Q: I’m renting a car abroad. Should I get collision insurance through the rental agency or my credit card? —Hannah W., Portland, Ore.
A: Domestically, the answer would be simple: go with the insurance offered by your credit card company (after reading the fine print, of course). Once you head overseas, though, it becomes much more complicated. All four major card networks offer qualifying cardholders some form of insurance for international rentals, but you have to check your policy carefully. American Express (Travel + Leisure’s parent company), MasterCard, and Visa do not cover rentals in Ireland, Israel, and Jamaica. American Express also disqualifies cars in Italy, Australia, and New Zealand. There are other exceptions (American Express doesn’t cover certain SUV’s; MasterCard won’t let you drive on unpaved roads; most policies preclude rentals of exotic and expensive vehicles), so do your homework. Cardhub.com provides an excellent annual comparison of all of these policies.
The key coverage that credit cards offer is for collision damage and car loss; to activate it, you need to decline the Collision Damage Waiver, or CDW, from the rental-car agency. That’s easy to do when you’re in the States, but it’s a different story abroad. Insurance regulations and standards vary from country to country, and even within countries, depending on the rental company. In some destinations, notably Italy, theft and collision coverage is required by law and automatically packaged into the rental-car rate. Rental agencies in other countries may not bundle a CDW (sometimes also referred to as a Loss Damage Waiver, or LDW) into their rates, but they will make it difficult for you to decline it.
“Car-rental companies will do everything in their power to get you to buy their insurance. It represents almost sheer profit for them,” says Jonathan Weinberg, founder of AutoSlash, an online booking engine for car rentals. This is certainly the case in Mexico, where the rental rates are seductively low—until you tack on the insurance. To get out of paying for a CDW, you may be required to bring proof of your credit card coverage. Weinberg recommends carrying a hard copy of the policy. Even better: get a manager at the rental agency to confirm by e-mail that the company will accept your credit card’s insurance—and bring a copy of this correspondence as well.
Ultimately, this may be more of a headache than it’s worth, especially if you are renting for just a few days and the insurance won’t add too much to your overall cost. Also, remember that if you do have an accident and you’re relying on credit card coverage, you have to be the middle man, collecting and filing the paperwork with your credit card company. You may even have to carry the full cost of the damage until you are reimbursed. With the rental-car company’s insurance, it’s much simpler.
That said, keep a few things in mind if you choose to use the agency’s insurance: in some countries, such as France, England, and Australia, the CDW (or LDW) often does not cover damage to a car’s windshield. For that, you’ll have to buy a separate policy. And the basic CDW in many European countries has an extremely high deductible. (In Italy, you could be liable for as much as $3,250 in damages.) To bring the deductible down, you’ll have to pay for a special Top Cover waiver. For those who need peace of mind, it’s worth the added expense.