If you have ever rented a car, you know how challenging the process can be. Not only must you learn the nuances of a new-to-you vehicle, but you must also navigate the complex world of collision damage waivers (more commonly referred to as “rental car insurance”). Do you need this coverage? What does it pay for? If you have questions about rental car insurance, continue reading to find out more about this important, but often misunderstood topic.
What is Rental Car Insurance?
Rental car insurance is a term used to describe the protection offered by rental car companies to customers who wish to minimize their financial risks while driving a vehicle other than their own. While it can shield drivers against financial liabilities for rental car damages, it is not actually insurance at all; rather, it is an agreement that the rental car company will not pursue financial compensation from the borrower for covered damages to the vehicle.
What’s Covered Under the Collision Damage Waiver?
Collision damage waivers only cover damages to the rental car and losses to the rental car company. For example, most companies will agree to absorb all administrative, towing, and loss of use fees in addition to the vehicle repair or replacement expenses if you purchase the collision damage waiver prior to renting a car. Several states allow a rental car company to hold the renter responsible for diminished value or loss of use. Diminished value refers to the car not being worth what it was prior to being involved in an accident. Loss of use refers to the damaged car being out of their fleet and being unable to rent to another customer, so can charge the renter the daily rental rate for the days the vehicle is out getting fixed.
Perhaps more notable is what is not covered by the collision damage waiver. Unlike traditional car insurance, collision damage waivers do not include coverage for bodily injury or property damage liability, nor do they provide medical payments coverage for you and your passengers. For those expenses, you would need to rely on your personal auto insurance or a form of supplemental coverage offered by the rental car company.
Another important point is that the coverage offered by the rental car company is not regulated like car insurance. That means the rental car company can set forth the guidelines within the collision damage waiver contract and create exclusions that could leave you with an unexpected bill. Carelessness while driving, for example, might void the protection in a collision damage waiver.
Do I Have a Choice in Purchasing Rental Car Insurance?
Yes, the choice is yours. You do not have to purchase rental car protection, even if the rental car company pressures you to. In fact, you may already have coverage available to you from another insurance policy, such as your personal auto or umbrella insurance, or from your credit card issuer. Often, drivers forego rental car insurance if they know their personal auto coverage will transfer to the rental vehicle and that their credit card issuer will pick up any shared or excess financial responsibility, such as the deductible.
Should I Purchase a Collision Damage Waiver?
The decision to purchase a collision damage waiver is one that you must weigh according to your personal circumstances. Some personal lines auto policies WILL provide coverage for loss of use or diminished value, others will not. Some companies offer endorsements to cover such situations. Some credit cards may cover these as well if the rental is paid for on the card.
It is always best to give us a call to discuss your individual situation if there are ANY questions as to what is or is not covered. We would be glad to help!
