If you have rented a car or plan to, you may be wondering if you should get extra rental car insurance. Extra insurance is known as a Collision Damage Waiver, or a CDW, but it is also sometimes called Loss Damage Waiver, or LDW. Car rental companies will go to great lengths to make you buy it. It can give you peace of mind, but is it worth it?
The upside to getting this insurance is that once you return the car and drop the keys off, you are completely done with the return process. Of course, there are certain exceptions such as tire damage. But otherwise a CDW is a key to worry-free auto rental. Just remember to always read the fine print for these insurances.
On the flip side, these insurances are very expensive. They start around $30 for one-day insurance policy and go up from there. The cost will depend on the car, the time periods, and also on the base car rental rate.
What if I don’t buy extra rental car insurance?
First, even if your regular auto insurance, credit card with insurance or a third party policy does pay for the possible car damage, you will have to make the payment upfront. Your insurance policy will only recover the cost afterward, or maybe only a portion of it. You should know that at the time of returning the rental car, you will have to pay all of the damages.
Second, if you don’t buy CDW, the rental company will make you pay for more than just small damages. Since rental companies really would like their customers to buy rental insurance, they make things so hard for customers if they don’t. This means that in case you do not buy a rental insurance, you will not only have to pay for any dents you have gotten on the car, but also for “loss of use”. This is the time the car will spend at the workshop and not earning through rental services. You will also be charged “diminished value”, which is the loss in car value from the damage. Additionally, you will need to pay any “towing charges” that might be needed in case of an accident. And finally, expect to be charged for “service or administrative fees” that the rental company would need to pay in claims.
Alternatives to Extra Rental Car Insurance
It is impossible to predict whether there will be a need for such insurance. If you are a licensed driver, not prone to giving into sudden urges to race on the road or give in to road rage, then chances are that you are also a safe driver. This reduces the risks automatically. In such a case, there are some alternatives to spending heavily on a CDW.
If your existing car insurance covers collision damage to your car, it is likely that it will also cover the damages to a short term rental car. If you have enough muscle to pay upfront in an unlikely event of car damage and if you are not driving the rental car out of the United States, then it is prudent to not spend on rental insurance. Check the coverage of your existing auto insurance policy for a better evaluation of risk.
Most credit cards provide collision coverage as long as you use that particular credit card to secure the rental car. This can also save you from spending an arm and a leg, but here too make sure to check the credit card benefit statement for more information. But overall, all four major credit card issuers, Visa, American Express, MasterCard, and Discover, provide some form of rental car insurance coverage. However, some credit cards may not pay for the “extra” costs mentioned above.
A third alternative is to involve a third party for rental car insurance. Consider getting your rental car through a travel agency, such as Priceline or Expedia. These companies themselves offer collision coverage, but at a much lower price – around $10, as compared to CDW insurances. However, such insurances also require upfront payment and then recover the cost after filing claims later.
There are pros and cons to buying extra rental car insurance. You now are equipped to rent a car and understand what is involved. If you opt to purchase the extra car rental insurance or you choose to forgo it, you will have peace of mind as you know what to expect in case of a collision or even minimal car damage.