So, you are going on vacation and will be in need of a rental car. The big question is “Do I buy
the Collision Damage Waiver , CDW, offered by the rental car company?” Well let’s look at a the answers to a few questions that might help with this decision.
Question: Don’t I already have insurance on with my auto policy?
Answer: If you have an auto policy with liability and physical damage coverage, you do have coverage that would extend to a rental car. However, I always strongly recommend that you buy the CDW coverage at the rental car company, because it’s “Walk Away Coverage.” If you get into a car accident while driving the rental car and you have purchased the CDW, you can simply walk away from that accident knowing that it will be taken care of with no hassle to you. The rental car company will also deliver another vehicle to you so you can continue on your vacation. Now, if you have an accident with a rental vehicle and you do not purchase their CDW, you now have to make a claim with your own insurance company.
Question: If I don’t take the insurance offered by the rental company and I get in an accident what will happen?
Answer: Well if you have ever had to make an auto insurance claim you should be aware that you will be without a car for several days while you get an appraisal of the damage to the vehicle and then wait again for the body shop to receive the parts and do the work.
When a rental car is out of commission it means that the rental car company has lost the income that your rented vehicle would have brought in during the days while it is being repaired. Who do you think is going to get that bill? That’s right. It’s you! Loss of Use is something the car rental agency will hit you with while the car is being repaired. This is not covered under your own auto policy and you will be personally responsible for those charges. Remember that credit card you used to secure the rental? The rental car company can potentially charge your credit card for the loss of use fees.
Additionally, the car rental company most likely will not wait for your insurance carrier to inspect the damaged property (especially out of state issues) and may simply move forward to have the vehicle repaired. In this case, if your insurance carrier does not agree with the amount of the repairs, they could then deny the claim or at least limit the coverage. If this happens you would then be responsible for it and guess who still has the imprint of your credit card?
Question: If I am considered at fault for the accident will it affect my driving record.
Answer: YES! Your driving record will be affected and points will stay on your record for the next 6 years. That’s 6 years of a much higher premium. If it’s a major accident it could equal an extra $400 or more each year.
So the question now becomes, “What would you rather pay? An extra $10 -$15 per day for one week or an extra $400 for 6 years. Seems like a no brainer. With all these facts in mind, remember that you can also look into the coverage that may be offered by your credit card company for vehicle rentals. Every credit card company is different and some may only provided limited coverage, but it never hurts to find out your options.
CDW coverage may seem like a lot of money at $10-$15 per day, but if something happens and you are involved in an accident in the rental car then you will be glad you bought it. Nothing puts a damper on a vacation like an accident, especially when it may cost you money that you did not plan on spending.