Use the highest grade Visa card you have or if you have the Amex premium protection plan, use your Amex card.
Car rental collision damage waiver is probably the most common way to ‘lure’ card members. All card issuers say they offer collision damage waiver, so you can decline the CDW (collision damage waiver) offered by the car rental companies. Seems like a huge benefit! But you will get scared if you read the fine print of the car rental collision damage waiver. Half of what the car rental companies will charge you is not covered.
Let me first acquaint you with some of the fees that car rental companies hit you with in the unfortunate case of an accident.
- Loss-of-use fee: Car rental companies charge you for each day the car was out of commission since it was being serviced. In most cases, they charge this even if they are not sold out!
- Diminished value fee: The companies will charge you for the depreciation in value due to the accident.
- Administrative fee: Just a vague name to pinch your hard-earned money.
I will discuss which cards cover these fees, but first let me briefly state how the credit card coverage works.
Understanding credit card coverage
If your card has car rental collision coverage, it will be activated if you charge the total amount of the rental to a particular card. Additionally, you have to decline the CDW offered by the car rental company. If the car is involved in an accident, the car rental company will charge everything to your card or send it to your insurance company. If the coverage on your credit card is secondary, your insurance company will be contacted first and only the deductible amount and other charges not covered by the insurance company will be sent to the credit card. If the credit card coverage is primary, your insurance company will not be informed and the credit card company will be sent the bill. In most cases, credit cards cover the whole amount. Nevertheless, there are some fees that they might not cover. Let’s see which cards offer what
- Visa : Coverage is secondary in most cases. Covers all fees and towing charges within ‘reasonable’ limits. This is the best bet with fewest fine prints.
- Mastercard: Coverage is secondary in most cases. Does not cover administrative fees. Covers all other ‘reasonable’ charges.
- American Express: Coverage is secondary unless you purchase the Premium protection plan. Cover all fees when the ‘rental company provides appropriate documentation’.
- Discover: Coverage is secondary. Covers no fees. The worst coverage in the market.
- Diners Club: Coverage is primary. Does not cover administrative fees. Covers all other ‘reasonable’ charges.
As you can see, Visa and American Express are the best bets. However, American Express has been known to deny fees coverage because they have been unable to get ‘fleet utilization logs’ from the rental company.
There is a huge fuss about primary coverage. This is because in this case, the accident will not be reported to your insurance company and there is no chance of an increased insurance bill. However, if your personal auto insurance is liability only, the credit card coverage becomes primary. I routinely change my auto insurance coverage to ‘liability only’ before any car rental trip and return it back to the normal state after the trip ends. Normally takes about 5 minutes of calling the insurance company. Personally, I would pay a $30 increase in my insurance than hundreds of dollars in rental company fees. Nevertheless, I have listed all cards I know of that have primary coverage.
- Citi Professional Card
- Citi Professional Cash Card
- CitiBusiness / AAdvantage MasterCard
- Citibusiness Card
- CitiBusiness / AAdvantage Visa Card
- AT&T Universal Business Rewards Card
- Diners Club
- Continental (Chase) Presidential Plus
- Continental (Chase) OnePass Plus
- Discover Escape Car
Before I conclude, I should remind you of the benefit provided by USAA. You can join USAA if you or any of your kith or kin have been in the military. When USAA members reserve cars using the USAA codes (they give the best rates in most cases), USAA covers all fees and damages with a deductible of $5000. This is easily covered by any credit card. Another small benefit to make the military household feel more special.