Rental car insurance, is it safe or stupid? The rental car attendant smirks. “Would you like to sign up for a collision damage waiver?” he asks; a glimpse of Don Corleone claiming, “I’ll make you an offer you can’t refuse,” flashes by. Is rental car insurance “good business”?
Some sort of rental car insurance is required. A rental car company, personal auto insurer, or credit card company can provide the coverage.
Rental car companies commonly offer basic insurance, such as liability insurance, personal accident insurance, accidental death coverage, and personal effects coverage. The Collision Damage Waiver (CDW [i.e. Optional Vehicle Protection; Loss Damage Waiver]) is their undeclared white elephant. It is an agreement the renter will not be liable nor will they pay for any damage or theft of his or her rented vehicle. Many times, a supplemental liability policy, which protects the renter against retribution from others, is tacked onto the deal. A CDW can be voided by reckless or illegal activity.
CDW sound like a bargain? Maybe, but at an industry average of $9-$19 per day, it is costly. Buying a CDW can easily double the rate of rental. Also, most insurance providers already extend their coverage to rented vehicles; purchasing a CDW is just dumping water in an overflowing moat.
While travel gurus used to classify CDWs as a con artist’s game, frequent travelers, the accident-prone, and the anxious may benefit from a CDW. If someone is renting in a foreign country, a business trip, an extended lease, or has no other applicable auto insurance, he or she may be required to purchase a CDW.
What happens if a vehicle is damaged and it is not covered by rental car insurance? Typically, not only will rental companies charge to cover the damage, but may also charge for profit lost while the vehicle is out of service and the estimated lowered re-sale value of the car (i.e. “diminution of value”).
Using a credit card company’s insurance as a bastion against rental insurance loansharking does not guarantee safety. Many credit card companies require rental car companies to reveal their utilization fleet logs, which are commonly regarded as sacrosanct by the rental corporations. Also, credit card insurance is commonly a secondary waiver, which means they won’t pay unless a claim is filed first with the insurance company.
So, is it “good business”? Maybe for the Godfather and the rental car company – but for you? Think again.