NEW YORK (
) -- If you plan on renting a car during an upcoming summer vacation, using a credit card to pay for it may save you money and provide increased protection.
When you rent a car, the rental agencies will try to sell a collision damage waiver, commonly referred to as a CDW. This is the insurance that provides coverage for damage to the rented vehicle. This can cost about $15 per day.
Depending on your policy, your personal auto insurance may cover any damage to the rental car. In addition, your credit card issuer may offer CDW coverage, but you must pay for the rental car in full with your credit card for this coverage to be valid. You must also decline the coverage from the rental car company. The CDW coverage from your credit card will be secondary to your personal coverage.
Make sure you understand the coverage on your personal auto insurance and your credit card before you rent a car. Since coverage varies from one issuer to another, it is a good idea to call both your car insurance and credit card company to get the specific details of your rental car coverage. Ask for the coverage information in writing.
Coverage can vary depending upon a number of issues:
Rental periods vary. Visa(V - Get Report) and Mastercard(MA - Get Report) only provide coverage if the rental is less than 15 consecutive days within your country of residence, and 31 consecutive days outside your country of residence.
There may be limits on the dollar amount of coverage. For instance, the Discover Financial Services(DFS - Get Report) Car Rental Insurance Plan provides $25,000 of secondary collision damage.
Know who the coverage covers. Does the coverage protect just the cardholder (American Express(AXP - Get Report)) or the cardholder and authorized drivers (Visa and MasterCard)?
Not all cars and/or all damage is created equal. The insurance may not cover damage done in a foreign country, or may not apply to expensive, exotic or antique automobiles. Some cards do not cover damage from dirt or gravel roads, or damage done due to off-road driving.
The first thing to do when you need to file a claim is to contact the credit card company and inform them of the accident. They will usually have you do the following :
Submit the completed and signed CDW form, postmarked within 90 days of theft or damage.
Include a copy of the receipt or monthly billing statement as proof that entire rental was paid with your credit card.
Include a statement from your insurance carrier showing the costs for which you are responsible and any amounts that have been paid toward the claim.
Include a copy of the accident report form, the auto rental agreement, and the estimate or repair bill.
--By Bill Hardekopf
Bill Hardekopf is chief executive of
, which compares and rates more than 1,000 credit cards. He is the co-author of "The Credit Card Guidebook."
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