What is a collision damage waiver for a rental car?
Whether you’re traveling or your car is in the shop, there are times when you’ll need a rental car. Even if you have auto insurance coverage on your own vehicles, that protection may not entirely extend to a rental.
Several rental car insurance options are available – some that you may already have access to through a credit card. Others, like a collision damage waiver, are offered by your rental agency.
But what happens if you crash a rental car? Will your own car insurance policy cover rental cars automatically? Here’s what you need to know.
What is a collision damage waiver?
When you rent a vehicle, the rental car company will ask whether you’d like to purchase a collision damage waiver (CDW), sometimes called a loss damage waiver (LDW). This waiver provides coverage for the rental car itself if you are involved in a car accident, get a chipped windshield on the highway, or if someone backs into your rental vehicle in a parking lot. In some cases, a collision damage waiver covers the vehicle if it’s stolen during your rental period.
Without this optional coverage, you are ultimately responsible for any losses or damage on the vehicle that wasn’t there when you first rented it.
Each CDW is a bit different, so it’s important to read your rental company’s contract and understand the exclusions before purchasing. Some plans exclude risky or negligent behaviors, for example, such as speeding or leaving the keys in the car. They also aren’t intended to cover liability-related expenses, so if you’re at fault for an accident with another driver, the CDW won’t extend to their property damage or bodily injury claims.
With a collision damage waiver, you can avoid paying out of pocket for rental car damages or filing a comprehensive claim against your own policy. These waivers typically don’t require you to pay a deductible, either.
While the cost of a CDW (or LDW) will vary by rental car company, vehicle class, and even rental period, pricing typically ranges from $5 to $40 per day on top of your rental fees.
Read more: What does collision insurance cover?
Rental car insurance coverage through credit card providers
Another option for rental car protection is to use a credit card that offers primary or even secondary coverage.
If you pay for your rental car with a credit card that offers rental car benefits, you can enjoy the peace of mind that comes with loss and damage coverage. If your rental car is stolen, hit, or otherwise damaged, your credit card issuer will pay up to its stated coverage limit for verified claims. They may also cover loss of use charges from the rental car company and even towing services.
Coverage limitations will vary by credit card company and card product. For instance, your credit card issuer may not cover things like:
Damages to exotic, antique, or recreational vehicles
Losses incurred while violating the rental car agreement
Any personal injuries
Long-term rental periods (exceeding 31 days)
Damages to vehicles rented through a car-share platform
Personal property losses
Damages covered by other policies or a CDW
Damages to exotic, antique, or recreational vehicles
Losses incurred while violating the rental car agreement
Any personal injuries
Long-term rental periods (exceeding 31 days)
Damages to vehicles rented through a car-share platform
Personal property losses
Damages covered by other policies or a CDW
It’s also important to note whether your carrier’s coverage is primary or secondary. Primary coverage steps in first, before your own insurance policy. Secondary coverage only kicks in once all other insurance and coverage options have been utilized and exhausted.
For example, Chase Sapphire offers primary rental car coverage while the Platinum Card from American Express only offers secondary coverage benefits.
In order to utilize this coverage, you often need to:
Reserve and pay for your entire rental period with the credit card
Decline any optional CDW offered by the rental car company
Drive the vehicle according to the terms of your rental agreement
File any relevant insurance claims within a timely manner
Reserve and pay for your entire rental period with the credit card
Decline any optional CDW offered by the rental car company
Drive the vehicle according to the terms of your rental agreement
File any relevant insurance claims within a timely manner
Rental car coverage from a personal auto policy
If your existing auto insurance policy provides you with rental car coverage, you may not need to even worry about optional waivers or credit card coverage.
If you’re involved in an at-fault accident, your existing liability insurance will typically cover the other driver’s damage and/or injuries, as long as you’re operating the vehicle in the United States (or in some cases, Canada). It will not, however, automatically offer coverage for the rental car itself, especially if you have a liability-only policy.
Some full coverage policies do cover drivers when they rent vehicles, in which case you’ll have both liability and comprehensive coverage even if you’re driving a rental car. In some cases, rental cars are excluded or you may need to opt into this coverage, though, so it’s important to read your policy documents carefully.
If your policy does offer rental car coverage, be sure to keep in mind the details of your policy, including:
The actual comprehensive or collision coverage you purchased
Your deductible(s) for comprehensive/collision insurance
Any policy limits chosen
Which drivers are covered by the policy
Where the policy is valid
The actual comprehensive or collision coverage you purchased
Your deductible(s) for comprehensive/collision insurance
Any policy limits chosen
Which drivers are covered by the policy
Where the policy is valid
If your carrier doesn’t offer enough rental car coverage, consider whether or not you should also purchase a CDW when renting.
Read more: Get cheap car insurance by understanding exactly what coverage you need.Using a non-owner policy for rental car liability coverage
A non-owner auto insurance policy is designed to provide liability coverage for frequent drivers who don’t own a vehicle of their own. Since these drivers don’t have a vehicle, this coverage follows them any time they borrow someone else’s vehicle or, in many cases, when they rent a car.
Since non-owner policies only provide liability coverage, that is all that would follow you when renting a vehicle; you wouldn’t get any protection for the rental car itself if it were lost, stolen or damaged. For that, you’d need to either purchase a CDW or rent the vehicle using a credit card that has rental benefits.
What happens if you crash a rental car?
If you are involved in an accident while driving a rental car, the first and most important step is to make sure that you and all of your passengers are uninjured and in a safe place. If possible, this may mean moving a drivable vehicle off the roadway. If anyone needs medical attention, call 911.
Since the vehicle is a rental car, you will likely want a police report for the accident, even if the physical damage is minor. As soon as you’ve exchanged information with the other driver and made any applicable reports, you’ll need to report the incident to the rental car company.
If you are at-fault for the accident, you’ll also want to contact your own insurance carrier. (You may want to notify your carrier of the accident even if you’re not at fault, so they can begin providing you with collision-related benefits.) If you have primary or secondary coverage through a credit card issuer, you can also begin the process of filing a claim against this benefit as well.
The next steps will depend on the coverages you have and who is ultimately responsible for the accident.
Getting into an accident is never fun, but there’s an added level of stress when you’re behind the wheel of a rented vehicle. But you have many options to financially protect yourself whether through your own auto insurance coverage, optional collision damage waivers, and even rental insurance offered through a credit card. These various coverages step in whether you wreck a rented car, the vehicle is stolen, or it gets a crack in the windshield while you’re driving.
Read more: What happens if someone else crashes your car?
