Renting a Car? Know Whether Your Card Adds Insurance

You're standing at the car rental counter, anxious to get on your way, but first you have to deal with the representative who's pushing you to sign up for the agency's car rental insurance ''just in case.''

Should you?

Most Americans have no idea what to do when offered collision damage waiver (CDW), the expensive add-on coverage offered -- often forcefully -- by rental car agents. Given the tricky exclusions listed in the fine print of most credit card policies, chances are, they're even more confused about what their credit cards cover.

We have answers to your big questions -- and the questions you need to ask -- so you can make an informed decision about whether to pay for the rental company's coverage the next time you rent a car.

What does my personal auto insurance cover? If you own a car, your personal car insurance will likely provide collision and theft coverage, says Michael Barry, spokesman at the Insurance Information Institute, but the coverage isn't perfect. Most auto insurers won't cover you if you rent a car overseas, for example, or if you're using the rental for business. So it's important to call and ask about exclusions. Many policies also decline to pay some of the additional fees that rental car companies typically tack on to the collision bill, potentially leaving you on the hook for hundreds of dollars. Not to mention that you'll be responsible for paying the deductible. So that's where your credit card comes in.

What does my credit card cover? As a perk of membership, many credit cards offer some kind of rental car protection. Generally speaking, they do not cover things such as personal injury or personal liability, although you may have that coverage through your auto insurance and health insurance. But they do typically cover collision damage and theft protection.

For most cards, the coverage is secondary, meaning that if you have car insurance, you have to file a claim there first (and your premium may go up). But your credit card should step in and pick up where your auto insurer leaves off, paying the tab for your deductible, towing charges and other fees. However, as many frustrated cardholders have learned, the fine print can be tricky. Credit card companies have their own restrictions and exclusions and they, too, often refuse to pay some types of fees levied by car rental companies.

For all those reasons, it's important to check your coverage in advance.

Do any cards offer primary coverage? If you have a card with primary coverage, that's the one you should use to book your car, says Jonathan Weinberg, founder of AutoSlash, an online booking engine for car rentals. ''Then you don't have to report the accident to your car insurance,'' he says, ''so there's no chance your rates will rise.'' Only a few cards offer primary coverage. As of August 2014, they include: the United Mileage Plus Explorer, United MileagePlus Club, Fairmont Visa Signature, Discover Escape, Ritz Carlton Visa Signature and the Chase Sapphire Preferred card.

If you have an American Express card, you can get primary coverage by enrolling in the company's premium rental car protection program. Once enrolled, you pay a flat rate of $24.95 ($17.95 for California residents) per rental. The program, which also includes some property damage and injury coverage, can make sense for longer-term rentals, Weinberg says, since you would pay one fee per rental rather than a daily rate like the one charged by rental car companies.

If you don't have personal auto insurance or if you're renting a car in a country where your personal auto insurance isn't in effect, then any card that offers secondary coverage becomes primary, so it should theoretically cover the entire cost of the damage.

What do I need to do to make sure I'm covered? Most credit cards require that you do the following in order for their coverage to kick in:

Decline the rental company's collision damage waiver (CDW/LDW).
Be the primary renter of the car.
Pay for the car in full with the card that provides the protection.

Before you rent, Barry of the Insurance Information Institute recommends you ask your card issuer to send you its rental car policy in writing ''because that will make it easier to resolve any disputes down the line.'' Check for the following common exclusions to make sure they don't apply to your situation:

Exclusion No. 1: Length of the rental Most credit cards won't cover car rentals that extend beyond 30 or 31 days; some have just a two-week limit. If you're planning a long-term rental, you can break up your rental period into shorter chunks of time to make sure you stay covered. The chart below provides some general limits by issuer. Individual cards may vary, so always check by calling the number on your card.

