Should you use your credit card car rental coverage?

When Glennis Deslippe was considering renting a car for an upcoming trip to Edmonton, her husband Nelson offered to pay for it on his CIBC Aerogold Infinite Visa -- even though he wasn't going on the trip -- because his card had rental car insurance. But it turned out that to qualify for the coverage on his credit card, Glennis would need to be both the renter and the driver of the vehicle.

"Thank God I did the research," she says. "It just goes to show, if you have rental insurance on your credit card, you've got to read the fine print."

It's true. Many credit cards will cover you if you get in an accident with a rental car, but there are numerous exclusions and exceptions. Representatives from Canada's biggest banks explain what you need to know about credit card rental car coverage.rental-insurance

First step: find out if you even have coverage
Only select credit cards have rental car insurance. It's most often available on premium, travel, U.S. dollar, rewards and business credit cards.

Canadian banks all have very similar criteria when it comes to rental car coverage. For example:

"For the car rental insurance to be in effect, the customer must have
a card in good standing, be the renter of the vehicle and charge the entire cost of the car rental to their TD Credit Card Account," Barbara Timmins, TD Bank's associate vice-president of corporate and public affairs, said in an emailed response to questions.

All Canadian banks except the Bank of Montreal (BMO) require that you pay the full cost of the rental on the credit card with the insurance coverage; BMO will still cover you if you charge only part of the cost. In addition, your rental of the car cannot exceed 48 days. Some banks allow you to use rewards points toward rentals, but you must put any remaining balance on your card. You can still receive coverage if the cost of the rental car is free.

TD, Scotiabank, CIBC and BMO all require you to decline the rental company's Collision Damage Waiver (CDW) and/or Loss Damage Waiver Coverage (LDW). You can accept these when using an RBC card, but RBC will only cover your deductible in the event of an accident if you do. To decline these coverages, indicate on the rental agreement that you are doing so and sign a liability waiver provided by the rental company.

Second step: know what's covered
Scotiabank, TD, CIBC and RBC all cover loss, theft or damage to the rental vehicle up to the value of the vehicle, as well as reasonable loss-of-use expenses for the rental company for the time the car is out of commission. BMO covers any expenses related to loss, damage or theft up to $65,000. You must make a claim within 48 hours after the accident to receive coverage in all cases.

Take steps before and after an accident to reduce your potential liability.

"Before you take possession of your rental, inspect it for previous damage and take pictures if there are scratches or dents," Heather Colquhoun, RBC's manager of corporate communications for Private and Commercial Banking, said in an emailed response to questions. "If your rental vehicle sustains damage of any kind, you should follow the same steps you would if you were driving your personal vehicle."

Liability coverage, including third-party liability, is unavailable on all credit card rental insurance plans, so make sure you have adequate private coverage for these possibilities. Credit card rental insurance also won't cover all-terrain vehicles, motorcycles, trucks or vans (except mini vans).

Third step: compare credit card insurance with rental company insurance
Before you waive the LDW on the rental form, consider the benefits of the rental company's insurance.

Unlike credit card rental car insurance, a Loss Damage Waiver provided by the rental car company will limit your liability.

"The LDW reduces the financial liability for loss or damage to the Avis car as long as they comply with the terms of the rental agreement," Alice Pereira, spokesperson for Avis Budget Group, said in an emailed response to questions. "Cost of LDW will vary by location, car group and rate. If you have rental car coverage through your personal insurance or charge card, LDW offers maximum protection, while your personal insurance or charge card may contain a deductible."

While most credit card issuers require that you waive the LDW to be covered by the card's insurance, some don't. Additionally, you can still take advantage of the card's insurance without having to waive additional optional insurance protection, such as Avis' Personal Effects Protection, provided by the rental car company under the terms of the rental agreement. The Avis insurance covers damage or loss of the renter's personal belongings up to $500 per claim and $1,500 per individual.

Other examples include Personal Accident Insurance (PIA), which covers emergency medical expenses and provides accidental death benefits; PIA-Plus, which is extended insurance coverage for those from other countries who need to cover medical expenses; and Additional Liability Insurance, which increases liability coverage for death and property damage.

Making a choice
If your credit card comes with rental car insurance, you're likely paying for it by way of an annual fee, so you may not feel it's worth paying twice for the same product by opting in to the rental car company's insurance. Or you may simply feel that the cost of the rental company's insurance is too high, and you just want to use what comes with your card, even if it means less or different coverage. The cost varies not only by company, but by region as well.

However, it's always wise to have liability coverage of some sort, so if you don't have it on your card, you may need to bite the bullet and accept the LDW and CDW. This may be more appealing if you have a card that will still cover the deductible if you accept the LDW.

The bottom line is, the better coverage choice will depend on where you live, which car rental company you use, which credit card you have and maybe even how long you need the car. The best way to decide is to know what your card covers before you head into the rental company so you can choose the coverage that works best for your wallet and peace of mind.

See related: Ensure smoother sailing with travel insurance, 6 ways cardholders can save on vacations
Published October 30, 2015

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