The Collision Damage Waiver – often referred to as “rental car insurance” – is the coverage offered by rental car companies to protect you against financial liability for damages to your rental car. Though optional, customers often feel pressured into purchasing the waiver to avoid unexpected charges in the event of a collision, hail damage, vandalism, or another covered event.
There are those who say drivers should never drive away without a collision damage waiver, and there are others who say purchasing it would be a waste. While you will have to come to your own conclusions about its value and relevance to your particular needs, there are a few things you should know about the collision damage waiver before renting a car.
It is not real insurance.
Rental car companies are not licensed to sell insurance. Therefore their in-house rental coverage is not an actual insurance policy, but rather an agreement between you and the company. In essence, the rental car company agrees to relieve you of your financial responsibility if a vehicle is damaged or destroyed while in your care. That means the “coverage” they offer is not regulated and may be subject to special terms and conditions. In many cases, collision damage waivers have strings attached that allow the rental car company to still pursue financial compensation if the conditions surrounding the vehicle’s damage do not meet the stipulations in the contract. In other words, you could still be responsible for damages in a wreck if you were found to be speeding at the time of the accident or engaging in some other kind of reckless behavior.
It is disproportionately expensive compared to auto insurance.
Most collision damage waivers are offered at a rate of $10 to $15 per day. If you are only renting for a couple of days, this might seem like a small price to pay for peace of mind. Expand that coverage to two weeks or a month, however, and you can see how quickly the costs can add up. Whereas a typical driver might pay less than $100 per month for liability, collision, and comprehensive insurance on a private vehicle, collision damage waivers could cost more than $400 for collision and comprehensive alone over the same period of time.
It offers the coverage you probably already have.
More than likely, the collision and comprehensive coverage in your personal auto insurance will transfer to the rental vehicle you drive. However, claims against your personal auto insurance will be subject to a deductible, whereas the collision damage waiver costs you nothing out of pocket for a covered expense. Another consideration is that your auto insurance may not cover the loss of use of to a damaged car or diminutive value of a damaged car.
On the bright side, you may be able to have your deductible expense covered by secondary rental car coverage offered by your credit card company. Terms and coverage vary between issuers, but all of the major credit card companies offer credit cards with some degree of rental car protection offered to drivers to pay for their rental vehicles with a credit card.
If you do not have collision and comprehensive coverage on your personal auto insurance, your credit card issuer might even pick up the entire cost of your financial liability to the rental car company.
Generally speaking, we recommend taking the collision damage waiver. One last note, be sure to list everyone that will be driving the vehicle as the collision damage waiver and any coverage you receive from third-parties will likely be limited to those listed as drivers on the rental agreement.
If you have doubts, or questions, feel free to give us a call, we’d be glad to help.