Kiplinger’s Personal Finance: Navigating the rental car counter | Business

When you’re eager to start your vacation, the last thing you want to hear is a sales pitch from the rental car agent.

But chances are the agent will hit you with a list of add-ons and fees, starting with the collision damage waiver, which can quickly jack up your daily rate by $9 to $30 a day.

We asked experts whether a collision damage waiver (CDW) was worth paying for.

If you have an auto insurance policy for your own vehicle, it usually covers damage to the rental car and other property, plus liability up to your policy’s limits.

On top of that, all the major credit card networks include rental car insurance with some or all of their cards, provided you pay for the rental with the card you used to reserve the car and decline supplemental coverage from the rental firm.

Assuming you follow the card company’s rules for triggering coverage – including the length of the rental and the type of car you get – it can fill in gaps once you file a claim with your insurer.

So you don’t need the rental company’s CDW – also known as a loss damage waiver (LDW) – which covers physical damage to the rental car. Right?

Not so fast. Even if you’re covered under your own policy for liability and accidents, you may be on the hook for two charges that your insurance or credit card typically won’t cover in full – or at all.

One is “diminished value,” which is the difference in resale value for a car before and after an accident.

Bill Wilson, an insurance educator and founder of industry blog InsuranceCommentary.com, said most charges he has seen run between $1,000 and $2,500, but he has seen the penalty go as high as $7,000.

The other is “loss of use,” which refers to the daily income the rental company loses while a car is being repaired.

To protect yourself, it is worth coughing up the money for the CDW, Wilson said.

Spencer Houldin, president of Ericson Insurance Advisors, in Washington Depot, Conn., agrees. “There are no headaches,” he says. “You drop off the car, say ‘Have a nice day,’ and you’re set.” As an added bonus, if an accident doesn’t trigger your liability coverage, you can avoid notifying your insurer.

What about supplemental liability insurance? If liability coverage on your auto policy extends to vehicles you don’t own, you probably don’t need to buy it, Wilson said. And the rental car company may automatically provide a small amount of liability coverage.

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