Do I Need Rental Car Insurance?

Nearly all rental car companies sell special rental car insurance coverage called a collision damage waiver (also referred to as a loss damage waiver). At first glance, the high cost and high-pressure sales pitch might make this coverage seem like an unnecessary up-charge. A closer look, however, could prove it to be protection you cannot afford to go without.

Learn more about collision damage waivers and the reasons why purchasing one could be the smart choice next time you rent a car.

1. You Get to Walk Away

Collision damage waivers are not insurance, but rather they are contractual agreements between you and the rental car company. The agreement states that you will not be responsible for any financial losses stemming from damage to the vehicle in a covered event. That goes beyond the cost of repairing or replacing the vehicle, too. In fact, the loss damage waiver will typically absolve you of all loss-related expenses, including towing fees and the rental company’s loss of profits while the vehicle is not on the road.

2. You Don’t Have to Pay for a New Car

Rental agreements have special clauses in them that state the value of the vehicle you rent is determined by the rental company. In other words, you might receive a bill for the price of a brand new vehicle instead of the actual cash value. Even with personal collision and comprehensive protection, it is likely you could be on the hook for any excess losses exceeding that which your insurer is willing to pay. Collision damage waivers transfer all financial risk back to the rental company, assuring you will not have to pay for excess loss assessments regardless of how much they cost.

3. You Don’t Have to Advance the Money for Repair/Replacement

If you’ve ever been in a car accident, you probably waited for a green light from your insurance company before sending your vehicle to be repaired. With rental car companies, however, time is money. Most are unwilling to wait for your insurance company to work out the details of your claim. Instead, it is highly likely they will have the vehicle repaired or replaced right away so it can begin generating revenue as soon as possible. The costs get billed to you – perhaps charged to the credit card on file in your account. With a collision damage waiver, the rental company is responsible for the repair or replacement, and you do not have to worry about temporary charges taking up your credit line and charging you interest.

4. No Claims, No Deductible

The financial fallout after a car accident does not stop with vehicle repairs. Without a collision damage waiver, you might have to rely on your personal auto insurance to cover your financial responsibility. Though collision and comprehensive coverage typically will transfer to rental vehicles, you’ll pay the price to file a claim. First, you will be responsible for your deductible, which might total hundreds of dollars. Next, the claim will stay on your insurance record for years, affecting the price you pay for personal coverage. With a collision damage waiver, there are no claims to file and no deductibles to pay so long as no one was injured and there are no property damage liabilities other than the damages to the rental vehicle.

As you can see, while rental car insurance is sometimes viewed as a scam, it is actually a good choice in our opinion.

If you have questions about rental car insurance or any other type of personal or commercial insurance, be sure to give us a call. We’d be more than glad to help.

 

Peter Cole, insurance agent and partner at Pentagon Insurance Agency in Elk River, MN, began his career in the industry more than 30 years ago. He prides himself on backing up every sale by personally providing service to his clients and by providing the coverage they need at the best possible price.

Contact Peter to discuss your situation today!