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Crashing your rental car
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January 21, 1998: 3:32 p.m. ET
What to do when you have an accident and the vehicle is borrowed
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NEW YORK (Biztravel.com) - As far as travel nightmares go, banging up a rental car has to rank high. Even if it's just a fender-bender, what's the best way to handle it? Who do you call first: the rental car company, your insurance agent, or your credit card company? And who's responsible for paying for the repairs?
Let's flash back to when you rented the car. The agent probably asked whether you wanted to purchase additional coverage from the rental car company that would protect you from damage, loss, theft, liability or injury. Did you choose the coverage or decline it?
The most appropriate answer would depend on a variety of factors, including whether you're paying for the car with a personal credit card or a corporate card, the card used, and your (or your company's) insurance status.
"Better check your insurance before you get to the rental car counter," recommends Jayna Neagle, a spokeswoman for the non-profit Insurance Information Institute. "With the average new car costing $23,000, most consumers can't afford to make a mistake on rental insurance coverage."
What should be your course of action when you get into an accident with a rental car?
Seeking appropriate medical care is the first priority in any accident that results in an injury. In any event, you should contact the police, so there will be an official report on file.
Next, notify the rental company, which will ask you to complete an accident report as soon as possible, and, if necessary, will provide you with a replacement car.
For example, Hertz offers emergency roadside assistance 24 hours a day, seven days a week. Under most circumstances in the United States, Hertz will transport you or reimburse you for cab fare to the nearest rental office to complete an accident report and pick up a replacement rental. Outside the United States, this policy varies by country, so check before renting.
If you chose the rental company's optional Loss Damage Waiver (LDW) or Collision Damage Waiver (CDW), you're probably covered for whatever repairs the car needs. This coverage usually costs about $15 a day additional, and offers primary coverage for damage, vandalism or theft, supplanting your own personal auto insurance.
[Prices for LDW or CDW vary by state; in New York and Illinois, LDW and CDW already are included in the basic rental fee.]
Rental car companies also offer optional liability insurance supplements for about $8-$9 a day, personal accident insurance for about $3 a day, and personal effects coverage for about $1.25 a day, according to the Insurance Information Institute.
"CDW is priced at gouge levels -- three, four or five times what it ought to be, based on real risk," says Ed Perkins, editor of the Consumer Reports Travel Letter. "Most people are better off using some better system to cover themselves."
If you follow Perkins' advice, you should decline the CDW or LDW -- which would mean you're covered by your own insurance -- with potential backup from your credit card's insurance company.
Only the Diners Club card, Perkins says, offers primary coverage to all renters. Visa, MasterCard and American Express provide secondary coverage only, meaning that they will pay for damages not covered by a driver's own insurance. The exception to this is for drivers who are not automobile owners; in that case, the credit card's insurance becomes primary coverage.
For corporate credit cards, says Perkins, damage coverage "depends quite a bit on corporate policy for a business traveler. A lot of [corporate credit cards] will include collision damage."
If you're relying on your own personal auto insurance, you'll need to contact your insurer to report the accident. Remember, your insurance rates could increase if you make a claim, so it could make better financial sense to opt for the rental car company insurance or make a claim on your Diners Club card. It's your call.
If you used a corporate card with built-in damage coverage, like Diners Club, or if you don't own a car, you would report the accident to the credit card company.
Here are a few other tips:
- Remember that no credit card protects you from liability. If you don't own a car, Perkins and the Insurance Information Institute recommend purchasing non-owner liability insurance, which costs about $300 a year.
- Credit card insurance may not cover specialty cars. For example, American Express' Car Rental Loss and Damage Insurance does not apply to full-size sport utility vehicles, exotic or antique cars, trucks, full-sized vans, or any cars driven off-road.
- Credit card insurance does not apply in Italy, New Zealand and Australia, and may not be applicable in other countries as well. Check with your rental company before booking.
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