car that he was renting at Newark Airport. The $14.99 charge was an additional charge that was optional. It was for a collision damage waiver (C.D.W.). If he did not pay this charge he would be responsible for any damage that was caused to the rental vehicle while he had it in his possession.

    The C.D.W. was more than 50% of the daily rental charge for the vehicle. Suddenly a rental car that looked like it was going to cost $30 a day was up to $45 a day. If he wanted to, he could even purchase additional insurance at three dollars a day to ensure his belongings.

    The rental agent was really being very nice. She understood the sticker shock of the cost of the insurance. “I see that you have a gold card in your wallet.” She said referring to his credit card. “You do realize that if you charge the rental to this card and decline The C.D.W. the insurance offered by your credit card will cover you in case of an accident and you will not have to pay the $14.99 a day.”

    Peter was pleased. Peter was happy. Peter rented the car and declined the C.D.W. Then Peter hit a deer and totalled the car.

    It was about midnight on the last day of Peter’s trip and he was heading back to the airport for a red-eye flight home. The deer came out of nowhere and Peter hit it before he had an opportunity to stop. Luckily he was not injured but the car was a wreck.

    The New York State police trooper that arrived on the scene confirmed how lucky Peter had been and filled out the necessary paperwork. Fortunately for Peter he had not been speeding and was wearing his seatbelt and his car was equipped with an airbag. The state wildlife people took care of the deceased deer and a truck company towed Peter’s car to the nearest pound.

    It cost Peter $145 for the taxi to take him to the airport where he arrived on time for his flight and had a little time left over to explain what happened to the rental car company. He was told that he would have to pay for the rental but that they would wait to hear from the insurance company attached to his credit card to see about payment for the car.

    The credit cards that provide rental collision/loss damage insurance all have different rules and regulations regarding their coverage and how you are to be indemnified. In virtually all cases, the coverage only kicks in when the full cost of each rental of the vehicle is paid for by using the credit card. You must also decline the C.D.W. In some places rental car coverage is mandatory and must be paid for when you rent the car. In others it is included in the cost of the rental. Credit card coverage is available everywhere that it is not prohibited by law but is only available on some credit cards.

    Some credit card companies insure you only for the actual cash value of the vehicle or any repair required to fix damage that does not result in the total loss of a car.

    Other credit cards also pay the rental car company for valid loss-of-use charges. Loss-of-use is the amount paid to the rental car company to compensate it when a rental vehicle is unavailable for rental while undergoing repairs for damage incurred during the rental period.

    Generally speaking your credit card must be in good standing in order to have rental car coverage available to you. Your coverage is also limited to only one rental vehicle at a time per cardholder.

    Most credit card insurance policies also limit the value of the vehicle that you could rent and exclude motorcycles , truck rentals, off-road vehicles and exotic vehicles like Lamborghini’s and Ferraris. You will likely be allowed to rent luxury vehicles such as Cadillacs and Lincolns as long as their value does not exceed the maximum permissible value according to the terms of the rental card contract.

    Many credit card insurance companies limit the number of days in a row that you may rent the same car. Taking it back and re-renting it the same day or even renting another car from the same rental car company will void your rental car credit card insurance.

    Credit card collision/loss damage insurance also includes full payment of the value of the vehicle in case it is stolen. It may or may not include the value of items that you had in the car that were either stolen from the car, or along with the car when it was taken. Similarly, personal items damaged in an accident are not likely to be covered by your credit card insurance either.

    Next week we will look at how Peter filed his claim and what success he had dealing with credit card company’s insurance brokers.

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