Can car insurance cancel your subscription
Before you hit the road in your rental car, check whether you really need that extra insurance. Photo: Aurelio Firmo
Your bags are packed, you’ve found a sitter for the dog, and you’ve suspended your newspaper subscription for a few days. That can only mean one thing: You’re going on a trip.
This year, consumers will take 1.6 billion leisure trips across the United States, reports the U.S. Travel Association, a trade group. Nearly eight in 10 travelers will go on their adventures by car, many of them rented.
Before drivers leave the rental-car lot, the salesperson will pitch an optional collision damage waiver (CDW) or loss damage waiver (LDW), which is the rental company’s version of car insurance (although it only covers damages to the rental car and not personal injury). Between the jargon and additional surcharges (what the heck is an energy recovery fee?), things can get overwhelming in the few moments you have to complete the paperwork.
In fact, 42% of consumers are thoroughly confused about insurance coverage when renting a car, reports the National Association of Insurance Commissioners (NAIC). And to make sure they’re covered, 34% will automatically shell out the extra cash “just in case.”
So it’s no wonder that the $36.4 billion rental-car industry rakes in the profit with its optional rental insurance, says IBISWorld, a market research firm.
But after spending an average of $66 per day for a car, reports AAA, do consumers really need to pay an extra $5 to $20 per day for rental-car insurance?
If you paid for the car with a credit card, probably not.
As a membership perk, many credit cards offer rental-car insurance, such as collision damage and theft protection. But the coverage on these cards is usually secondary insurance — so you’ll have to file a claim with your primary car insurance company first — and will only cover things like your deductible and towing charges, reports the Insurance Information Institute.
Nonetheless, about one in four consumers doesn’t have a clue whether or not their credit card provides any type of coverage, adds NAIC.
To inform drivers of their options, consumer website CardHub examined four of the major credit card networks and their rental-car insurance policies. In its “2014 Credit Card Auto Rental Insurance Report,” CardHub found that while some offer better coverage than others, all have limitations in their coverage — be it rental time limits or country exclusions. Additionally, none of the card networks covers exotic, expensive, or antique cars, trucks, vehicles with open beds, or recreational vehicles.
“So far, AmEx would be best,” says CardHub spokeswoman Jill Gonzalez. American Express was rated No. 1 in CardHub’s study because it offers the most comprehensive coverage, has insurance on all of its cards, and its policy information was easily accessible. But it’s also the only card that doesn’t offer coverage for popular SUVs, including the Chevrolet Tahoe, Ford Expedition, Land Rover Range Rover, and Lincoln Navigator.
Here’s a snapshot of each credit card network’s coverage:
American Express: All its cards offer insurance, and rental coverage lasts up to 30 days. Towing charges, damage to tires and rims, and accidents that occur on dirt and gravel roads are covered. The loss of use of the car and insurance deductible are also covered. Some SUVs and luxury vehicles, vans, and trucks aren’t covered.
Discover: All its cards offer coverage, which lasts up to 31 days. Its policy covers towing fees, damage to tires and rims, and accidents on dirt and gravel roads. But the loss of use on your auto insurance isn’t covered. Luxury vehicles, vans, and trucks also aren’t covered.
MasterCard: Its insurance policy is limited to World cardholders. Coverage lasts up to 15 days for World cards, and up to 31 days for World Elite cards. Towing and damage to tires and rims are covered, as are accidents that occur on dirt and gravel roads that the city routinely maintains. The loss of use and insurance deductible are also covered. But luxury vehicles, vans, and trucks aren’t covered.
Visa: Rental-car insurance benefits are offered to all cardholders. Towing charges for the vehicle and the loss of use and deductible on your auto insurance policy are covered. However, coverage is limited to 15 days domestically, and accidents that occur on dirt and gravel roads are not covered, and neither is damage to the tires and rims of the vehicle. Luxury vehicles, vans, and trucks also aren’t covered.
