Insurance Journal Forums

Even though a typical Personal Auto Policy will cover a vehicle that the insured rents while on vacation, do you think it is worth it to still buy the insurance offered by the car rental agent?

Absolutely - Your credit card can be charged for the total cost of repair PLUS the cost of lost rental. The insurance will cover some of this but will may not cover any interest charges that could occur if the repair could not be made in a timely manner .

We always recommend purchase due to "diminished Value" that many car rental places are now pursuing, especially Enterprise. The diminished Value is not covered under the auto policy nor many major credit cards.

Short answer - No, it is not worth it. (That is what you asked)

Long answer - It might be worth it for some situations. Your insurance policy, especially with some deluxe endorsements will cover most of the losses and some credit cards, especially Gold cards will cover most losses. The problem is that the rental companies all have different contracts which can change at any time, your insurance policies may have different wording of endorsements, and credit card companies change their wording and coverage all of the time. You are never sure exactly what charges you might be exposed to for any rental.

OK, that establishes that you might have some exposure w/o the CDW, but doesn't answer whether it is worth it. CDW is a major source of income to the rental companies and is wildly overpriced. I choose to not take it, but tell customers to make their own decisions.

IIA has some articles on line about it.

Thanks to all who replied.

I personally think it's not worth it. There is no benefit if you already have insurance on another vehicle, it’s just redundant because that policy will cover you.

sethm wrote:I personally think it's not worth it. There is no benefit if you already have insurance on another vehicle, it’s just redundant because that policy will cover you.

It really isn't quite that simple, though I personally agree with the decision not to buy. For example, if you have a serious accident, the rental company may charge the entire value of your car on to your credit card until insurance can be verified. If you only have one card and are out of town, that could ruin your vacation if the card is maxed out. An earlier poster mentioned diminished value. Who knows what additional charges the rental company might add on to which your insurance company might not want to pay.

You really can't say your other insurance will cover you completely. Like I said in my post though, the charge for CDW coverage is scandalous and is almost pure profit.

If you are an insurance agent and are asked by an insured, you had better tell them "yes, buy it." The auto coverage that you write will not pay the rental company for diminished value NOR the loss of income it would have earned during the repair or replacement of the rental unit. The rental contract makes the renter responsible for the damage, regardless if the cause of the damage was due to negligence of a third party. I rented a vehicle from Enterprise, and also Alamo, and both pursued me personally for damages as a result of 3rd parties striking the rental while parked. Neither was paid, but it took a substantial amount of effort, time and threats of legal action to make them cease. I now buy the CDW, hand them the keys and walk away!

For reasons that others have mentioned, I do not rely solely on my own personal auto policy's coverage. With my American Express card, they offer cardholders a very broad insurance policy that'll cover everything that rental contracts make you liable for. You sign up for the program, and charge the rental fee to your AMEX card. AMEX charges you $25 per rental for the coverage, automatically adding it to your card. So, you can waive those damage charges from the rental companies and still feel secure that you are protected. For $25, it's a bargain.

While I usually tell my customers who ask, that their policy has coverage that will respond to the damage to a rental vehicle, I also encourage them to buy it if they are going to have the car for an extended period of time. The longer you have the car, the more likely you are to have or be in an accident.

One point that I did not see in this formum is how the car is being rented. If you are renting for your business, but using a company furnished credit card in your name, then you have another whole issue of whose insurance would respond to an accident.

The Big I has a flyer on the 10 reasons to purchase the Collision Damage Waiver. http://freepdfhosting.com/841f31b76d.pdf

I provide it to my clients whenever they ask.

The real answer: It depends.

It depends on your underlying auto and personal excess liability coverages. It depends on who is insuring you, and what their policy states.

It depends on how you want to handle a claim. What is your pain threshold for paying out of pocket expenses, and willingness to deal with adjustors? How many phone calls are you willing to endure? How much out of pocket expense are you willing to incure for diminished value and loss of use?

I explain to my insureds that they have an exposure due to loss of use and for that reason they may want to buy the lower of the CDW options.

It should be noted, however, that many carriers have contracts with rental agencies stating that their clients will not be charged such things. Ask a claims manager for your primary company(ies) if they have such conditions in their contracts with rental car companies.

Myself, I don't buy it as my carrier has an agreement with Enterprise that they do not pursue their insureds for Loss of Use claims. It is for that reason that I rent from Enterprise.

It depends on what state and where I am driving. If its somewhere like New York City, then yes, however if its just somewhere that is rural or not so busy then no. I think this decision should also be based on how much driving experience someone has in different areas. People in las vegas are probably some of the worst drivers that I have ever had to share the road with, yet in Texas I felt like everyone must have gone to the same driving school that I had... just my 2 cents..

I am surprised that no one posted one of the major reasons for buying the coverage from the rental car place: If you don't, your personal auto policy may very well cover the damage, but since most auto policies pay for rent car damage out of the liability portion(even in the event of a comprehensive loss to the rent car), the client now has an "At fault claim", which could make their auto rates go up 20% to 40% over the next 3-5 years. So why would any insurance agent NOT recommend to their clients to by the coverage from the rent car place, especially when the basic coverage is only $13 a day or so? I have been an agent for over 12 years now, and I buy it when I rent a car. I am in an "at fault" state(Texas), so this type of insurance surcharge may only apply in the roughly half of states in the US, that have laws based on "at fault".