Making It a Policy to Know Your Rental Car Coverage

It’s never been fun to stand at a rental-car counter and face a sales agent who wants to sell you collision-damage waiver (CDW) coverage.

You think: I’m already covered for that by my own car insurance. Or my credit card. Or both. Aren’t I?

The clerk says: Are you sure?

And of course you’re not sure because only particle physics is more complicated than keeping track of changes in the world of rental car insurance.

Now, however, it’s more important than ever to do some homework on what kind of car insurance you need, and where you need it. Not only has American Express stopped covering its cardholders’ CDW troubles (that is, car damage or theft) in several foreign countries, but industry veterans say rental-car companies, insurers and credit-card-issuing institutions are looking for their own ways to cut back on the costs of providing rental-car coverage.

As a result, many travelers probably have less protection than they think.

Certainly, selling CDW coverage gives rental-car companies a prime chance to boost profits, often capitalizing on consumers’ fear and confusion. In many cases, collision-damage waiver coverage can add $10 or more to your daily rental rate. As of early this month, Avis CDW coverage in Britain, France and Italy was $13 to $17 daily, depending on the car and country.

But if your own car insurance policy includes collision and comprehensive coverage (which is not legally required but is usually carried by drivers with fairly new cars), then it probably already covers your travels in a U.S. rental car. It probably doesn’t cover rental cars in foreign countries, however. That’s where charge cards often enter the picture--but their role may be changing.

Last month, American Express--which has long boasted of its worldwide coverage for its cardholders--stopped providing CDW coverage to cardholders traveling in Jamaica, Ireland or Israel. AmEx says claims have been unusually frequent and costly in those countries. That news pushed the AmEx “exceptions” list to six, since the company already was excluding Australia and New Zealand--where domestic laws require all renters to buy CDW through rental-car companies--and also Italy. (This move affects American Express’ consumer charge cards. Benefits carried by corporate AmEx cards vary from company to company.)

So far, AmEx rivals Visa and MasterCard, which give foreign CDW coverage to premier cardholders (“gold,” “platinum” or “corporate,” usually) and some others (depending on the institution that issues the card), continue to cover Jamaica, Ireland, Israel and Italy. Visa, with 277 million cards circulating in the U.S., estimates that 87 million of those are premier-level “gold” or “platinum” cards with primary foreign CDW coverage overseas. MasterCard, with 200 million cards in the U.S., won’t say how many of its cards are premier-level or provide CDW coverage.

Diners Club, another charge card that offers primary CDW coverage abroad, hasn’t announced any big changes either. But industry veterans wonder how long these competitors will stand pat.

Meanwhile, protections for consumers are being redrawn in several other quarters. In May, the Car Rental Council of Ireland, complaining of red tape in dealings with American insurers, tried to require that all foreign customers buy CDW coverage with Irish rental cars. The proposal was blocked by Irish tourism officials, but the issue could arise there again.

Also, stricter limits are being drawn on protections offered through the premier charge cards. Card issuers have steadily lengthened the list of rental vehicles that are excluded--expensive (over $50,000) and exotic cars such as Porsche or Rolls Royce, for instance, or sport-utility vehicles, or motorcycles. (Exclusions lists vary from card company to card company.) Also, insiders say that among the financial institutions that have been issuing non-premier charge cards with CDW coverage as an added perk, some are cutting back, often dropping primary coverage in favor of secondary coverage (which includes only the costs not covered by someone else’s primary policy).

“And a lot of the secondary companies have gotten out of it completely because of the costs involved,” says Dan Kummer, senior personal lines specialist at the National Assn. of Independent Insurers, which lobbies nationally on behalf of insurance companies. (Spokespersons at Visa and MasterCard say this isn’t the case among their companies’ card-issuers but could offer no figures.)

What to do? If your regular car-insurance policy doesn’t include comprehensive and collision coverage, and your credit cards are neither gold nor platinum, you’re a good candidate to buy that rental-car CDW coverage, outside and inside the U.S.

The only way to make a safe decision is to study what you’ve got already. That means reviewing your car-insurance policy, and probably calling the insurance agent to ask specific questions about rental cars and foreign lands. Further, it means probably calling your charge-card issuing company to clarify its coverage, if any. Once you know those things, you can walk with a swagger to the rent-a-car counter and give confident answers when the insurance questions start.

Or you could take a train.

Reynolds travels anonymously at the newspaper’s expense, accepting no special discounts or subsidized trips. He welcomes comments and suggestions, but cannot respond individually to letters and calls. Write Travel Insider, Los Angeles Times, Times Mirror Square, Los Angeles 90053 or e-mail chris.reynolds@latimes.com.