Whether it's for a summer vacation, a business trip or weekend get away, consumers need to understand their insurance options when it comes to renting a car.
When to Accept or Decline the Collision Damage Waiver
Often times consumers will decline or accept insurance coverages offered by car rental companies without fully understanding the consequences. Before walking into the car rental facility there are a few things consumers should know to assist in making wise auto insurance choices when renting a car.
Type of Car Rental
First and foremost, the supplementary coverages available at the time of rental differ whether the car is being rented for personal or business use. A business auto policy responds much differently to a car rental than does a personal auto policy. Read also: Auto Insurance Factors and Buying a New Car.
Car Rental for Pleasure
The personal auto policy is the first supplementary line of defense when renting a car. If the person renting the car does not own an auto or is not otherwise covered by a personal automobile policy, then the only alternatives available are to purchase the coverage as offered by the car rental company and/or to explore coverage offered through his credit card company.
A car owner, on the other hand, has a personal auto policy and is in a better position to accept or decline coverage offered by the car rental company. Before making a decision, however, the individual should review the personal auto policy to ensure the policy contains adequate liability limits and physical damage coverage to meet the rental company requirements.
Keep in mind that personal auto policies that do not have physical damage coverage (comprehensive and collision), will not provide such coverage on a rented car. In that case, it is wise to accept and pay for the collision damage waiver being offered by the car rental company.
Review Credit Card Agreements: Although credit card companies offer some type of insurance protection when it comes to renting cars, there is no set standard. To understand just how much protection is afforded, it's best to call the credit company (or companies if there is more than one) to see what they offer. Coverage offered by credit card companies is not usually primary. In other words, they will offer coverage in excess of any existing coverage. Read also: Car Rental Insurance Coverage.
Renting a Car for Business Use
When renting a car for business use, make sure the business auto policy contains non owned and hired car coverage. This coverage is a liability only coverage and will not pick up the cost to repair damages to the rented car. Companies usually address the physical damage exposure in a couple of ways:
Purchase the Collision Damage Waiver: Many companies encourage employees to purchase the collision damage waiver. When signing the waiver, be sure to list the names of all individuals who will be driving the rented car. Not listing the drivers and paying the appropriate fee per driver may void coverage in the event of an accident involving a driver not listed on the waiver.
Credit Card Coverage: Similar to renting a car for pleasure, some credit cards offer coverage for business rentals. It's best to check with the credit card company to find out what is provided before renting the car.
Collision Damage Waiver
Not to be confused with insurance, collision damage waivers are just that, a waiver. The collision damage waiver absolves the driver from being financially responsible for damage to the vehicle (including theft). It also waives the cost of the rental company's loss of use while the vehicle is out of commission. These waivers may be voided if the damage was caused by speeding, drunk driving or other risky behavior.
Some car rental companies such as Alamo offer two levels of waivers. The Maximum Waiver which waives the renter's financial responsibility up to the total value of the vehicle and the Waiver Saver 3000 which, in essence, makes the rental company responsible for the first $3,000 in damage and the individual is responsible for costs above $3,000. Such waivers are beneficial to renters with high deductibles on their personal auto policies. Read also: How to Find the Right Auto Insurance for a Car.
Non Insurance Aspects of the Collision Damage Waiver
Car rental drivers must be mindful of the fact that a waiver is not insurance. Collision damage waivers only cover the cost of damages to the rental car. If a driver gets into an accident that causes damage to another's car or property, the collision damage waiver will not pickup the cost of the third party damage.