Thomson report

If you've ever rented a car in the U.S., you know the pitch. "Would you like the collision damage waiver to protect you in case of an accident?" the agent asks.

Insurance agent calls it "hassle insurance" because they knows what a hassle it can be when a rental car is damaged or stolen — even if it's not your fault.

The truth is, CDW, which can be as much as $20 a day in some states, is not insurance. It's an agreement between you and the rental car company that if the car is damaged or stolen you won't be held liable.

For as long as I can remember consumer and travel experts have advised us not to buy the CDW. They say it's too expensive and unnecessary.

Consumer Reports also advises its readers to “resist the pitch,” because their personal insurance policy probably covers damage to a rental car. The editors also recommend paying with a premium credit card that provides accident coverage.

These consumer groups are all well intentioned. But I believe they are stuck in park while the rental car industry has changed dramatically. It’s time to question this advice and take a fresh look at the subject.

Rental car companies hit you up for more than the cost of repairing the vehicle. Chances are the contract you sign (but probably don’t read) obligates you to pay for all the revenue lost while the damaged vehicle is out of service.

You may also be charged for “diminution of value,” the money the car company estimates it will lose (because of the accident) when it sells the vehicle.

Remember, the rental car company has your credit card number, so they can just add these charges to your bill.

Rental car tips

Most insurance policies do not cover rental cars in other countries. See if your insurance company sells a rider for this. If not, then the CDW is advisable.

For primary credit card protection, the vehicle must be rented in the cardholder’s name.

Carefully check damage before you drive off the rental car lot. Mark everything on the damage slip they give you. Check the car again when you return it. And ask for a signed slip that says you brought it back undamaged. You may have to go into the office, but a few extra minutes could save you hundreds of dollars.

Most credit card companies' collision damage waivers are secondary coverage. That means you must file a claim with your insurance company before they’ll pay a dime.

Stuck again, unless you have one of the few cards that offer primary coverage – they’ll pay the rental car company without the need to file a claim with your own insurance.

Some Visa and MasterCard accounts provide primary rental car coverage.

Diners Club cards all have free primary collision damage waiver coverage of up to $75,000 per incident. This is insurance coverage for rentals of 45 consecutive days or less. It will pay for physical damage or theft of the vehicle, towing charges and reasonable loss of use charges.

If you have an American Express card you can buy a special package for under $25 per rental (up to 42 consecutive days) that converts the card’s secondary rental car coverage into primary insurance coverage of up to $100,000. And there’s no deductible.

The Collision Damage Waiver, often sold through high-pressure scare tactics at the rental counter – is grossly over-priced. In some cases, the CDW is higher than the daily rental rate. That’s just crazy.

Rental car companies could provide this protection at a much lower cost. But it’s now become a major profit center for them. The new business model is to charge less for the car and make their money from people who buy damage and liability protection.

You probably don’t travel enough to pay the $300 annual fee for a Diners Club card. So either get a new credit card with primary coverage or add primary protection to your American Express card.

Your RoadsidePlus card from ICBC is your best protection for car rentals. $1 million CDW, $25 a day for another rental car or a maximum of $250.00, $300 deductible collision and comprehensible. It costs you when you buy your insurance. It is $50 or $71 depending on you safe driving record.

It’s time you reconsider what you’ll do the next time you rent.