“ I ’ m interested in finding a arrant bumper-to-bumper, ‘ drop off the keys at the counter ’ cable car lease coverage when I travel. I recently thought I had complete coverage though a accredit poster, but when my car suffered a little incision, the car lease company flat-out refused to document that it actually lost income from having the car rental in the shop class ( which took three weeks to repair a small dent ). I was left with duty. ”
Car Rental Insurance: 9 Nasty Truths
This experience is uncommon, but not unique. Car rental companies desperately want you to buy their collision damage release, or CDW ( sometimes besides known as loss damage release, or LDW ), and will go to great lengths to make you pay for even the smallest damages if you don ’ metric ton. here ’ s what you need to know before you shell out for car rental insurance on your next vacation .
The One Way to ‘Drop the Keys and Forget It’
When you buy a CDW, the rental company surrenders its rights to charge you for damage to a car rental—with a few exceptions, such as tire price or gross negligence. ( CDW terms and conditions vary by car rental company, so you ’ ll want to read them cautiously before committing. ) But otherwise, no matter how banged up the car could be, you ’ re off the hook : just turn it in and be on your way. No other approach—your own policy, your credit card, or a third-party policy—is as comprehensive examination or commodious. If you want that full flexibility and peace of mind, give for CDW .
CDW Insurance Is Ridiculously Overpriced
typically, a CDW starts at around $ 30 per day and can go higher. It sometimes costs even more than the foundation car lease rate. The actuarial monetary value to the rental company—the amount it would allocate toward a damage pool based on hazard experience—is credibly equitable a few dollars a day ; the rest is theirs to keep. No curiosity the agents push it so hard : It ’ sulfur clearly a lot more profitable than the car rental alone .
You’ll Pay Up Front for All Damage
You can cover your major damage duty by relying on your own indemnity, a credit card with insurance, or a third-party policy. But in all of those cases you have to pay a damage claim up front man, then recover vitamin a a lot as you can ( all of it, you hope ) by filing a claim subsequently. That means signing a credit card bill for hundreds or flush thousands of dollars when you return the damaged car, and not knowing if you ’ ll induce that money back .
That ’ south why many lease companies won ’ thymine accept rentals via debit card, or a credit card with a small specify. If you can pay the initial rental fee with a debit batting order, you ’ ll still need to provide a credit card to cover a possible damage claim, which would be filed before you can leave the render antagonistic .
‘Damage’ Is More than Fixing a Dent
If you don ’ triiodothyronine bribe CDW, rental companies can charge for more than equitable fixing the price. They besides charge for :
- “Loss of use,” meaning the potential revenue lost while the car is out of service being fixed, even if the company had lots of other cars available. And they generally figure that daily loss at the full retail rate.
- Towing charges, if you are unable to drive the car back to the return station.
- “Diminished value,” or the potential loss of the car’s resale value (because of your damage) when the rental company disposes of it, usually within two years.
- Administrative fees associated with the claims process.
Most non-CDW car rental insurance will cover those extras. But, in some cases, coverage depends on cooperation from the lease company—and it may not be forthcoming, as our lector ’ mho above wasn ’ thymine .
Alternative #1: Pay with Your Existing Car Insurance
In many cases, if your regular car insurance covers collision damage to your insured car, it besides covers price to a short-run lease. But this coverage is generally limited to driving in the U.S. and possibly Canada, and won ’ t cover car rentals in Mexico, Europe, or anywhere else. so, before you plan on using your own indemnity, check its coverage. If it does cover rentals, you can place a claim on it. silent, you must typically pay your policy ’ second deductible, and any claims may cause your rates to go up.
Alternative #2: Use Credit Card Benefits
These days, most credit cards provide “ release ” collision coverage for car rentals, provided you use the card to secure the lease. A sample credit wag benefits statement describes coverage as :
“ physical wrong and/or larceny of the cover rental fomite. valid loss-of-use charges assessed by the lease party while the damaged fomite is being repaired and is not available for habit, as substantiated in the company ’ s fleet utilization log. reasonable and customary tow charges related to a cover loss to take the vehicle to the nearest stipulate repair facility. ”
bill that this typical Visa tease ’ randomness benefits do not cover belittled value or administrative costs. A few bounty recognition cards offer primary coil collision coverage, meaning the tease takes broad duty for the payment. But coverage on most cards is secondary, meaning the batting order picks up alone what you can ’ thymine first recover from your own indemnity. And you inactive have to pay the rental company up front, then file for reimbursement from your card issuer .
Another gotcha in the above fine print : This card ( and many others ) pays for loss of use entirely if verified by the rental caller ’ sulfur log. unfortunately, some rental companies don ’ thymine collaborate with credit card issuers in providing this type of documentation in a timely manner .
Alternative #3: Third-Party Car Rental Insurance
If you rent a car through one of the big on-line travel agencies ( OTA ) such as Expedia or Priceline, the means normally offers you the choice to buy collision coverage for around $ 10 a day. That coverage is provided by a third-party insurance company such as Allianz. The cost is a draw less than the lease company ’ s CDW, but, as with recognition poster coverage, if you damage the car, you have to pay up front and claim later .
distinctive third-party collision coverage includes about the same contingencies as credit card coverage, but because it ’ mho grouped with the reserve you won ’ thyroxine have to make any other claims. You can besides buy collision coverage independently : Bonzah, for exercise, sells coverage at around $ 9 per day .
You Need General Liability Protection
You should never get behind the wheel of a car—or lawnmower, for that matter—without indebtedness protection. But you don ’ thymine buy that from a car rental company : It normally comes with family, homeowner, or tenant policy, and it covers far more than a car rental. And if your net deserving is in six figures, you credibly need an “ umbrella ” indebtedness policy that covers a million dollars or more .
Car rental companies in most countries are required by law to include liability policy. In the U.S., required coverage can be laughably little ( normally only the minimum required by the department of state ) —it ’ south normally much better in Europe. If you don ’ t have solid liability indemnity, you might consider buying the rental company ’ second propose. still, your best bet is to make certain you ’ re covered 24/7 with your own insurance so you can forget about the lease company ’ second overpriced indemnity .
The Uncertainty Principle
The takeaway from all this : No alternate source of collision damage coverage—your car indemnity, your accredit wag, or a third party—completely isolates you from risk. Lots of travelers successfully rely on lower-cost alternatives to CDW without encountering any problems, indisputable. occasionally, however, your own indemnity, credit batting order, or third-party policy may not cover an strange consign a rental company might impose .
If you ’ re unwilling to accept any gamble at all, you might want to buy that overpriced CDW. For most travelers and circumstances, recognition batting order or third-party coverage is sufficient, and primary coverage is a lot better than secondary.
consumer advocate Ed Perkins has been writing about travel for more than three decades. The establish editor of the Consumer Reports Travel Letter, he continues to inform travelers and fight consumer abuse every day at SmarterTravel .
Editor ’ s note : This report was in the first place published in 2017. It has been updated to reflect the most current information .