Should I Purchase the Rental Car Damage Waiver?

You are traveling for the Fourth of July weekend and you will be renting a car.  You go through all the steps, pick out the car you want, fill out paperwork then comes the confusing question.  Would you like to purchase the rental car damage waiver?

And your answer is?

YES…and here is why:

Personal and Business Auto Policies are no longer adequate to cover all loopholes.

With summer vacation upon us and the Fourth of July this Friday, many of us will be faced with renting cars for our vacations.  For many years, it was generally thought that you could reject the Rental Car Damage Waiver offered by the rental car company because adequate coverage was afforded through your personal or business auto policy.  This is no longer the case.  Car rental companies have continued to change their rental contracts to create liabilities that are not covered under these policies.  These “gaps” in coverage have been costing car rental customers significant dollars over the past several years.

So, we have arrived at a point that although damage waiver fees are generally considered outrageous, most consumers should consider purchasing the waiver for short-term rentals.  This is increasingly becoming the case as rental car companies charge ever higher fees and penalties for losses and expenses not covered by most auto policies or credit cards.

The top ten reasons to purchase the rental car damage waiver:

Loss Valuation:  The rental company has the discretion to determine the value of the car and this may be different from the Actual Cash Value determined by your insurance company.

Loss Settlement:  The rental car company may choose to make the repairs immediately, potentially resulting in a lack of auto insurance coverage because of failure to comply with the “appraisal clause” in your auto policy.

Loss Payment:  The rental agreement may require immediate reimbursement for damages.  It is not uncommon for the rental company to charge your credit card for the full value of their car plus expenses.

Loss Damage Waivers:  The rental agreement usually requires reimbursement for more than collision, making the consumer responsible for ANY “loss” in value beyond normal wear and tear.

Indirect Losses:  Many rental company agreements call for the renter to pay for loss of rental income while the car is out of commission.  Most alarmingly, rental car companies are inclined to charge for “diminution of value” on the car that was damaged.  This is not covered by most auto policies under physical damage.

Administrative Expenses:  The rental contract may make the consumer liable for various “administrative” or loss-related expenses such as towing, storage, appraisal, claims adjustment, etc.  These are typically not covered on personal or business auto policies.

Other Insurance:  If there are multiple carriers involved in a claim settlement, and you have purchased the damage waiver, you will not have to determine which carrier has the primary coverage on the vehicle.

Excluded Vehicles & Territories:  Personal auto policies exclude coverage for certain types of vehicles that are not private passenger cars (motor homes and motorcycle).  Additionally, coverage is limited to the U.S., its territories and possessions, Puerto Rico and Canada.

Excluded Uses and Drivers:  One often overlooked issue where a coverage gap might exist is using valet parking at a hotel or restaurant during personal or business trips.  Most auto policies cover damage to non-owned autos if you have physical damage coverage on at least one declared auto.  If someone else is driving the car, it may be excluded from coverage.

Additional and/or Future Costs:  Your personal auto policy is likely to have a deductible between $500 and $1000.  The rental car waiver usually does not.  If your company pays a significant claim on a rental car, you may be subject to a surcharge on your personal auto policy.

So, as hard as it may be to “bite the bullet” and buy the Rental Car Damage Waiver from the car rental company, it can certainly save you many dollars and a multitude of headaches in the long run.  Don’t spoil your vacation with an unexpected rental car catastrophe!