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Gambling with Rental Car Coverage

rcc-3Like most people I quickly brush off the rental car agent when they ask me if I need extra coverage on a car.  “No, no I’m good.”  After all, it’s expensive, superfluous, useless and a way for the rental car company to get into my bank account and sniff around for funds for their Christmas party.  Right?  Well, probably…maybe…hmmm. You might just be gambling with rental car coverage.

If you take a minute to read the fine print on your car insurance policy or credit card agreement you may find a term that you don’t recognize.  “Loss of use.”  That’s rental car speak for “Hey we may have 20 more Nissan Sentras on the lot but since we can’t rent this exact one for a few days, you have to pay.”

Kimberly Esquivel of San Antonio found that out the hard way when she and her family rented a car from Alamo in Orlando, Florida.  This is what she told creditcard.com

Slash Your Car Insurance Premiums. Search for Lower Rates. Before they left, Esquivel called Discover to make sure that she was covered, since she didn’t have protection through her auto insurance. “The woman said, ‘Just make sure you use your card to pay for it and you’ll be covered. You won’t have to worry about a thing,’” Esquivel recalled.

The worst happened. At SeaWorld, Esquivel backed the car into a pole. She reported the accident to Discover, sent the necessary paperwork and put it out of her mind. Weeks later, she got a bill for almost $1,000.

Discover had paid $3,000 to repair the car, but had refused to pay various administrative fees and a so-called “loss-of-use fee” for each day the car was in the shop and the agency couldn’t rent it.

It was very, very frustrating,” Esquivel says. “They say, ‘We’ve got you covered,’ but that’s not true. I’d been a customer with Discover for almost 20 years. That was the first time in 20 years that I really needed them, and they let me down.”

So does this mean you should take the $15 to $25 a day collision damage waiver offered by the rental agency? Not necessarily. It depends what level of risk you’re willing to take and what coverage you have.

According to the Insurance Information Institute, these are the steps that you should take.

First, call your primary car insurance provider and ask specifically what your policy covers. Auto insurers are required by law in some states to pay loss-of-use and other fees. Others may cover some of those costs but only up to a certain amount, or offer to sell you a rider to cover the fees.

Once you understand your car insurance coverage, choose carefully when selecting a credit card for a car rental. Use a card that offers primary coverage if you have it, and ask your issuer how it handles loss-of-use administrative fees.

Finally, never take your rental car on an unpaved surface.  Most people don’t know it, but that will invalidate the coverage offered by many policies and credit card agreements.  You know that field where they want you to park at the county fair?  If you rented a car to get there, either find on-street parking or be very…very…careful.