Credit cards provide some extra rental car coverage

I was the bearer of bad news in my last column when I passed along this advice from insurance experts: When renting a car while on vacation, purchase the rental company’s extra insurance, despite the added cost.

But several of you weren’t convinced.

“For your follow-up, can you address the added coverage that American Express offers?” wrote reader Scott Boyages. “They claim that it's equal to the coverage you get if you take the rental company's insurance. Curious whether it actually does.”

We’ll do our best today to explain how major credit cards may or may not protect you when renting a car. Plus, as promised, the lowdown on renting Zipcars and moving vans.

Credit card coverage

In many ways, your personal automobile insurance policy will cover injuries, property damage, and collision damage (if you carry collision insurance) when you’re driving a rented car just as it would if you were driving your own car, so long as you’re in the United States, including its territories and possessions, or Canada. But you’re still responsible for any deductibles on your policy, which is where a credit card company helps out the most.

Most major credit cards provide “secondary” coverage for collision damage, which means the credit card company will pick up whatever costs your auto insurance company doesn’t, such as your deductible, assuming you follow the credit card company’s rental rules (more on that in a minute). If you’re renting in a country where your personal auto policy isn’t valid, there’s a decent chance your credit card company will pay the entire collision bill.

“The big payoff with your credit card is that it kind of covers that gap,” said Ben Woolsey, director of consumer research for Creditcards.com, an independent credit card information and comparison website. “It doesn’t cost you anything . . . and with just one accident with a rental, you will save enough to pay your annual fee.” Possibly several times over.

The car rental company often charges a “loss of use” fee for the income it loses while your banged-up rental car is in the repair shop. Several credit card companies, including MasterCard and Visa (but not Discover), say they will cover such fees, which can amount to hundreds of dollars, if you use their card to pay for the rental. But Woolsey said that’s not always the case.

Before covering loss of use fees, credit card companies often want to see “fleet utilization logs” from the rental company to verify it actually lost money by having your vehicle out of service. (If the company has cars sitting unrented in its lot, having your vehicle in the repair shop isn’t really a hardship.) “The problem is, most rental companies, including Hertz, Avis, and Budget, won't provide the logs,” because they consider them confidential, Creditcards.com reports. “That tug-of-war can leave you stuck with the bill.”

For the least amount of risk, you should buy the rental agency’s best insurance package, Woolsey and other insurance experts advise. (Just make sure it absolves you of paying fees for loss of use and “diminished value” after an accident.) But if you’re willing to gamble a little, you can potentially do as well without it, depending on which credit card you use.

Visa generally gets good marks for paying fees even when logs aren’t available, Woolsey said. The more prestigious your credit card “level,” the less hassle you’ll likely encounter in general, he added.

American Express, meanwhile, allows card holders to buy “premium” protection for a flat fee of $25 per rental for up to 42 days. Unlike other credit card protections, this one acts as a primary insurance policy for up to $100,000 in theft and damage, meaning you won’t need to file a claim with your personal auto insurer to cover such costs.

The service isn’t flawless: It doesn’t address personal liability or primary medical expenses, and American Express still requires adequate documentation from rental companies before paying loss-of-use fees. But it offers probably as much protection as buying the extra car rental insurance (a few other benefits are included), Woolsey said, and for potentially a lot less money.

Regardless of what type of credit card you have, you need to read the card company’s entire list of rental rules and restrictions because there’s bound to be a surprise. A taste of what you might find:

• Rental cars whose sticker prices exceed $50,000 are rarely covered, and there are often exclusions for a number of popular SUVs.

• American Express won’t help if you damage a tire on your rental car, nor will it cover damage resulting from “radioactivity.”

• If you are past due on your credit card on the date of your accident, some cards will void your rental benefits.

“With most of these cards you have to contact the credit card company within a set window of time — you can’t just wait for your auto insurance to handle the claim first,” Woolsey said. “You have to include [the card company] in the whole process. With my card the wording was something like ‘within 20 days of the accident,’ and I almost missed that.”

Rules for moving vans

Does your personal auto insurance coverage extend to rental vans, moving trucks, or rental trailers?

The answer used to be yes, provided you didn’t rent something too big, said Donna McKenna, spokeswoman for the Massachusetts Association of Insurance Agents. But since Massachusetts deregulated the auto insurance industry five years ago, companies have had the freedom to define which vehicles your coverage includes — and they can exclude moving vans.

“Best advice: Talk to your insurance agent,” McKenna said.

Woolsey offered more bad news: credit cards normally don’t provide any coverage benefits for rentals of “trucks and any type of commercial vehicle, like a U-Haul.” U-Haul’s website is even more definitive, stating, “No credit card companies cover rental trucks.”

Help from Zipcars

Zipcar provides all of its users with a degree of built-in insurance.

“In the United States for Zipcar members 21 years of age or older, our insurance coverage consists of a combined single limit of $300,000 per accident, meaning that all third-party bodily injuries, or property damage costs relating to the accident, are covered in the aggregate up to $300,000,” company spokeswoman Colleen McCormick e-mailed me. The catch is you’re responsible for the first $750 in damage in any accident, sometimes even one you don’t cause.

Zipcar’s website says the company may charge a damage fee for “dents, scratches, collisions, flat tires, windshield cracks, dead batteries (from leaving the lights on), engine problems, vandalism, theft, third-party damages and, in some cases, third-party personal injuries.”

“If a properly insured third party is found to be 100 percent at-fault, then you’re off the hook and not responsible for the damage fee,” the website says. But proving 100 percent fault isn’t always easy.

For less than $10 a month, Zipcar members can buy a waiver that eliminates the damage fee, or a partial waiver that cuts it in half. But neither of those purchases might be necessary, our experts said, as your personal auto insurer, your credit card company or both, will likely take care of the $750 fee for you.

Peter DeMarco can be reached at demarco@globe.com. His Facebook page is “Who Taught You to Drive?” and he can be followed on Twitter at @whotaughtU2driv.