Updated February 2010

Collision Damage Waiver - 5 Reasons Why You Should Buy It

Last month, we told you how important Non-Owned & Hired Auto liability was. However, when you rent vehicles, this coverage only insures you for liability, not for damage to the vehicle itself. There are several ways to cover yourself for possible damage to your rented vehicle. Many people rely on their business automobile policy. While others use a credit card that covers such mishaps. And, of course, you can always buy collision damage waiver coverage from the rental company.

Despite its seemingly outrageous costs, we are going to give you 5 reasons why, at least on short term rentals, you should buy the collision damage waiver (CDW, also known as loss damage waiver-LDW) from the rental car company:

1.

Loss Valuation

Most rental agreements require you to reimburse them for the "full value" of the vehicle. However, if you are relying on your auto policy for protection, it covers vehicles for their "actual cash value". You see where we're going here. A rental company's ideal of "full value" can be very different from an insurance company's idea of "actual cash value".

2.

Loss Payment

The rental agreement may require immediate reimbursement for damages and it is not uncommon for the rental company to immediately charge your credit card. This can create a significant debt, "max" out the card's credit limit, and perhaps shorten your business trip.

3.

Loss of Use

Yo would most likely be responsible for the rental company's loss of rental income on the damaged vehicle until it was repaired or replaced. Would your credit card or business auto policy pick up this expense?

4.

Deductible

If you rely on your business auto policy, you will certainly have a deductible ranging from $250 to $1,000, or higher. There is no deductible with CDW/LDW.

5.

Excluded Vehicles

If you are renting a vehicle other than a standard automobile, will your business auto policy or credit card coverage cover it? Motorhome, pickup truck, motorcycle?