How to Use the Collision & Damage Insurance Offered by Your Credit Card
Vehicle renters are always faced with the question of whether or not they should pay for the collision damage waiver (CDW) offered by the rental company. If you have a credit card that offers travel rewards, you may not need to. One of the bonuses of this type of credit card is the insurance coverage it offers. Many of these cards offer collision & damage insurance to cardholders wishing to rent a vehicle.
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How does Collision & Damage Insurance Work?
If your rental car gets stolen or damaged, you won’t be held liable and the insurance will pay for the cost of repairing or replacing it. Note that damage to other vehicles, property, or persons is not covered: the protection is only for the rental car. Your auto insurance in your home country may cover those types of damage, so if you’re planning to rent a vehicle, it’s a good idea to check your policy before you leave for vacation. If you want to protect yourself from being liable for damage to these, you should check to see if your travel rewards credit card offers liability coverage.
Credit card collision & damage insurance will kick in only if you decline the CDW that your rental company offers. The waiver is optional, and it can be expensive: the average cost is $20 daily. When you purchase this waiver your rental company cannot demand payment from you for any unintended damage inflicted on the car.
The coverage is secondary for most cards, meaning that you must file a claim with your insurance company in your home country first. If you have a card with primary coverage, use that to book your rental, and you won’t have to report the accident to your insurance company. A secondary card becomes primary if you’re renting a car in a country where your personal auto insurance is not in effect, or if you don’t have personal auto insurance, and that card should theoretically cover the full amount of the damage.
What does Collision & damage insurance Cover?
Collision & damage insurance normally covers any expenses related to fixing a vehicle that has an accident, is vandalized or wrecked in some other way. It also covers the cardholder if the rental company claims “loss of use.” The company bears a loss when one of their rentals ends up in an accident and has to be repaired since it cannot make money from that vehicle until it has been restored to working order. If you opt to take the CDW, you will be covered against claims of loss of use.
This article pertains to personal credit cards. Coverage levels for collision & damage insurance for business credit cards can be considerably different from the benefits described herein. Also, note that cards in the same network may have varying levels of coverage, so it’s important to contact your card issuer and find out what you’re covered for before renting a vehicle, so you’ll know what charges you’re liable for in case you have an incident.
What does Collision & Damage Insurance NOT Cover?
Your credit card collision & damage insurance does not cover all types of damage or losses. For example, if a person that is intoxicated by drugs or alcohol operates the rental vehicle, coverage will be denied. It also does not cover damage that the renter deliberately inflicts on the car or damage that occurs when the car transports illicit goods.
If you travel to a conflict zone, you should be aware that collision & damage insurance does not cover damage that occurs during a rebellion or war.
Collision & damage insurance covers only one vehicle: if you rent a second one and you have an accident you will not be covered for it as long as you’re still in possession of the first one. Note that collision & damage insurance only covers rentals for periods of 48 days or less.
This type of insurance also does not cover all types of vehicles. Only cars, SUVs, and minivans are usually covered. Typically, collision & damage insurance will not cover off-road vehicles, motorcycles, mini or regular cargo vans, limousines, trailers, campers, recreational vehicles, trucks, or pickup trucks.
Collision & damage insurance usually does not cover expensive cars that will cost a lot to repair. Any vehicle with a price tag in excess of $65,000 when brand new will generally not be covered. Bentley, Aston Martin, Porsche, Ferrari, Rolls Royce, and other cars deemed to be exotic are usually not covered as well. Vehicles over twenty years old are considered antiques and are not covered. Partially or wholly hand-finished or handmade vehicles are also not covered.
Claiming for Collision & damage insurance
You must call the car insurance provider right away if you find yourself, victim, to car theft or vehicular damage. In order to prepare a valid claim, most policies specify that you must report the accident or damage within 24-48 hours.
The insurer will require adequate documentation to process your claim. Police reports, copies of quotations for repairs, photos showing the damage, a copy of the rental contract showing that you rejected the CDW, and costs for repair that the rental company charges to your card are all considered relevant documentation.
Your collision & damage insurance provider can decline your claim if you don’t present convincing evidence. You must fully cooperate with the insurer throughout their analysis of your claim in order to receive compensation. You should also cooperate if the insurance provider decides to sue a third party in relation to your incident.
Pay Attention to Details
Paying for the car rental company’s CDW can be costly, especially if you’re renting the vehicle for a long period of time. However, it stops the company from charging your card for damage to the vehicle.
Whether you choose to depend on the collision & damage insurance that you get as a cardholder, or you go with CDW is a matter of how much coverage you have, and exactly what is covered. Ensure that you check this before opting to decline the collision damage waiver. Also, if your card doesn’t offer collision & damage insurance, think about getting one that does.