Accidents happen. Being prepared is the easiest way to navigate difficult circumstances, such as a car accident while driving a rental vehicle. Rental car insurance is an add-on benefit that you can purchase to protect yourself while driving someone else’s car. Though not technically insurance, the collision damage waiver can provide valuable benefits to drivers. Continue reading to learn more about rental car coverage and whether it could be right for you.
Collision Damage Waiver
Also known as a loss damage waiver, the collision damage waiver is the assurance by your rental company that you will not be held liable for damages to the vehicle that are caused by a covered event. It is more of a contract than insurance, but it still offers the same principle benefit: transference of risk away from the borrower. With this coverage, you can drive off the rental car lot knowing you will not be responsible for car repairs, replacement, loss of use, towing charges, and other expenses, nor will your face any shared financial responsibility and no deductibles.
Unfortunately, collision damage waivers do have their downsides. To begin with, the coverage can be very expensive compared to the total cost of renting a car. In some cases, collision damage waivers can increase the price of a rental by $10 or $15 per day, which may translate to an increase of as much as 60 percent. Also, collision damage waivers often contain clauses that void the coverage when you engage in fraudulent or reckless behavior. It all depends on the terms within the contract, so be sure to read the fine print before signing on the dotted line.
Another problem with rental car insurance is the redundancy of coverage. Imagine paying for something and finding out that you already had access to it for free. In many cases, drivers are talked into purchasing this coverage when they already have protection against rental car damages through a personal auto insurance policy or a credit card.
Other Rental Car Coverage Add-Ons
In addition to the collision damage waiver, your rental company might offer you other types of coverage designed to shield you from financial losses. Some of these may include:
- Supplemental liability coverage
- Personal belongings coverage
- Medical coverage
While these types of coverage may be more affordable than the collision damage waiver, they are probably unnecessary if you already have other types of insurance. For example, the liability and comprehensive coverage on your personal insurance policy will probably cover any bodily injury and property damage liability you incur, as well as reimburse you for items that are stolen from your rented vehicle. Likewise, health insurance and the medical payments coverage on your car insurance policy follow you while you use a rental, eliminating the need for extra coverage.
Is Rental Car Insurance Right for You?
Only you can decide if rental car insurance is a purchase that fits your needs. If you are satisfied with the coverage you have on your credit card or personal car insurance, you can decline the collision damage waiver next time you rent a car. However, your personal insurance and credit card coverage can still leave you responsible for things such as the rental agency’s loss of use, and making up the difference between an ACV claim and being assessed for the cost of replacing the damaged vehicle with a new one.
If you desire convenience and would rather avoid a filing a claim on your own policy, rental car coverage might be right for you. It is important to speak with your card issuer as well as your independent agent to review your coverage before accepting or declining the collision damage waiver.