If you’ve ever felt sticker shock when you were given a price for rental car insurance, you’re not alone. Adding a collision damage waiver to your rental can cost upwards of $15 or more per day. For those trying to stick to a budget, the extra protection can increase the cost of a rental by more than 50 percent.
If you already have collision and comprehensive auto insurance, a collision damage waiver might seem like a poor investment. Continue reading to find out the truth about the coverage offered at the rental counter and the value it provides drivers – even those who are already insured.
What is a Collision Damage Waiver?
Collision damage waivers are contracts signed by the rental company and the purchaser of the contract. The waiver states that the person who rents a vehicle will not be responsible for any physical damages or other losses stemming from an accident or other covered event. It is not insurance, but rather an agreement that the rental company will not sue the customer for financial loss.
Like any business contract, there are certain stipulations and exclusions typically included in collision damage waivers. For example, the waiver may not apply if you were driving recklessly or allowed an unauthorized driver to operate the vehicle prior to an accident. However, damages that do fall under the agreement are covered in full without any deductible or other financial responsibility.
What if You Already Have Insurance?
If you own a vehicle, you should already have car insurance. If your policy contains collision and comprehensive protection, that coverage will probably cover damages to a rented vehicle as well. However, you will likely be responsible for paying your deductible, and the claims process may be more complicated than it would be with a collision damage waiver, but you should be able to recover at least a portion of the losses you are responsible for.
In addition to your personal car insurance, it is possible that your credit card issuer may offer rental car damage protection that will cover your deductible and other costs not covered by your insurer. You should verify the details and conditions of your credit card coverage before deciding for or against the collision damage waiver.
Keep in mind that you are ultimately responsible for all damages to the rented vehicle and any losses stemming from those damages. This includes losses not covered by your insurance company or credit card company. Sometimes there are disputes over the loss value of the vehicle. Your insurance company may only be willing to pay for the actual cash value of the damaged vehicle, whereas the rental company seeks compensation for a complete replacement. You could be personally billed for any excess loss above what your insurer is willing to pay, including extra fees for towing charges, loss of use, and other expenses.
Should You Purchase a Collision Damage Waiver?
Only you can decide if the collision damage waiver is a sound investment when you rent a vehicle. Before you buy or decline coverage, make sure you understand what alternative protection is available to you and what exclusions are listed in the waiver. As always, you can speak with your independent insurance agent at any time to ask questions about your existing coverage and seek advice on the ways you can minimize your risk when renting a car.