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Three Reasons to Purchase the Rental Car Damage Waiver

April 23, 2013

Although most damage waiver fees are considered outrageous, there are some good reasons to consider purchasing the coverage.

Loss Valuation
The value of a rental car, according to virtually all rental agreements, is determined solely at the discretion of the rental company and may be significantly different from the “Actual Cash Value” basis used by most auto policies. As a result, the rental agreement may contractually obligate you to reimburse the rental car company for the “full value” (whatever that is) of the vehicle.

Loss Payment
The rental agreement may require immediate reimbursement for damages and it is not uncommon for the rental company to charge your credit card immediately. So if you’re on vacation and counting on being able to use your credit card? You could really have a problem and might wind up having to cut your trip short.

Loss Damage Waivers (LDW)
The rental agreement usually requires reimbursement for more than collision, making you responsible for ANY “loss” in value beyond normal wear and tear– regardless of fault. As a result, you would most likely be responsible for the rental company’s loss of rental income on the damaged car. The rental contract may also make you liable for various “administrative” or loss-related expenses such as towing, storage, appraisal, claims adjustment, etc. None of these expenses are typically covered by an auto policy.

In addition, rental car companies are increasingly inclined to charge for “diminution of value,” an indirect loss that is not covered by an auto policy’s physical damage section. We have seen documented examples of these charges for amounts of $5,000 and almost $8,000 and heard of one that was allegedly $15,000 on an upscale SUV rental.

Here is a link to an article that was written by the Denver Post in 2008.  Some contractual items and premiums have changed, I’m sure, but the difference between contracts does make you stop and take pause.

The bottom line is this: when you rent a car and choose not to buy the loss damage waiver, be careful. If you do damage the car you may be forced to pay fees and charges above and beyond what your auto policy will cover.

Filed under: Uncategorized — admin
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