What letter do I need to decline CDW?
Credit Card CDW–all you need to know
What is Collision Damage Waiver?
Collision Damage Waiver (CDW) is an obligatory coverage for rental vehicles. It is not an insurance but takes the financial responsibility off of the customer should the vehicle be damaged. To allow a customer to take a vehicle without coverage would be extremely risky to the agency and the customer alike. The car rental agency has a moral and legal obligation to ensure that the customer is adequately insured to drive their rental vehicle on Costa Rican roads.
Credit Card CDW
Most credit cards offer perks to their customers; one of which is Collision Damage Waiver. With this optional coverage on the credit card, the customer is permitted to decline the car rental agency’s CDW coverage. However, the customer must provide a letter of proof from the credit card provider or bank that outlines this coverage.
Car rental agencies advertise this requirement on their websites and in communication with customers to arrange for the letter to be emailed ahead of the rental. This enables the car rental agency to verify the CDW coverage and provide clear pricing for the upcoming rental.
Unfortunately, not all customers realize the seriousness of the request. Once arriving in Costa Rica, it is possible to call the credit card provider to verify coverage, but this can be a painful process. Waiting on customer service representatives on a business helpline is never easy, and worse when the beach is waiting, and a line of other car rental customers is forming behind you. Federico Barquero of Grupo ANC, estimates that approximately half of the customers calling credit card providers discover that the CDW coverage offered doesn’t cover their rental vehicle. This then leads to additional coverage costs which is not a surprise to receive at the start of a vacation.
Terms and conditions of Credit Card CDW
The biggest issue is that the CDW coverage terms and conditions vary considerably between credit card providers and even between the different card types offered by that provider. The customer is often unaware of many excluding factors for rental in small print on policies regarding car rental CDW coverage.
Firstly, it is important to establish that the CDW coverage is provided outside of the renter’s home country; some policies may limit coverage to the United States.
Vehicle type has various restrictions too that are crucial in establishing the customer’s coverage. Exclusions often include 4×4 vehicles and premium SUVs which heavily restricts the customer vehicle choice in an industry where over 60% of vehicles are four wheel drive. AMEX excludes premium and many full-sized SUVs from its coverage, for example.
Further restrictions apply to coverage for the number of passengers that the vehicle holds—usually 8 or less–which exclude vans from CDW coverage through a credit card.
Another consideration is the value that the credit card provider has as a limit to coverage. Vehicles are not cheap in Costa Rica due to high importation fees and taxes, and the $30 thousand coverage provided by many credit card providers is not sufficient for all vehicles.
The duration of the rental period can depend on whether the renter can use CDW through the credit card or not. Mastercard CDW coverage, for example, is only valid for 15 consecutive days of car rental.
Requirements for the letter of proof
The requirements of letter for the car rental agency are based on the varying conditions offered and discussed above:
• Name of card holder
• Coverage is provided in Costa Rica
• Maximum limit of coverage
• Duration of coverage
• Vehicle exclusion policies
• Number of passengers permitted
Bring or even better, email the letter from your bank or credit card provider in advance to ensure that your vehicle pick up is fast and easy–and that your vacation starts without a hitch!
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