A major reason why credit cards are so popular is the fact that they allow customers to gain access to several financial privileges through using their credit cards. For example, some credit card companies offer extended warranties to customers who make purchases using their credit card, which can be very helpful if the customer spends a lot of money on purchases each month. Many cardholders are not aware of the rewards that credit card companies offer them, all for simply using their cards.
Some rewards are strictly financial, such as the “cash back” option. Cash back means that the cardholder will literally be paid by the credit card company when they use their card. Since merchants who accept credit cards pay a fee to the credit card company, the company may elect to share a portion of that revenue with the cardholder. Another popular benefit is to reward the cardholder with miles that they can apply to their next flight trip. The rewards that credit card companies offer are meant to retain customer loyalty in the face of keen competition from other credit card companies.
These benefits have been criticized over the years by consumer advocates because they claim that credit card companies are taking advantage of consumers. There are some companies that do take advantage of their customers, unfortunately, but many people have found value in the various rewards offered by credit card companies. One of the most popular benefits is rental car insurance. Rental car insurance is insurance offered by rental car companies to cover any damage to the vehicle incurred when in use. Now, credit card companies are offering rental car insurance to cardholders who use their cards to make the transaction.
So, should you buy regular car insurance with coverage for your rental car or should you opt to buy rental car insurance through your car rental company or should you just depend on your credit card company to cover you via your credit card rental insurance benefits? Read on to learn some of the specifics of how credit cards and rental car insurance work together so that you can decide which option is best for you.
Rental Car Insurance Details
There are upsides and downsides to rental car insurance offered through credit cards. The upside is that the car insurance usually covers damage done to car by collision and theft. This insurance is designed to pick up where the cardholder’s regular car insurance policy leaves off. In addition, there is no need to notify the credit card company of an accident or theft. If the cardholder uses the card to pay for a rental car and denies the rental car company’s offer of insurance, the credit card company acts as the cardholder’s primary insurer.
The downside is that the precise terms and conditions vary from card to card, which can lead to interesting situations when the cardholder thinks they are insured under a blanket policy and the reality is different. The biggest downside is that the amount of coverage differs from card company to card company. In fact, some of the coverage amounts different from card to card within a single company. For example, American Express’s coverage varies depending on the individual card.
Loss-Of-Use Fees and Rental Car Insurance
Another disadvantage of credit card-provided rental car insurance is that the fine print may contain a lot of fees that eats away at the insurance benefit. Some of the fine print may even leave the cardholder stuck with the bill for the fees after all. The problem is that rental car companies and credit card companies sometimes get into a tug-of-war over the release of records detailing the car company’s utilization of their fleet of rental cars. Since many rental car companies claim that the records are confidential, the credit card company decides the matter is too complicated and leaves the bill with the cardholder anyway.
That problem is related to a curious fee known as the loss-of-use fee. When a rental car is damaged, the rental car company imposes a loss-of-use fee for their loss of the use of the vehicle. If the credit card company picks up the renter’s tab, they impose this fee on the card company, which leads to the problem described above. Rental car insurance did not used to be this complicated, but unfortunately credit card companies have changed the rules again.
Rental Car Insurance Basics
It is good for the policyholder to contact their auto insurer and ask what their policy specifically covers and does not cover. Once they have determine that, and their policy does not cover rental cars, rental car insurance is their best option. Customers should not be afraid to fight for their money, especially if it seems that they are being ripped off. One customer who used American Express got billed for the loss-of-use fees. He complained, and American Express handled it.
An additional benefit to using credit card provided rental car insurance is that many drivers fall into the high risk auto insurance category because of their past driving history or other factors. This in turn makes buying a high risk auto insurance policy quite pricey because of the auto insurance underwriting. The positive to this is that just because someone is considered a high risk driver does not mean that they will necessarily find it harder to get approved for a credit card with rental car insurance coverage.
Using rental car insurance from credit card companies is a convenient way to discount the risk of a car accident with a rental car. The problem is that many customers do not understand the fine print, and how credit card companies can charge them for fees that, under the terms of their card, the credit card company themselves should have paid.
Credit card rental car insurance is not all bad. Customers like the convenience of having their rental cars covered just as well as their normal cars. Even better, they do not have to pay for something that they are already covered for. Rental car insurance offered through credit cards is a great way to make sure that the customer is getting what they paid for.
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Thank you for the information. Credit card services are expanding rapidly,theres always a new best deal coming out. This is good for credit card owners!