American Express discards 'loss of use' car rental coverage

By Bruce Mohl, Globe Staff, 06/16/02

		Sensible traveler  Destinations  Where they went  Travel gear  Student travel

Sam Engelstad of Somerville is that rare consumer who reads the fine print.

In a recent eight-page, fine-print mailing from American Express, he discovered some changes to his account that make renting a car with his credit card far less attractive.

The company, for example, will no longer cover "loss of use" fees that are assessed by most rental car companies for the time a damaged rental car is being repaired. It also won't cover theft or damage to unsecured vehicles, presumably vehicles that are unlocked.

The loss of the loss-of-use coverage means cardholders either have to shift to another credit card that does provide the coverage or buy coverage from the rental car company for anywhere from a couple dollars to $21 a day.

"From their advertising, you'd think American Express is all about offering the kind of service no one else dares to offer," Engelstad said. "But I suppose we should know better."

Engelstad said he was told by a customer service official at American Express that the company dropped its loss-of-use coverage because car rental companies wouldn't provide the data needed to determine underwriting risk.

Judy Tenzer, an American Express spokeswoman, said the coverage wasn't dropped because of any dispute with the car rental companies.

"Loss of use is not something that is being regularly covered today by credit card insurance policies," Tenzer said. "This is something that moves us more in line with the industry."

I'm not sure whether American Express is joining the rest of the industry or trying to lead it. But the small-print shift is another reminder that consumers using a credit card to insure a rental car need to stay on top of what's being covered and what's not.

Credit cards used to be pretty much the same when it came to renting cars, but now the coverage can vary quite dramatically. The color of the card is no guarantee of anything.

As of now, both Visa and MasterCard do cover loss of use. In its card member agreement, MasterCard says it will cover "reasonable and customary charges imposed by the rental car company for the period of time the car is being repaired (`loss of use' charges) that are substantiated by a fleet utilization log." Visa promises to cover "valid loss-of-use charges imposed and substantiated by the rental agency."

The Discover Card doesn't cover loss-of-use fees, but I had to scour the card member agreement to learn that. When I checked with customer service at Discover, I was mistakenly told the card did cover loss-of-use fees.

If you're about to rent a car, it's best to check your insurance coverage. Start with the insurance you have on your personal car. It may be sufficient for your rental car as well. If you don't carry comprehensive or collision coverage, or you keep your deductible high to hold down your premium costs, you may want to check out what your credit cards provide.

Most credit card coverage is secondary to your personal comprehensive and collision coverage, meaning it fills in where your own coverage leaves off. Check how long the coverage lasts (it varies from 15 to 30 days), what type of vehicles are covered, and when it is voided. Now, add to that list whether loss-of-use fees are covered.

If they aren't, you may want to buy protection from the rental car company. Unfortunately, some companies combine it with their standard loss damage waiver, which typically costs $21 a day. A handful of companies break it out separately, usually charging about $1.25 a day.

Or, as Engelstad is doing, you can rent a car with a Visa or MasterCard and leave your American Express card in your wallet.

Expedite fee

A Globe colleague recently bought a ticket online with American Airlines miles and was hit with a Sept. 11 security fee as well as a $50 "expedite fee." Surprised by the latter charge, which popped up at the very end of the ticketing process, he asked me what it was for.

It turns out American charges the fee on any ticket purchased with frequent-flier miles less than 21 days in advance, which was the case here.

My question: What exactly is being expedited? The ticket was purchased online and the itinerary was being e-mailed out, so there was no rush-rush postage charge or last-minute paper shuffling.

Tim Kincaid, a spokesman for American, said the expedite fee is designed to cover the cost of getting the ticket out to the customer faster. Same-day service, for example, costs $75. Even on Internet transactions, Kincaid said, there are extra handling costs involved.

"Think of it as a rush charge," he said.

Foreign exchange

Time shares may be the way to go for people in countries with relatively weak currencies, according to reader Chris Frey.

Frey said many Canadians have found buying a time share at a Canadian-friendly resort in the Dominican Republic helps them counter the low value of the Canadian dollar.

"By buying in the Dominican Republic and exchanging to more expensive locations, savvy Canadians are leveraging their dollars dramatically," he said.

Bruce Mohl can be reached by e-mail at mohl@globe.com.