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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? |
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