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Car Rental Insurance Tips

by John Daoukakis, Operations Coordinator, CFS

Typically, when asked you if you would like to buy insurance, the first thing that comes to mind is to say “No”. The strong sales pitch makes many of us defensive because we are often under the impression that insurance is an unnecessary cost. We usually reflect on all the times we bought insurance or a warranty but never used it and think to ourselves what are the odds that I’m actually going to need this?

When renting a car we might want to be more receptive to getting insurance. Car rental companies almost all normally include liability insurance in their daily rate. Meaning that if you get into an accident or damage property the liability insurance will cover the value of the property damaged. However, it will not cover the damages on the vehicle that you are driving. The insurance that rental companies offer is called collision damage waiver (CDW) or loss damage waiver in the USA. For a daily fee, you are entering an agreement between you and the rental provider stating that the rental company is liable for any collision damage to the rental vehicle. Without this waiver, you are liable for damages up to the full value of the vehicle as well as whatever additional fees apply. This can result in you potentially having to pay tens of thousands of dollars!

Now that I have your attention, you do not necessarily have to buy the collision damage waiver (CDW) from your rental provider. In many cases your personal car insurance is transferable. You should call and check with your car insurance provider to see if your policy covers you when renting vehicles. You would want to find out exactly what you are covered for and what your deductible is. In most cases, the coverage is the exactly the same as for your personal vehicle. You may also want to ask your personal car insurance provider how much more it would cost to add rental coverage to your policy. It is usually very reasonable and ends up costing less than paying the daily CDW fee.
In some cases, your credit card may also cover collision damage waiver (CDW). Most basic credit cards do not offer the necessary coverage but a lot of the more premium credit cards do. If you are not sure simply call and ask. It is possible to add this service to your credit card and in most cases ends up being much less expensive than the CDW. Again, find out what you are covered for and what your deductible is to avoid any unpleasant future surprises.

If your car insurance is not transferable and your credit card does not cover you, this is when you should purchase insurance from the rental provider. They usually have a couple of different options for you to consider, the main difference being the coverage and deductible. Normally they will have two options, one with a high deductible of 500$ to 1000$ that is less costly and one with a deductible of 0$ that is more expensive. If you do not understand something or want a clarification do not hesitate to ask questions. A lot of us tend to skim over the contract and just sign it. Reading it thoroughly will help you understand what is covered and what is not. Once you are informed you can make a logical decision that fits your needs.

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