FlyerTalk Forums - AMEX CDW not cover Ford Excursion :-(

SXCHAN:

I sent you the article to your private e-mail. I'm posting it here in case others are interested.

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June 13, 2001

Business Fare

Check Your Insurance
Before Renting an SUV

By JANE COSTELLO
WSJ.COM

Steven Chan won't be renting a Ford Excursion on his next trip.

Mr. Chan, a consultant from Oakland, Calif., reserved a full-size car from Budget Group Inc. in Seattle to drive over Easter weekend. When Mr. Chan arrived at the counter, the rental agent pitched him an upgrade to a Ford Excursion for an additional $25 a day.

"She told me it was very easy to drive," Mr. Chan says. "But when I saw it, I realized it was huge -- like a tank."

He was tired and didn't feel like walking back to the counter to complain, so he drove off into the sunset in the super-sized SUV.

It turned out to be a costly decision. Mr. Chan was able to maneuver the commando-sized vehicle through the streets of Seattle, but the Excursion met its Waterloo in a shopping-mall parking lot in Vancouver, Wash. While making a sharp right turn he scraped a barrier, which resulted in a scratch along the side of the vehicle and damage to the rear-door step.

Mr. Chan reported the accident when he turned the car into Budget. He wasn't too concerned, though, since he had previously used an American Express card to rent a minivan, and knew that the credit card provided secondary insurance coverage.

But when he called American Express to report the accident, he was told that its car-rental coverage didn't extend to large SUVs.

"I just assumed they'd cover it," says Mr. Chan, who was reluctant to contact his own automobile insurance company at first, for fear theaccident might cause his premiums to go up.

Three weeks later, he received an itemized bill from Budget for $2,400: $1,800 in repairs, a $300 loss-of-vehicle-use fee and a $300 administrative fee.

Plan Ahead

Budget spokeswoman Allison Striegel says that customer-service agents don't warn renters about the fact that any given credit card may not cover the damage to the vehicle. "We don't get into specifics, since we don't maintain information regarding the thousands of types of credit cards in circulation," she says.

The fact that behemoth SUVs aren't covered by a popular credit-card company is one of myriad reasons experts suggest this summer's vacationers place a call to their automobile insurance or credit-card company before hitting the open road in a rental.

"The car rental is always the last thing on people's minds when they're planning a trip," says Jon LeSage, director of research for Abrams Travel Data, a car-rental consulting firm in Long Beach, Calif. "You need to get a clear understanding from your card company what's covered and what isn't."

Most personal credit cards offer "secondary coverage" of rental cars, meaning the card company pays any remaining accident claims after the cardholder's automobile-insurance carrier has settled. If a cardholder doesn't have car insurance, the secondary coverage comes first.

Oftentimes, the type of coverage can depend on the hue of credit card. American Express Green and Gold cards provide coverage only for vehicles up to $55,000, but Platinum coverage extends to vehicles up to $75,000. The exception is SUVs: American Express doesn't cover large SUVs, such as the Ford Expedition, the GMC Yukon and the Chevrolet Suburban.

Diners Club cards provide primary collision coverage -- meaning the customer's insurance company isn't involved in any claim -- but the card doesn't cover "high value, special interest or exotic" cars such as the Aston Martin, Daimler, Ferrari, Maserati, Porsche and Rolls Royce.

And renters will face pitches for these fancy cars. An offer on the Hertz.com Web site reads: "Imagine yourself on the open road in a sleek Jaguar S-TYPE or XJ8. Taking care of business in a classic Lincoln LS or Navigator. Vacationing in a stylish Volvo. Or heading for new territories in a Land Rover Discovery."

By the Numbers

There are no published statistics about the percentage of rental vehicles involved in accidents, although experts believe the number correlates to the number of incidents in the general population. What is different is the type of accident reported.

The most common accidents with rental cars occur in parking lots at low speed. This correlates with the activities of vacationers, who often find themselves in crowded parking lots trying to maneuver an unfamiliar vehicle in or out of a small space.

And while many car-rental customers may have adequate collision or liability coverage from their own insurance company or credit card, the $10 to $25 a day collision and liability damage waiver offered by the rental car companies enables drivers to walk away from a fender bender without looking back.

"It's still the easiest and cleanest way to deal with an accident," Mr. LeSage says.

To be sure, most drivers who pay high insurance premiums and credit-card fees don't want to add an average of $20 a day -- $7,300 at an annual rate -- to their car-rental bill to potentially duplicate coverage they already have.

"Typically, the kind of coverage you have on your own car extends to the rental vehicle," says Dick Hospital, assistant vice president for underwriting at Geico Insurance. Liability coverage on a rental is limited to the amount covered under the individual's policy minus deductibles; collision coverage provides full payment up to the value of the car, and payment is made regardless of fault.

Drivers who are responsible for an accident can expect to see insurance premiums rise. "If it's just you and the guard rail, there isn't anyone else involved," Mr. Hospital says.

But even drivers who have sufficient insurance coverage can find themselves wrangling with the car rental company after the damages claim has been paid.

Four years ago, Bill Daly, a consultant from McLean, Va., hit a tree in Yosemite National Park with an Oldsmobile Aurora he rented from Avis. His car insurance company paid the claim in full, but refused to cover the $1,200 "loss of vehicle availability fee."

"I was astonished," he says. "My insurance refused to pay it, and Avis said it was my responsibility."

Mr. Daly says he "stonewalled" for about six months, before Avis agreed to charge him a reduced fee, equivalent to one month's rental.

A spokesman for Avis says that the fee "is only a fraction of the revenue Avis forgoes during the out-of-service time," and that all renters must pay it unless they opt for the loss damage waiver.

'More Prominent' Fees

All of the major car-rental companies charge a loss-of-vehicle-use fee based on a formula that takes into account the daily rate of the vehicle multiplied by the number of days it is out of service.

"We obviously encourage people to take our risk product," Budget's Ms. Striegel says. By signing up for the company's collision-damage waiver, renters are spared any additional fees associated with an accident.

In some states, the maximum loss-of-vehicle fee is determined by law. Unfortunately, most insurance carriers and credit-card companies pay only for direct damage to the car.

"These fees have definitely become more prominent over the last five years," Mr. LeSage says. "The car-rental companies fight this out with insurance companies every day."

In the meantime, Mr. Chan is left to debate whether to let his insurance pay for the dent in the Expedition or eat the cost to keep his premium low. But what bothers him the most is the fact that he upgraded himself into an accident that wasn't covered.

"They should warn people that this is a large vehicle that shouldn't be used in a city -- the Rocky Mountains, maybe, but not a city," he says.

Ironically, while that may sound like good advice, warning SUV drivers to stay off-road could turn out to be a costly mistake: Many credit-card companies cover the rental only if customers agree to drive on paved roads.

Write to Jane Costello at [email protected]