Guide to Canadian Credit Card
Car Rental Collision Damage Waiver (CDW) Insurance

 

There are a plethora of Canadian credit cards that offer various types of insurance coverage as part of their benefits package. Many of those insurance coverages will thankfully never go used but it is good to know they are there for that 1 in 1,000 chance of something happening. That being said, there are some benefits that definitely provide up front value and do get used more often than others and one of those is car rental collision damage waiver insurance. If I was to bet I would put this coverage as the number one used benefit out of all credit card insurance offerings. The reason why is that nothing actually has to go wrong to use this benefit, you don't actually have to get into an accident! By having this coverage on your credit card you can, in most cases, decline a car rental company's CDW insurance and save yourself the roughly $20 to $30 or more per day that they charge!

Other than savings, you may be asking what does credit card CDW insurance coverage provide and how does it work? That's where this guide comes into play. We researched the CDW policies of 70 credit cards in Canada plus took our own first hand experiences with dozens of car rentals over the years to put it together. The first thing we noticed when going over the policies of the cards in our chart below is there is very little difference between them all. They almost all read the same save for some differences in number of days covered, value of vehicles and minor differences in the exclusions and terms such as limited production vehicles being 2,000 vehicles or 2,500 vehicles.

Rewards Canada recommends printing off the car rental insurance coverage section from your credit card's policy so that you know what's covered and so you can show the car rental agency what is covered as some will ask for it. Typically it will also list the phone number to call should you get into an accident or have your rental car stolen.

What is covered with Collision Damage Waiver insurance?

Collision Damage Waiver Insurance will cover damage to the vehicle from an accident, vandalism and/or theft of the car that you are renting. That's strictly it. It is not third party automobile, property or liability insurance. For third party insurance you need will need coverage from your own personal auto insurance or you will have to buy it from the car rental company. In some countries, like most in Europe, liability insurance is required by law and is already included in your car rental price. Be sure to check with the rental company to see what insurance is included and isn't included in the cost of your rental.

Will my credit card cover me anywhere in the world?

For the most part, yes. In researching the insurance policies of the cards listed below none provided actual country exclusions. However, certain countries like Ireland, Italy, Jamaica and some others have mandatory laws that renters must have CDW coverage from the rental car company regardless of your credit card coverage. In those cases your credit card should cover the deductible if the policy you get from the rental car company has one. If there are travel advisories and/or sanctions in place from the Government of Canada for certain countries those may affect your coverage.

Maximum MSRP coverage

It is pretty much a given that credit card CDW insurance won't cover the rental of a Ferrari or even a Jeep Wrangler if you chose to take the latter off roading. But did you know all of the cards except one in Canada have stipulations as to the maximum MSRP (Manufacturers Suggested Retail Price) of rental cars that are covered? For all cards but that one, that maximum limit is either $65,000 or $85,000 and that's in Canadian dollars which means in the U.S. you'd only be covered for cars up to ~US$50,000 or ~US$67,000. Now I would say for most people this may not be a factor but it is definitely something that you should be aware of. Many times I have heard people rave about the fancy car or SUV they received as a free upgrade thanks to a kind customer service agent, from their elite status or from places where you get to pick your own car like how National Car Rental does for their Emerald Club members. What most renters don't realize is the value of the car they just upgraded to is over the MSRP limit of the card they are using and they are no longer covered. This exact situation has happened to our family at least twice, where we received an upgrade to a vehicle whose MSRP easily went over $85,000 but thankfully we still carry the one card that does not have a set maximum MSRP and that is the Diners Club Club Rewards Mastercard. Unfortunately this card is not open for new applications but we do really hope BMO considers bringing it back to the market. Rather then tell the whole story of this MSRP situation here, you can read all about it at: Why you need to be careful with rental car upgrades when using the CDW coverage from your credit card

Another time on Maui we received an upgrade to a Cadillac Escalade XLT which most definitely would have exceeded the $65,000 limit that some cards have and most likely exceeded the $85,000 on other cards as well. Again, thanks to the Diners Club card no worries here however I do know that since those Escalade XLTs can fit 7 to 8 people and a lot of luggage they are popular for when multiple families travel together as they'll rent one of these. So do be aware of this MSRP limitation. Same goes for those who just like to rent the fancier cars that aren't on the excluded list of cars - just double check what the possible MSRP may be and then decide if you do want to go ahead with the rental or you can chose to rely on your own auto insurance (you'll have to check your policy for rental car coverage and maximum value) or just end up buying the car rental company's coverage.

Length of coverage

All of the cards listed in the table below provide CDW coverage on rentals of up to 31 or 48 days depending on which card you have. If you rent a vehicle for a period longer than is provided by your card your entire rental will not be covered. For example if you rent a car for 50 days and your card only provides 48 days of coverage and are expecting to be covered for those 48 days and risk the other two - it doesn't work that way. You will not be covered right from the start of your rental. Nor can you extend a rental or start a new rental right after your previous one to try to reset the length of coverage period. In most cases you need at least a full day between rentals to be covered. This should be of particular note to Canadian snowbirds who head south for the winter and don't own cars but rather rent in places like Arizona or Florida.

Here's an excerpt from American Express Aeroplan Reserve Card on length of coverage:

If the Cardmember rents a vehicle for longer than forty-eight (48) consecutive days, there will be no coverage under this insurance, including the first forty-eight (48) days. Coverage cannot be extended for more than forty- eight (48) days by renewing or taking out a new rental agreement with the same or another rental agency for the same or another vehicle. A full calendar day between rentals must exist in order to break the 48 consecutive day cycle.

Some Notable Exclusions

Here we look at some of but not all of the exclusions from the various credit card policies. Be sure to read your card's policy for a complete list of exclusions and conditions.

