If you are planning to rent a car, you will probably be given an opportunity to purchase special coverage called a collision damage waiver that is designed to protect you against liability for damages to the vehicle. Many people decline this coverage because it is expensive – especially if they already have rental car damage coverage from a personal insurer or credit card company. However, doing so could be a mistake. Before you write off the value of rental car insurance, learn 5 reasons why you might be glad you purchased this important protection after an accident.
1. You don’t have to advance the money for the loss.
Rental companies may not want to wait for your insurance or credit card company to pay a damage claim. Without the collision damage waiver, the rental company could charge your personal credit card for the losses until the claim is settled. Depending on how long it takes for the rental company to be reimbursed for the damages, you might find yourself floating a high balance and paying interest until the money is refunded to your account.
2. You don’t have any surprise fees.
When a damaged rental car needs to be repaired or replaced, the rental company loses revenue. This expense – known as loss of use – can be transferred to you. A collision damage waiver typically protects you against loss of use liability, as well as other fees like administrative costs and towing charges.
3. You don’t have a deductible.
Collision damage waivers do not typically include any shared financial responsibility for the driver. Instead, you return the damaged vehicle and walk away with no financial obligation to the rental company. Had you relied on your personal collision or comprehensive insurance instead, you would likely be responsible for paying a deductible of several hundred dollars. Similarly, coverage from your umbrella insurance might only pay benefits once you pay a self-insured retention amount.
4. You can maintain your spotless claims record.
Being claims-free is something to be proud of. If you currently receive a discount on your car insurance because of your spotless record, the collision damage waiver can help you maintain that status if you damage your rental vehicle. Since you are not financially responsible for the damages, there is no need to file a collision or comprehensive claim. However, you might still be responsible for bodily injury and property damage liability if the accident involved more than just your vehicle.
5. You aren’t responsible for any valuation disputes.
Rental car agreements typically include clauses that state the loss value of the vehicle you borrow is determined by the rental company – not an insurer. The collision damage waiver protects you regardless of the value of the loss. On the other hand, the collision and comprehensive coverage on a personal insurance policy might only cover the cost of repairs or the actual cash value of the car. That means the rental car company could bill you for any excess loss valuation left unpaid by your personal coverage.