No matter how many times we cover problems that come with collision damage on rental cars, customers share the same frustration. If you’ve ever rented a car, you’ve likely experienced the moment of angst at the counter when being asked if you’d like to purchase the rental company’s insurance.
The angst you, and countless others, feel stems from not truly being aware of what your current auto insurance covers. Many individuals won’t take the rental car insurance because they simply think they’re covered by their own insurance. Well, that’s not always the case. Want to be prepared next time you’re renting a car? We can help you understand whether you need the insurance or not, before you get to the rental counter.
All Rental Car Coverage is Not Created Equally
As our owner Brandon Badell knows so well, “all rental car coverage is not created equally.” Let’s explore your options when it comes to insuring yourself during a rental car period.
Option 1: Pay with Your Existing Insurance
For many people, if your current auto insurance cover collision damage, that same coverage extends to a short-term rental. However, if you plan on simply relying on your own insurance, check its coverage beforehand.
Keep in mind that you’ll still need to pay up to your deductible and filing a claim may effect your rate in years to come. Essentially, you’ll have to pay up-front for all damage and then – hopefully – recover as much, or all of it, after filing the claim.
So, What Exactly Constitutes “Damage” To A Rental Car Company?
Above, we told you that if you rely on your own coverage, you’re responsible for all damage up-front. Do you know that also means:
- Paying for “loss of use” meaning the lost revenue while the car is out of commission,
- Towing charges,
- “Diminished value” meaning a loss to the car’s resale value,
- Administrative fees with processing the claim.
So, if you damage a rental car, and it sits in a shop for 3 weeks before repairs even begin, you’ll be responsible for paying the rental company for those 3 weeks.
Option 2: Use Your Credit Card Benefits
Did you know that most credits card companies these days provide “free” collision coverage for rental cars? Check with your specific credit card but know that most coverage is secondary. This means that the credit card picks up only what you can’t recover first from your own insurance. You’ll still have to pay the rental company up-front, and then file for reimbursement from your card issuer.
A final thing to keep in mind: remember the “loss of use” we mentioned above? Many credit companies will only pay loss-of-use if verified by the rental company’s log, and some rental companies will not cooperate with credit-card issuers in providing these logs in a timely manner.
Option 3: Third-Party Car Rental Insurance
Your third option is to buy collision coverage from a third-party. Many times, if you book using Expedia or Priceline, the agency offers you coverage from a third-party. This often costs a lot less than the rental company’s plan, but just as the other options mentioned above, you have to pay up-front and claim later.
Option 4: Buy the CDW Insurance from the Rental Company
Although many people, including us in this very article, refer to this at “rental car insurance” what you’re really purchasing is called a “collision damage waiver.” What this means, essentially, is that the rental car company surrenders its right to charge you for damage to the car, with a few exceptions. No other option is as comprehensive or convenient.
Sounds great, right? The unfortunate side to CDW is that it can be very costly,, sometimes even more than the base car rental rate itself. The rental company stands to make 95% of this cost. No wonder they push you so hard to purchase it when you’re at the counter!
Our Final Say
What you should take away from this article is that no one alternative to collision damage coverage – your auto insurance, your credit card, or a third-party – will completely isolate you from risk. Do many travelers rely on lower-cost options to CDW without a problem? Sure. It happens every day!
However, accidents happen! And what’s more, your insurance, credit card, or third-party policy may not cover than accident in an unusual circumstance.
So, if you’re unwilling to accept any risk at all, it’s our recommendation that you purchase that CDW next time your travel with a rental car.
Trust Badell’s Collision to prepare a fair estimate and repair your car right. We have worked to uphold the Gold Standard over the years. Our shop will work with your car insurance. Call us or request an estimate today.
