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Rental Car Runaround

Michael Flack

IF YOU’VE EVER rented a car, you’ll inevitability have heard the collision damage waiver (CDW) sales pitch. It sounds something like this: “I assume you want us to protect you bumper to bumper on the car, right?”

If you say, “yes, please,” then—for anywhere between $10 and $30 a day—the rental car will be covered for losses due to theft or damage, except for damage to certain portions of the car. Hint: Read the fine print. If you say, “no, thank you,” you need to be prepared to take on the risk yourself.

I don’t buy the CDW from car rental companies. I’ve studied the issue extensively, and I feel adequately covered by my auto insurance and by the auto rental collision damage waiver offered by the credit card I use to rent the car. You need to review all of this yourself to determine what’s best for you.

Auto rental CDW is a benefit offered by almost all credit cards. The benefit provides reimbursement, subject to the terms and conditions detailed in each card’s benefits guide, for damage due to theft or damage up to the actual cash value of most rental vehicles. Prior to renting a car, you should review the benefits guide for your credit card.

What happens if you file an auto rental CDW claim with your credit card company for damage to a rental car? I’ve checked the internet and I can’t find a single actual example of someone making a claim. So….

Prior to COVID-19, I rented a car in Edinburgh, Scotland, from Hertz using my USAA Visa credit card. I declined the auto rental CDW offered at the rental counter. Two days later, while driving entirely too fast on the Isle of Skye in an effort to reach Coruisk House before sundown, I clipped the only section of curb on the isle, resulting in a puncture to the sidewall of my left rear tire. I drove on the spare uneventfully but slowly for the balance of the trip.

When I returned the car to Hertz, I mentioned the flat tire. The attendant filled out a form describing the damage. She provided me with a hardcopy. I took a photo of it and the tire. Subsequently, Hertz charged my credit card $160 to cover the “tyre” damage.

When I returned to the U.S., I called USAA and—after numerous phone transfers—initiated an auto rental CDW claim. It was all pretty straightforward. USAA sent me an email with my claim number in the subject line. I then replied to the email with all relevant documents: contract, damage form, photos of the damage, credit card statement and so on. As it’s easy to leave your rental car contract in the car when you return it, be sure to photograph it as soon as you receive it at the rental car counter.

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About two weeks later, I was contacted by a USAA representative, who was following up on my claim. The conversation was a little odd. He asked if I had purchased the CDW from Hertz, to which I replied, “No, because I was relying on the auto rental CDW insurance via my USAA Visa credit card.” He offered that, “I always get the CDW from the rental car company myself. Call me a belt-and-suspenders kind of guy.” He then asked if I still wanted to make a claim, to which I replied with a measured, “Yes… I do.”

Subsequently, USAA informed me that it was waiting on documentation from Hertz that detailed the cost of the tire repair. While that seemed reasonable, I asked USAA why Hertz would be in a rush to provide such documentation and was met with silence. After waiting for resolution for more than a month, I decided to take matters into my own hands. As my father once said, “If you want something done right….” I contacted USAA to dispute the Hertz credit card charge for $160. I asked that Hertz provide documentation that detailed the cost of the tire repair.

About a month later, USAA informed me that my credit card dispute was resolved in my favor for the full $160. A few weeks after that, USAA informed me that my auto rental CDW claim was resolved in my favor—but this time for a lesser amount, $120. USAA couldn’t give me the full $160 for some reason or another. I’m not sure exactly why and I didn’t want to push it.

Planning to rent a car? Keep these three additional points in mind:

  1. Normally, credit card auto rental CDW insurance is secondary to your auto insurance policy. Since my auto insurance policy does not provide overseas coverage—and neither does yours—my credit card auto rental CDW became the primary.
  2. Prior to relying on your credit card for auto rental CDW insurance, read the fine print to fully understand what is and isn’t covered. Some credit cards do not provide coverage in Ireland, Jamaica or Israel. Some provide coverage for 15 days and others for 31 days. Almost all do not provide coverage for pickup trucks, vans and other high-end vehicles.
  3. Your auto insurance should provide you liability insurance for your rental car in the U.S., though you should confirm this. If you don’t currently own a car, you may want to ask your insurance company about rental car liability insurance.

Michael Flack blogs at AfterActionReport.info. He’s a former naval officer and 20-year veteran of the oil and gas industry. Now retired, Mike enjoys traveling, blogging and spreadsheets. Check out his earlier articles.

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AnthonyClan
AnthonyClan
5 months ago

I would like to know why the rental companies charge so much? If the price were reasonable, many if not all would purchase it for peace of mind. This could cover the added cost of more potential claims.
I’m sure they could do an instant risk check with current technology and at least offer low-risk customers a lower rate.

mjflack
mjflack
1 month ago
Reply to  AnthonyClan

AnthonyClan, thanks for the comment. I have a feeling that rental car companies price coverage to maximize their profit.

