Rental Car Coverage: Do You Really Need It?

When you’re eager to start your vacation, the last thing you want to hear is a sales pitch from the rental car agent. But chances are the agent will hit you with a list of add-ons and fees, starting with the Loss Damage Waiver. A Loss Damage Waiver, also known as a LDW, is an optional product that waives your financial responsibility for any loss or damage incurred to the rental vehicle, provided you have not violated the Rental Agreement’s Terms and Conditions.

We have all been there before when this question arises. You probably roll your eyes and say “I don’t need it because I have car insurance”–but, not so fast…it might be worth it to purchase this additional coverage. 

If You DON’T Purchase Additional Coverage

Most Insurance carriers will extend your existing Comprehensive and Collision coverages to the rental vehicle. However, in the event of an accident, you would still be responsible for paying your deductible, as well as any administrative fees the rental company may impose. For example:

• Loss of use. This is the daily income the rental company loses while a car is being repaired and cannot be rented. 
• Diminished value. This is difference in resale value for a car before and after an accident. Their damaged vehicle may be less valuable and charges can run between $1,000 – $2,500, and even as high as $7,000. 

These potential costs could ruin an otherwise enjoyable vacation. 

If you DO Purchase Additional Coverage 

The Loss Damage Waiver that the rental company offers essentially replaces your own Comprehensive and Collision Insurance. So, in the event of an accident, the rental company waives the claim against you for the damages. This means you and your insurance company are off the hook if you wreck the car, or even if it is stolen or vandalized. Please understand that the waiver could become void if the accident was caused by a reckless act on your part, such as, but not limited to speeding, driving under the influence, etc. 

We always advise people to purchase the additional coverage. If you are in an accident with your rental car, there are no headaches. You simply drop off the car, say ‘Have a nice day’, and you are set.

If you carry Comprehensive and Collision coverage, you are not required to purchase the Loss Damage Waiver. However, many policyholders will still purchase the additional coverage to give them peace of mind while enjoying their much needed vacation.