Exclusion No. 2: All vehicles aren't covered Most credit card companies exclude trucks, pickup trucks, antique and exotic vehicles, ATVs, motorcycles and large vans and SUVs that seat more than a certain number of passengers (usually seven or eight). But car rental consultant Jim Tennant of the Tennant Group says the exception that tends to cause the most trouble is the limit on expensive cars, since rental agencies are offering more luxury cars than they used to. ''When car rental companies are almost out of cars, they may think they're doing you a favor by giving you a Mercedes instead of the big Ford or Chevrolet you reserved,'' Tennant says. ''But because the Mercedes is valued at over $50,000, it may not be covered.''

Both MasterCard and Discover specifically note that they won't cover a car worth more than $50,000; Visa says it doesn't cover ''expensive'' cars, and AmEx says its coverage varies by card. If you are planning to rent a luxury car, AmEx's premium coverage specifically notes that it covers cars worth more than $50,000.

Exclusion No. 3: Some countries aren't covered

If you're traveling to those places, consider using one of these cards, which have no country exclusions: MasterCard World and WorldElite cards, Discover cards, and all Chase cards.

Weinberg recommends taking a written copy of your credit card rental car policy when you rent outside the U.S. Overseas rental agencies often require you to pay for their CDW unless you have documentation showing other coverage.

Are there other exclusions I should be aware of? Read the fine print. Some policies won't cover you if you drive on unpaved or gravel roads; others won't cover you if you wait too long to file a claim. Also, make sure anyone who may drive the car is listed on the rental contract. ''If you rent a car in your name and then your spouse is driving and has an accident, companies will use that as a way to deny coverage,'' Weinberg says.

If I have full coverage, will I be responsible for any extra fees? Unfortunately, it's possible. Rental car agencies often charge ''loss-of-use'' fees to cover the revenue they lose while a damaged car is in the shop, and those fees can total hundreds of dollars.

American Express, MasterCard and Visa (but not Discover) say they will pay those fees as long as the rental car agencies provide documentation, usually a ''fleet utilization log,'' verifying they actually lost money because the damaged car was out of service. Here's the problem: rental companies consider those logs confidential; they argue that, legally, they don't have to provide them. So while your rental company and credit card company play the blame game, you can end up on the hook for the bill. (Note: In some states, such as New York and Wisconsin, car rental companies aren't allowed to charge loss-of-use fees. In others, auto insurers are required by law to pay those fees.)

In addition to loss of use, rental companies may charge two other fees that may not be covered: administrative fees and ''diminution-in-value'' or diminished value fees, designed to cover the inherent loss of value to the car because it's been damaged. ''On about one out of every three non-total losses, there are some fees the credit card companies won't pay, and I have to go back to the customer and bill it,'' says Andrew Sutter, president of damage-recovery company Total Fleet Solutions.

Are some card companies more willing than others to pay those extra fees? Rental car claims administrators in four different states told CreditCards.com that Visa is the most willing to pay up, followed by American Express. ''Visa for the most part pays our administration fees, while AmEx and MasterCard usually say no,'' says Shayne Ashton, general manager and vice president of PurCo Fleet Services in Spanish Fork, Utah. ''They're also more willing to pay loss-of-use fees, although they use their own formula to calculate what they think they should pay.'' He and other administrators say AmEx has become more willing in recent years to cover some of those extra fees, especially for customers who pay for their premium service.

What should I do if I'm billed for those fees? Start by asking the rental car company if it would be willing to waive the fees. Rental car claims administrators sometimes agree to drop some charges if they've been paid for everything else. Then go to your insurer and credit card company, emphasizing what a good customer you've been. ''If you put enough pressure on them,'' Weinberg says, ''they'll usually pay out in the end.''

So should I get the rental car insurance or not? As always, you will have to weigh the risks and benefits. Despite the many exceptions and exclusions, it is possible to get full coverage through your personal auto insurance and credit card, but you'll need to choose your card carefully, read the fine print and be willing to fight for coverage of any fees. But if all you want is peace of mind, and you don't mind the expense, the rental car company CDW/LDW coverage may be the way to go.