Car Rental Damage Waivers: Are They Worth It?

Car_crash_1So you’re at the check in desk ready to pick up the keys to a shiny new rental car and you’re offered the optional collision or loss damage waivers. Should you accept?

The answer is that it depends. Here are some things you need to know in advance to make a good decision.

First of all, in most cases when you rent a vehicle you are liable for loss or damage, even if someone else caused it or if the cause is unknown. Therefore, it is important to have coverage. If the rental isn’t covered under another policy (we’ll get to that in a moment) the damage waivers (which are not technically insurance) offered by your rental car company are probably a good idea. They’re relatively inexpensive, get the job done and offer you peace of mind while driving.

“But wait,” you say. “Did you mention that my rental might be covered under another policy?” Why, yes. Yes we did.

If you have automobile insurance, chances are that the coverages you bought for your own vehicle will apply to rental vehicles too. If you have collision coverage, it will likely cover damage you cause to any car that you’re driving. Remember that your deductible will also apply. Most policies only pay “in excess” of other coverage, so that means that if you buy waivers from your rental car company or obtain other coverage, they will usually pay first. For fire, vandalism, theft or collisions with animals, your comprehensive coverage (assuming you have it) will also probably apply to the rental. Again, it will be subject to your deductible and pay “in excess” to other coverage. Ditto with your own liability insurance should you cause an accident. It’s a good idea to check with your insurer ahead of time to see what will and will not be covered on the rental.

If you don’t own a vehicle, don’t carry collision or comprehensive coverage on one you do own, or (shudder) don’t insure your own vehicle at all, you might want to take the waivers offered by your rental car company unless you have coverage elsewhere.

We hear you ask. “Elsewhere? Where else might I have coverage?”

In many cases, the credit card you use to purchase the car rental may offer car insurance benefits for free (or cheap). Coverage such as this varies widely from card to card when offered, so be sure to read the fine print that came with your credit card agreement.

In addition to the loss damage and collision damage waivers, many rental car companies offer a wide variety of additional protection plans covering personal effects, accidental death or injury, supplements to your own insurance coverage if you have low limits, etc.

The bottom line is that you’ll want to review all of the coverages and options available to you long before you arrive at the rental car desk. It’s wise to make sure you have adequate coverage from one source or another to cover the costs should you experience an accident in the rental car, but there’s no sense in paying for duplicate coverage. Your own insurance agent is likely your best resource in understanding coverages in force and what your options are.


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