What would happen if you backed your rental car into a light pole during your vacation? What if it was stolen from the parking lot of your hotel? Nothing can ruin your day quite like knowing you are responsible for repairing or replacing a vehicle. Perhaps that is why so many people choose to purchase rental car insurance when they borrow a car. Also known as a collision damage waiver or loss damage waiver, the coverage offered at the rental counter can be very expensive and perhaps even unnecessary. Today, we are explaining everything you need to know about rental car insurance so that you can make a more informed decision the next time you have the chance to buy it.
The Coverage May be Redundant
The biggest reason most people decline rental car insurance is the redundancy of the coverage. For many, the idea of paying more for protection they already have does not make sense. In most cases, the collision and comprehensive coverage on a personal auto insurance policy will transfer to a rental car. You might be responsible for paying your deductible, but even that may be picked up by some credit card companies as a perk of membership so long as you used your credit card to pay for the rental reservation.
Collision Damage Waivers Contain Exclusions
Collision and loss damage waivers are contracts that contain special terms set forth by the rental company. If you cause damage to your rental car that violates those terms, you might still be responsible for any financial damages and losses you incur. For example, the damage waiver may be voided if you lied to the rental company or committed fraud. It could also be voided if you caused an accident while engaging in reckless activity, such as street racing.
It is Much Simpler to Use than Your Personal Coverage
The collision damage waiver is not real insurance. Instead, the rental company makes an agreement that it will not seek any compensation for damages to the vehicle barring any exclusions within the agreement. This can save you the headache of coordinating the claims process between the rental company and your insurer. It could also save you money.
Rental agreements allow rental companies to charge you for any losses they incur, including loss of use and administrative fees. The collision damage waiver takes that responsibility off your shoulders, regardless of how much the loss may be. It also prevents the rental company from advancing the charges for damages onto your credit card while you wait for compensation from a third-party insurer.
There are No Deductibles or Claims to File
If you plan to take a road trip that puts many miles on your rental car, the risk of an accident will be higher than when you drive your personal vehicle in your hometown. One accident claim against your collision or comprehensive coverage could cause a significant increase in your personal car insurance premiums, not to mention, you might be responsible for paying a deductible. With a collision damage waiver, any damages to your rental car will not go on your personal insurance record, and you will not be billed for any shared financial responsibility.