What about Rental Car Insurance? Whether or not to buy a collision damage waiver is a hot topic for many travelers. A collision damage waiver or CDW will cover drivers for damages to the rental car if you get into an accident. But is it ‘real’ insurance? In fact, a CDW is really just an extension of your car rental agreement which provides for your personal liability for damages to the car. A collision damage waiver will cost you money and according to the Western Insurance Information Service (WIIS) you should do the following before signing on the dotted line for rental car insurance.
Make sure you always consult any existing auto insurance policy you may have. You might want to talk to your agent personally and find out if your rental car is covered by your current auto insurance policy. In many cases these policies make provision for liability insurance to cover bodily injuries you may cause in an accident. Physical damages to the rental car may only be covered if you have comprehensive and collision coverage. If you don’t have these types of coverage you may need to pay for rental car insurance instead.
Your credit cards may make provision for rental car insurance if you are in a accident. You may be eligible only if you have not signed a collision damage waiver and are happy to charge the rental car to the credit card. If your credit card company offers this facility make sure you understand any limitations and exclusions that may apply.
If your auto insurance policy and credit cards don’t cover you, you may need to sign the CDW and make sure you have some form of rental car insurance. This will make sure you don’t need to fork over $15,000 to $20,000 to replace the rental car if you are involved in an accident. A collision damage waiver simply pays the rental car company for the loss of use of the vehicle. Most U.S. states do not cover drivers for loss of use in a standard auto insurance policy. (Alaska, Connecticut, Louisiana, Minnesota, North Dakota, New York, Rhode Island and Texas are notable exceptions)
If you are in accident many rental car companies demand payment upfront which may be impossible for some travelers. Make sure that you know what rental car insurance you qualify for before taking out a collision damage waiver but do buy one if you have no alternative means of insuring the vehicle.