Here are the top 5 reasons why you should strongly consider buying the collision damage waiver when renting a car:

1. Loss Valuation and Settlement. Did you know most rental agreements allow the rental car company to determine the vehicle’s value solely at its discretion if you are involved in a claim?

So, if you are in an accident that totals a vehicle a few years old, the rental car company can still charge for a brand-new vehicle. A standard auto insurance policy only pays the “Actual Cash Value” of the vehicle, which means you will be stuck with the difference in value.

2. Indirect Losses. If there is an accident, you will most likely also be responsible for the loss of rental income incurred by the company while the damaged vehicle cannot be used. While many auto policies will provide some coverage for this, there have been many cases where individuals are still charged thousands of dollars above what their insurance company would pay.

3. Administrative Fees. If you damage a vehicle, there is a good possibility the rental car company will add additional charges for expenses such as towing, storage, and claims adjustment, calling them “administrative fees.” Your insurance policy will not provide coverage for these expenses, either.

4. Diminution of Value. This is another fee the rental car company can add on if the damage to the vehicle is over a certain amount. For example, suppose a rented vehicle sustains more than $1,000 in damage. In that case, many companies will charge an additional percentage fee (typically 25%) because they figure the sustained damage has now decreased the value of the car and their ability to sell it. Your auto policy isn’t picking up this fee.

5. Loss Payment. If you happen to damage a vehicle, it is typical for the rental car company to immediately charge your credit card for the damage to the vehicle. This can create a massive mess as it could potentially max out your credit card. This can create some real headaches for your insurance company.

One of the provisions within your policy is that the insurance company needs to be able to inspect the vehicle so they can accurately calculate the damage amount. However, the rental car company may not wait for an adjuster, and it is common for them to charge your credit card and begin repairs immediately.

The problem is that the provision within your insurance policy mentioned above may give your auto insurance company the right to deny the claim as they were not allowed to inspect the vehicle properly.

Between the fees associated with damaging a vehicle, the valuation process, and the payment mess, you can see how you could quickly be out thousands of dollars. By not signing the waiver, you may be setting yourself up for some substantial personal expenses.

Recommendation: We know you don’t want to pay more money for the waiver, but believe us, if you happen to damage a rented vehicle, you’re life will be a thousand times easier than if you hadn’t signed and paid for it.
Also, please double-check how your insurance policy will react to some of the claims scenarios above.