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rental car coverage

When should you take on the extra coverage?

You've just arrived in a faraway city on a business trip. It's been a long flight in, your bags were delayed, and now you're standing in a long line at the rental car agency. The last thing on your mind is the minutiae of insurance coverage, but you now face a situation in which the nice person behind the counter has just asked you:

"Would you like to purchase our loss damage waiver?"

Sometimes, the question is phrased like this:

"Would you like to purchase our insurance coverage?"

However the question is put to you, you'll notice right away that in most cases, the fees involved often are more than the rental price for the vehicle. For that kind of money, the insurance coverage better be good. But is it?

The first thing to realize is that what the rental car company is offering isn't really an insurance policy—it's a waiver of the rental company's requirement in the rental contract that you return the vehicle in the same condition as you got it. Basically, you're normally liable for all damage to the vehicle (including theft and weather-related damage) and a loss damage waiver removes that provision.

If you don't have this coverage and a loss or damage occurs, you might be liable for the cost to repair the damage, administrative expenses, and other calculations that the rental company might exact (such as "diminished value" or "loss of use"—both of which try to estimate the decrease in ongoing revenues from the vehicle and the loss of revenue while the vehicle is in the shop).

Some personal auto policies cover these types of losses, but many policies do not cover all of the potential losses arising out of damage to a rental car. Even if you do have a good personal auto policy, you should probably purchase the loss damage waiver.

If you damage the rental car, you will appreciate the convenience of just dropping the keys on the rental counter and walking away. And don't overlook the greater chance you will have an accident while driving an unfamiliar rental car in an unfamiliar place. If you have to report the claim to your own insurance company, you can adversely affect your auto insurance premium. The damage waiver may be your best decision in the long run. To keep the cost as low as possible, shop among several rental car companies to compare the cost of the waiver relative to the basic rental charge.

To discuss this and any other insurance questions, give us a call at 512-476-6566.