To Buy or Not to Buy – Rental Car Loss Damage Waiver

June 8, 2011 at 9:55 AM | Posted in Auto | Leave a comment
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Many people struggle when deciding whether to pay for the rental car insurance waiver or to extend coverage from their personal auto policy to the rental vehicle.  In order to make that decision, you should be aware there are several coverage gaps between your personal auto policy and what the rental company will hold you responsible for, as recent changes to the rental car contracts have increased your responsibility as a renter.

The following describe a couple of coverage gaps you should be aware of:

  • Physical Damage to the rental vehicle will extend from your personal auto policy as long as the vehicle you are renting is a private passenger type vehicle in the continental U.S., its territories and Canada.  However, physical damage will be settled at actual cash value.  Not only would you be responsible for the loss of rental income for the rental agency, but there will be no coverage for diminution in value (the reduction in a vehicle’s market value due to an accident when the repaired vehicle is eventually sold).  Rental companies are now holding the renter contractually liable for this diminished value.
  • The before and after method of calculating the renter’s responsibility when a car is substantially damaged.  Depending on how the vehicle is damaged, the rental company may choose to sell the vehicle for salvage.  When this happens, they have the right to charge you the difference between the market value on the day of the rental (before) and the amount the vehicle sold for at the salvage auction (after).  There is NO coverage available for this under your personal auto policy.

Buying the loss damage waiver is the only way to close ALL of the rental car gaps in coverage.  When you purchase the waiver, you are not held liable for any damage to the vehicle as long as you have not engaged in any prohibited use (contract wording can differ so make sure you read your contract to identify what they consider to be prohibited use). Make sure everyone who will be operating the vehicle is listed on the contract.

Should you need further information on this subject please contact us at 888-850-9400.


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