SanLouisKid
SanLouisKid
6 months ago

American Express offers an optional, extra charge Premium Car Rental Protection. Currently it’s $24.95 for 42 consecutive days of $100,000 of primary physical damage coverage. Rather than just rely on the freebie credit card coverage, I always buy this extra physical damage coverage. Claims are not reported to your insurance company, unless a bodily injury liability or property damage claim occurs too. I haven’t had to turn a claim in on this yet so I can’t vouch for it, but after reading the terms, it appears to be a reasonable deal. Beyond that, the “loss of use” and “impaired value” is another issue addressed by coverage provided by credit card companies. If that’s a concern for you, then you should probably bite the bullet and purchase coverage from the rental car company.

mjflack
mjflack
1 month ago
Reply to  SanLouisKid

SanLouisKid, Thanks for the comment though I don’t completely understand the benefits of this Premium Car Rental Protection.

SCao
SCao
6 months ago

Thanks for sharing. Quite a few years ago, I had a rental car accident (fairly serious) while vacationing in Florida. I did not purchase any insurance from the rental car company. However, my own auto insurance was able to cover the damage, except the deductible. Then my Amex credit card (I used to reserve the rental card) paid me for the deductible, so I had zero payment afterward. Amex was very easy to work with for filing and processing my claim.

mjflack
mjflack
1 month ago
Reply to  SCao

Scao, thanks for the comment. It is reassuring to hear how this actually played out and that you were completely covered.

Steve Spinella
Steve Spinella
6 months ago

I made a claim for damage in Costa Rica last year. I used my United Club visa card for the rental (from Chase). I was successful. It did take some time, and there was an attempt to delay or avoid payment–“you have not provided an independent estimate of the damage.” I replied that I had provided detailed pictures of the damage as well as the estimate from the rental company in CR (a Hertz affiliate) and that while I could ask a body shop here to give a second estimate based on that information, it would be both higher and irrelevant. After a while they simply paid the claim without any further communication. The claim was under $1000 US.

mjflack
mjflack
1 month ago
Reply to  Steve Spinella

Steve Spinella, thanks for the comment. It reassuring to hear that your coverage via Visa fully covered you.

HannahKatz
HannahKatz
6 months ago

We always skip the rental car company insurance in the U.S. since we carry auto insurance, but when we rented a car in England, we decided to buy it, as it was only for a five days, and we were not used to driving on the left, especially with roundabouts going clockwise. Ironically, I clipped the curb (again not used to driving on the left) and it was out in the country, but fortunately there was no damage. Amazed to turn the car back in without a scratch. Still glad we purchased the extra coverage for the peace of mind.

IAD
IAD
6 months ago

Thanks! Very helpful!

mjflack
mjflack
6 months ago
Reply to  IAD

Your welcome IAD!

johny
johny
6 months ago

I thought your message was gonna be GET THE RENTAL INSURANCE.

mjflack
mjflack
6 months ago
Reply to  johny

johny, I think the CDW offered by rental car companies is way overpriced. Everyone needs to make their own decision, but unfortunately everyone makes their decision without fully understanding what is and isn’t covered.

Thomas
Thomas
6 months ago

What a hassle! It’s nonsense like this that makes me distrustful of any person or corporation that makes me sign a document with a lot of legalese. And it’s rather annoying that reading the fine print is such a chore. There’s always a bunch of gotchas hiding in there.

mjflack
mjflack
6 months ago
Reply to  Thomas

Thomas, you’re correct about the fine print, it can be extensive. That’s why I try and do some research about my insurance needs prior to approaching the counter. Toll transponders can be another area of gotchcas, which I cover here:

https://report44.wixsite.com/theafteractionreport/the-rental-car-protocol

Roboticus Aquarius
Roboticus Aquarius
6 months ago

Cool post, I’ve never heard of anyone actually using their credit card coverage before.

mjflack
mjflack
6 months ago

Thanks Roboticus Aquarius!

Arnold Hold
Arnold Hold
6 months ago

The arithmetic makes sense, but frankly if I need to rent a car for just a couple of days the collision waiver, while expensive, saves a lot of hassles. Sounds like you had to do plenty of work to get back the $160 charge removed, and besides if you do run this through your car insurance you’ll probably get nicked at your next renewal on the premiums.

mjflack
mjflack
6 months ago
Reply to  Arnold Hold

Arnold Hold, You make a valid point. If you only rent for a few days, then it can save some hassles, though if you rent a car more often, $10-30/day can add up. I didn’t mind the work to get the $160 back (plus another $120 for my “efforts”) as it was matter of “principle” and a reconnaissance for future claims. Claiming it on my car insurance would have been impossible as this was an overseas rental and well below my $1000 detectable.

Danielle
Danielle
6 months ago

My ex did have occasion to claim for rental car damage on the credit card. Whoops, read the fine print. He had accepted a pick up truck as a rental because they “didn’t have anything else available” when he picked up his reservation. Guess what, trucks aren’t covered. So be careful what you accept, as well.

mjflack
mjflack
6 months ago
Reply to  Danielle

Sorry to hear that Danielle and very good point. Something similar happened to me at Grand Rapid Airport, except I had a minor accident. All the mildly amusing details are here:

https://report44.wixsite.com/theafteractionreport/the-rental-car-protocol

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