Comparison of Credit Card Rental-Car Insurance
|All cards||All cards||World and World Elite cards|| |
|Antique, exotic, or luxury vehicles, vans, trucks, pickups, motorcycles, recreational or off-road vehicles, and some popular SUVs||Antique, exotic or luxury vehicles, vans, trucks, pickups, motorcycles, recreational, or off-road vehicles||Antique, exotic or luxury vehicles, vans, trucks, pickups, motorcycles, recreational, or off-road vehicles|| |
Antique, exotic or luxury vehicles, vans, trucks, pickups, motorcycles, recreational, or off-road vehicles
Rental Coverage Duration
|Up to 30 days||Up to 31 days||Up to 15 days for World cards; up to 31 days for World Elite cards||Up to 15 days for rentals in your country of residence; up to 31 days outside country of residence|
|Accidents occurring on dirt and gravel roads are covered||Accidents occurring on dirt and gravel roads are covered||Accidents occurring on dirt and gravel roads frequently maintained by municipality are covered|| |
Accidents occurring on dirt and gravel roads are NOT covered
|Theft or damage in Australia, Ireland, Israel, Italy, Jamaica, and New Zealand||Theft or damage in Australia, Ireland, Israel, Italy, Jamaica, and New Zealand are NOT covered for the Escape card. |
There are no country exclusions for the rest of the cards.
|Theft or damage in Israel, Jamaica, the Republic of Ireland, or Northern Ireland are NOT covered for Standard, Gold, and Platinum cards. |
The World cards do not have any country exclusions.
Theft or damage in Israel, Jamaica, the Republic of Ireland, or Northern Ireland.
Loss of use of rental car
Deductible on your auto insurance
|Towing Fees||Yes||Yes||Yes|| |
Damage to tires and rims
|Full Policy Details||American Express Rental Collision Policy||Review your account online or call for details.||Review your account online or call for details.|| |
Visa Rental Collision Policy
|Source: CardHub’s 2014 Credit Card Auto Rental Insurance Report|
Confirm That You’re Covered
Before you’re blindsided at a Hertz or Enterprise Rent-A-Car counter about CDWs and the potential protection you may already have, you should do your research. To qualify for a credit card’s supplemental insurance, card issuers typically require that you’re the primary renter of the car, that you pay for the car with the credit card that provides the protection, and that you decline the rental company’s supplemental insurance, or CDW/LDW.
To know exactly what type of insurance benefits you have (and how to use them) call the toll-free number on the back of your card. Then ask them to send you their coverage information in writing so it’s easier to resolve any disputes down the line.See Also: Get 2x Points on All Your Travel and Dining >> Recommended For You A Great Way To Pay Off Debt With A No Interest Credit Card
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Most people’s eyes glaze over at the words “credit score.” Sure, it’s boring. It’s confusing. But ignoring it can make your financial life difficult. And it can affect your social life, too.
Anyone who has had bad credit knows that it can be a huge pain in the butt. Oh sure, it doesn’t…Read more
We often overlook the social impact of credit, but it exists nonetheless. For example, a Bankrate poll found that 42 percent of people said knowing someone’s credit score would affect whether or not they’d go on a date with that person. One respondent said:
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Obviously, there’s a lot of judgment here.
Another 2015 study from researchers at the Federal Reserve Board, the Brookings Institution and UCLA found a link between bad credit and divorce. Moneyish reported:
The higher your credit score, the less likely you’ll split from your partner, and vice versa. Indeed, for every 105-point uptick in a person’s credit score, there is a 32% drop in the likelihood of them divorcing. “Couples with the lowest initial average scores are two or three times more likely to separate than the couples with the highest average scores, and the likelihood of separation largely diminishes as scores increase,” the study found.
Obviously, there’s a huge correlation/causation argument to be made here. A low credit score itself probably doesn’t cause a relationship to go south, but according to the study, it’s a good predictor of a bumpy road ahead. This is likely because bad credit and financial stress usually go hand in hand.
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It’s not just about your score, though. You also want to get a (free!) copy of your credit every report every year (and you can do that at annualcreditreport.com). Review it for any negative items and areas for improvement. We’ve told you how to decipher it here.
If your credit isn’t stellar, the best way to improve it is to pay your debt bills in full and on time every month. Beyond the obvious, though, we’ve written some guides that can help:
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