The toaster oven’s 10-year extended warranty? Your new sofa’s 2-year protection plan? The rental car damage waiver? The question of whether you should buy these is among life’s greatest questions. While some of these policies may be an easy choice, the question we get most is, “should I buy the rental car damage waiver?” The short answer is, most likely yes. But read on for the reasons why.
“What About My Auto Policy?”
“I was told my auto policy covered this,” is the famous last words of those who can attest to paying thousands of dollars out of pocket for damage to a rental car. While most auto policies have coverage for the use of non-owned vehicles, there are notable exclusions on most policies. The big U-Haul truck or trailer you rented for your move? Probably excluded. Camper rental? Probably excluded or has very limited coverage up to $2,000.
“But I only rent passenger cars, surely that’s covered?”
Many policies have exclusions or limitations for this as well. Rental car agreements often have “Loss of use” clauses in their contracts. This clause refers to the loss of revenue the rental car company would experience if a car is damaged, which you are responsible for. Often your policy will have a limit to the amount it will pay the rental car company for the loss of use, plus if your insurer and the rental company can’t agree on the appropriate charges, you could find yourself paying out of pocket for the difference.
Diminished Value Charges
If you find yourself reading rental car damage waivers as light reading material before bed, you may be familiar with diminished value charges. This is the reduction in value for a vehicle that has been damaged and then repaired, which a rental car company will charge you with if you damage their rental car. Even if a car is repaired to be in the same condition it was before the accident, it will often have a diminished value.
Most auto insurance policies exclude diminished value charges which would make you responsible for the charge; however, some policies offer it as an option.
So what’s the solution? Buy the rental car damage waiver, drive responsibly, and relax knowing you should be covered. And the next time you are comparing rental car prices between companies, be sure to factor in the damage waiver, as prices vary between companies.
One last pro tip, do not valet your rental car. Many damage waivers will be voided by allowing an unauthorized person to operate the vehicle. While many venues have some form of garage keepers coverage, it’s best to not rely on the insurance of others.
The insurance world can be complex, but we’re here to simplify it. If you have questions about an insurance policy or risk management strategies give us a call or send us a message. Our insurance experts are here to help!
