Nearly every driver has used or will need a rental car at some point in their lives. Whether you are traveling or utilizing temporary transportation while your personal vehicle is being repaired after an accident, you will be faced with the option to purchase coverage for the vehicle from your rental car company.
Though it may seem like a smart buy, there are at least four reasons why it may not be the best option in every scenario. Continue reading to find out whether buying the collision damage waiver offered by rental car companies is right for you.
1. You’re Probably Already Covered
The only reason to purchase coverage from the rental car company is for assurance that you will not owe thousands of dollars in damages if you are involved in an accident. While it may seem like a financially responsible decision, it wouldn’t make sense to purchase coverage if you already have access to the same benefits from another source at no added cost. In fact, there is a good chance that you do have access to rental car protection – and probably from more than one source.
The first is the collision and comprehensive coverage on your personal insurance policy, which may transfer to other vehicles you drive, including rental cars. You will still be responsible for your deductible, although even that may be covered by a secondary source of coverage – your credit card company. So long as you used a credit card to reserve and purchase your rental car, you may have access to rental car damage coverage from the card issuer. Other sources of possible rental car coverage include your personal umbrella insurance policy and trip insurance if you are traveling. It is important to note that coverage will vary between card issuers and insurers, and not all umbrella and trip insurance policies contain protection for rental cars.
2. Collision Damage Waivers Tend to Have Exclusions
Collision damage waivers may minimize your frustrations if you return a vehicle damaged, but only if the damage was caused by a covered event. Since these waivers are contractual agreements and not actual insurance, the rental car company could still pursue you for financial losses if you violated the terms of the contract. For example, the waiver may not cover theft of the vehicle if it is stolen while warming up on a cold morning in your driveway. The rental car company could place the liability on your shoulders, forcing you to foot the bill for the vehicle.
3. It Doesn’t Cover Liability
If you run into another vehicle, a pedestrian, or someone else’s property while driving a rental car, you are ultimately responsible for any damages you caused. The collision damage waiver is designed to protect you against liability to the rental car company – not any victims involved in the accident. You will still need to file a claim against your personal insurance policy if you are responsible for a third-party’s property damage or bodily injuries.
4. It’s Somewhat Expensive
Rental car coverage is no small expense when compared to the cost of renting a car. Whereas a vehicle may cost you $30 per day, the collision damage waiver could easily cost an additional $10 to $15 per day, significantly increasing your overall costs. While an extra $100 may not seem like a lot to spend on coverage for a week-long rental, that is more than it would cost many drivers to fully insure a personal vehicle for an entire month.
While the final decision is yours, we suggest you take the collision damage waiver. While we just gave you 4-reasons why you may not want to take it, the settlement of an accident involving a rental vehicle can be a nightmare. By choosing to take a collision damage waiver, you will likely have no responsibility for the repair or replacement of the vehicle, nor will you be responsible for the rental companies loss of profits.
If you have questions about your personal or commercial insurance, feel free to give us a call, we’d be glad to help.