Last Updated on August 14, 2026 by David
Do you routinely decline the over-the-counter insurance when you rent a car? If you get in an accident and you haven’t purchased over-the-counter Collision Damage Waiver (CDW), the company can charge you for the cost to repair the vehicle. It can also charge Loss of Use fees to recoup forfeited revenue while the car is in the shop. After all, the time when the car being fixed is lost for the rental company.
On the surface, that may sound reasonable. But in practice, these fees can add up to ridiculous sums. Worse yet, Loss of Use can become a quagmire because these fees are not always covered by personal auto insurance and credit card protection, so they can take renters by surprise. Here’s what you need to know.
The Car Rental Loss-of-Use Loophole
If you decline CDW because you believe you are covered through your personal auto insurance or credit card, getting slapped with Loss of Use fees can come as a shock.
Loss of Use is a murky surcharge, as the laws vary from state to state. Some states—including New York and Wisconsin—do not allow rental car companies to charge Loss of Use fees. In other states—including Colorado and Texas—there are legal precedents upholding the rights of the rental car companies to charge them.
Buy Collision Insurance For Less Than What You’ll Pay at the Rental Counter
The most surefire way to protect yourself is to buy the Collision Damage Waiver (CDW) or Loss Damage Waiver (LDW) sold over the counter, but it will be pricey and may not be the most cost-effective solution.
Personal Auto Insurance and Car Rental Loss of Use
Most major insurers cover rental car collision damage but not Loss of Use, the 13News investigation found. But be careful; coverage varies by policy and state. Some states actually require coverage for rental Loss of Use. Maine, for example, requires coverage for verifiable/actual Loss of Use up to 30 days. Call your insurance company and double check rather than assuming you are covered.
Credit Cards and Loss of Use
Some credit cards will cover you for Loss of Use fees. If you have a card with primary coverage, use that one to book your rental cars. If there’s an accident, you don’t have to report it to your auto insurance company and take a hit on your premiums. These include premium cards such as Chase Sapphire Preferred, Chase Sapphire Reserve, United MileagePlus Explorer, United MileagePlus Club, Ritz-Carlton Visa Infinite and the JP Morgan Reserve card.
If you have any American Express card, you can get primary coverage by enrolling in Amex’s premium rental car protection program. You’ll pay $24.95 per rental (Florida residents pay $15.25 and California residents pay $17.95), which is cost-effective on rentals of more than a few days and will offer peace of mind.
Premium Credit Cards That Offer Premium Car Rental Benefits
One caveat: Even if your credit card covers Loss of Use, the resolution process can be long and drawn out. Credit cards that offer primary coverage rely on the rental car agencies to provide documentation—typically a “fleet utilization log” that documents the actual lost revenue while the damaged car was out of service. Problematically, rental companies often refuse to provide these logs, as they deem them confidential. So the rental car company and your credit card company can get mired in a blame game, leaving you the hook for the bill.
The bottom line is that some credit card policies have your back and others do not. Know which kind of card is in your wallet and choose accordingly.
AAA Membership and Loss of Use
AAA members who rent from Hertz can take advantage of a key benefit. Loss of use fee will be waived provided there is no violation of the terms and conditions of the rental agreement. It’s crucial to apply the AAA code when booking the vehicle.
How to Fight a Claim on a Rental Car
If a rental car company charges you a steep Loss of Use fee, here’s how to fight it:
- Enlist your auto insurance company for help. Insurance companies hate junk fees, are good at arguing claims and often take a dim view of Loss of Use fees. Your insurance company might be able to pressure the rental car company to drop or decrease the fee.
- Demand documentation. Request an itemized Loss-of-Use calculation. Request the contractual/legal basis for the charge. Request documentation supporting the claimed amount. Just because the rental car company says it has lost $900 in revenue doesn’t mean it can prove it. Request records of the rental, the repair bill and proof that the car would have been otherwise rented. If the company refuses to show you the paperwork, you will have a strong case in a credit card dispute. Dispute charges through the appropriate contractual or statutory process if the documentation or amount is deficient.
- Escalate. Bring the case to the relevant state regulator/consumer-protection authority or an attorney where appropriate.
Related:
