Do You Need to Buy the Insurance from the Rental Car Company?

A Facebook Fan asked me whether or not she needed to purchase the extra insurance when she rents a car.  Rental car companies sometimes refer to this as “Collision Damage Waiver” or CDW.  The answer is not as simple as yes or no.  In general, your auto policy covers a temporary substitute car (e.g. a rental car for vacation) the same way it covers your regular use car.

So if you’re renting a car for your big trip to Florida this summer, you’re covered…right??  Well, if you’re referring to getting the rental car fixed after an accident, the answer is YES.  But rental car companies have been known for coming after you for “loss of use” expenses (money lost due to the car not being able to be rented).  Insurance does NOT cover this.  However, it is my opinion that the rental car company would need to prove that they have no other cars to rent and that there was someone willing to pay for a rental car and they had none to rent.  I have also heard stories about rental car companies being sticklers about minor scratches that are present on a car when it’s returned…especially by customers who opted out of the CDW coverage.  If you do choose to opt out of the CDW, make sure you inspect the car for scratches before renting it.

Some other important things to consider:

–          If your regular use car has liability only, then the rental car is only covered for liability.  Get CDW in this case.

–          Your insurance will only cover a private passenger auto rental.  U-Haul trucks and vans do not qualify.  Get CDW in this case.

–          If you are renting the car for a business trip, absolutely purchase the CDW from the rental car company.  And while you’re at it, insist that your company rents the car in their name (or use a company credit card to pay for the rental car).

This question leaves a lot of room for personal preference.  Please feel free to leave any comments on my Facebook page or contact me personally.