Rental Insurance: To Buy or Not to Buy? That is the Question!
BY GEORGE M. STARK, P.A.
It is almost midnight and you have just landed in Dallas. Groggy-eyed, you make your way to the luggage carrousel and the rental car counter. Baggage in hand, the rental car agent looks you squarely in the eye and asks you if you will be assuming responsibility for damage to the rental or be buying insurance from her? Clearly, you are in no mood to be making financial decisions; you just want to sign the rental agreement and be on your way. The rental agent may refer to this as a collision damage waiver even though it is not really insurance. You must either buy it at the quoted rate or initial and sign the rental agreement in what seems like 17 places, should you decline it.
WHAT IS A DAMAGE WAIVER?
Damage waivers are optional coverage that car rental companies sell in case the rental car is damaged. This means that the rental company waives its right to hold you responsible for damage to the car. Without buying the waiver, the rental company will hold you responsible for any damage to the car unless you are otherwise protected.
HOW MUCH DOES A DAMAGE WAIVER COST?
The cost of a damage waiver can vary from company to company and location to location. Normally, damage waivers cost $10.00 to $30.00 a day.
WHAT FORMS OF FINANCIAL PROTECTION EXIST IF I DON’T BUY A DAMAGE WAIVER?
The alternatives to purchasing a damage waiver include your credit card and/or your own personal automobile insurance company, both of which will likely pay for damage to your rental at no additional cost.
A. Credit Card Benefits: All four major credit cards provide some form of coverage; some are better than others, but keep in mind that you must use a credit card to reserve the rental and pay for the reservation with it. These benefits are not offered on debit cards or prepaid credit cards. We suggest that you research the rental coverage that is offered by your credit card company.
B. Personal Automobile Insurance: Your automobile insurance policy will typically cover damage to your rental car in the United States and Canada providing you have collision coverage that would cover damage to your own automobile, but remember, your automobile insurance collision deductible will also apply to the rental car. So, you are on the hook for the deductible unless the program offered by your credit card company pays for it.
OK…WHAT SHOULD YOU DO?
The general rule is DO NOT BUY THE WAIVER.
Rental car companies make a fortune on those of us who purchase the waiver because we are made to feel that it is better to be safe than sorry. However, generally we do not recommend that you purchase it because it is normally redundant to other forms of insurance that you already have and/or your credit card benefits. Buying a waiver from a rental car company may cancel other forms of protection that you already have; so, unless buying a waiver makes you comfortable, understand that in most cases it is just adding another layer of protection to that which you already have.