The exclusion that stands out the most that is seen in all policies was trucks, pick-up trucks or any vehicle that can be spontaneously reconfigured into a pick-up truck, off-road vehicles, vans (other than mini-vans), cargo vans or mini cargo vans are not covered. This means your card won't cover a U-Haul rental but I think what really stands out are pick up trucks. Pick up trucks have become increasingly more popular with rental car companies especially in Alberta, B.C. and Saskatchewan. Now, a lot of these are for those travelling on business to go out to oilfield sites, mine sites, wind turbine farms and so on. In those cases usually the company the person works for is paying for the rental and the company provides coverage so this isn't a concern. However as those pick up trucks are there for anyone to rent someone may just happen to rent one to get around Regina or whatever city they are in (maybe it is the middle of winter and they want a four wheel drive truck) but don't realize they aren't covered for CDW by their card.

In terms of vans, mini vans of up to 8 passengers are covered by all of the cards. Some do state vans will only be covered as long as they only can carry up to that 8 passenger limit including the driver and don't exceed a 3/4 ton rating.

A popular option for longer term rentals in Europe are tax free cars. This is where you actually get a brand new car under a lease agreement, usually for 17 days or more. Cards don't cover these however the leases typically include full insurance coverage anyways. (You may be familiar with a company like Auto Europe who are quite famous for these type of rentals)

Another area where you will not be covered is if you drive on a road that is not considered a publically maintained road (off-roading essentially). There are roads however that are considered public or publcally maintained but are not properly maintained where you cannot take your car as a rule set out by the individual rental company location and that will make up part of the rental agreement. And dny operation of the rental car in violation of the terms of the rental agreement will mean you are not covered by your card's insurance. One such road which is a well known example is the southern part of Highway 31, also known as the Pi’ilani Highway, on the island of Maui. Most rental car agreements on Maui state that you cannot drive your rental vehicle here due to the poor condition of the road. There's no stopping you from going there and many people still go there however you would be violating the terms of the agreement thus you would have no coverage from your card should something happen.

Note per the comment from vortoozo: some cards cover secondary drivers who are not listed on the rental agreement, and some provide coverage when the vehicle is driven on publicly maintained gravel roads, regardless of whether the rental agency allows this.

It should also be noted if you rent an 'executive' car in Europe outside of Italy, and by executive it usually means BMW, Mercedes and the likes of those luxury vehicles you cannot drive them into Italy. The rental companies have this in place due to high theft rates of these type of cars in Italy. If you do you drive into Italy, you would be violating the rental agreement and would have no CDW coverage from your credit card.

Driving while intoxicated will void and nullify any coverage from your card. Honestly, I would recommend to not even have one drink if you know you will be driving your rental car as you never know what the rules and laws may be in place where ever you are at.

Exotic cars are not covered by any of these cards. The policy will list what they consider exotic but these are your Ferrari's, Lamborghini's, Porsche and so on. However brands like BMW, Mercedes, Cadillac etc. will be covered by your card so long as they don't go over the MSRP limit.

Car sharing services such as Turo where the car is owned by an individual not by a corporation are not covered by credit card car rental insurance. In most cases these car sharing services provide insurance that is already built into to cost of renting/sharing. Other car sharing services like Zipcar (which is owned by Avis) may be covered by your credit card but it is best to check with your card issuer before hand.

Primary Coverage vs. Secondary Coverage

Most Canadian credit cards provide primary insurance for their CDW coverage which means you don't have to go through your own insurance company first if something does happen to your rental car. This is one benefit Canada does better than the U.S. as many cards there only provide secondary coverage. That being said you may want to double check your card's policy to see if it is primary or secondary coverage.

Some of the cards do provide Personal Effects insurance which essentially covers items stolen if your car is broken into. All of the cards that do offer this coverage do so as secondary coverage. So if you are the victim of a theft from you car you will need to go through your own personal auto and/or home insurance first and then apply to the credit card company for an additional coverage (typically this will mean the credit card company will pay your deductible as that's all your on the hook for). If you don't have personal auto or home insurance, the Personal Effects insurance will be your primary coverage.

Other coverage

Several cards provide additional coverage for car rentals beyond CDW insurance. Those are Personal Effects Insurance which cover theft of items from your rental car, see Primary Coverage vs. Secondary Coverage above for more details. The other coverage is Car Rental Accidental Death or Dismemberment. This insurance covers you for certain injuries or death as of a result of an accident with your rental car. There are limits per person and per incident for both of these types of coverage which are listed in the chart. For more complete details please see the relevant card's policy.

First Hand CDW Coverage Experience

Many moons ago on the beautiful island of Maui I happened to back our rental mini van into a column in a covered parking lot. It put a nice dent into the corner of the bumper but at least that was it. No damage to the column (it was concrete) and we could still use the car for the entirety of our family vacation. I called up the credit card insurance provider who were very helpful, they asked a myriad of questions such as is anyone injured, is the car drivable etc. and advised to get a police report. Well, I called the general Maui police phone number (not 911), explained what happened and told them I needed a police report for the insurance. I don't think if the dispatcher relayed all that information as three or four police cars with their emergency lights on came to the hotel. It must have been a slow night for the Maui Sheriff's department! It definitely provided some entertainment for those in the lobby area! Anyways, once I explained everything, several of the police cars left and one very helpful officer provided a file number for the report that I then passed along to the credit card insurance provider. In the end the repair cost was around US$700 as the rental car company did send me the bill directly which I then forwarded to the insurance provider and they took care of the rest. FYI at that time the rental was put on the TD First Class Visa Infinite card so I could redeem points against the charge afterwards, however for all my other rentals I still put them on my Diners Club Mastercard.

The cards and their coverage: