When you rent a car or truck, you may assume that the rental charges quoted by the rental company are the only expenses involved. However, when you sign the contract, the rental agent may persuade you to purchase a collision damage waiver. This waiver may offer added financial protection in certain cases.
A rental damage waiver is an agreement between you and the car rental agency that prevents you or your insurance company from being held liable for any damage to the rental vehicle caused by a traffic accident. If you are involved in an accident while operating the rental car, the rental agency will absorb the cost of repairing or replacing the vehicle.
The cost of a collision damage waiver varies according to the car rental agency and the geographic area in which you will operate the vehicle. If you plan to drive the vehicle in an urban area where many traffic accidents occur, expect to pay more for a collision damage waiver than you would in a rural area. The cost of this waiver is typically charged for each day you rent the vehicle -- charges between $8 and $19 per day are common, as of June 2011.
Whether you need a collision damage waiver depends on the coverages afforded under your personal auto insurance policy. If you carry collision coverage under your personal auto policy, you may not need a collision damage waiver. However, if you only carry liability coverage, your auto insurance policy will not cover damage to the rental vehicle.
Check your auto insurance policy to make sure that your collision coverage applies to rental vehicles. Some insurance companies, particularly those that specialize in insuring high-risk drivers, may not extend collision coverage to rental cars. If you are unsure whether your personal auto coverage applies, call your agent or insurance company.
Also, some credit card companies offer rental insurance. Call your credit card company to find out what types of coverage are available. If your credit card company provides collision coverage, you may not need a collision damage waiver.
- "CPCU 510: Fundamentals of Risk Management, Insurance and Professionalism"; AICPCU Society; 2003
- Insure Me: Rental Car Insurance -- Do You Really Need It?