Car insurance - Rental car coverage, collision damage waiver, diminished value, loss of use

Rental Car Coverage

The question often comes to us as to whether or not our customers should buy the collision damage waiver when they are renting a car. This can be costly and you would obviously want to avoid this cost if it all possible.

The answer to this question is "maybe". If one of your insured vehicles has full coverage (meaning liability, comprehensive, collision, medical payment, uninsured motorists, etc) than a rental car would fit the definition of Temporary Substitute Automobile and the collision and comprehensive coverages would extend to the rental car.

However, if you decide not to purchase the collision damage waiver, please be aware the following would also be true:

Your deductible would extend to the rental vehicle. If you automobile insurance policy were written with a $1000 deductible, you would be responsible for the first $1000 of damages to the rental car.

Rental contracts are now making you responsible for coverage not covered by your insurance policy.

1. Diminished Value. If the vehicle is involved in an accident, the decrease in the market value is not covered by insurance.

2. Loss of use. If the vehicle cannot be rented while the repairs are being completed, you will be billed the daily usage rate until the car is once again on the road. This additional charge is not covered by insurance.

If the vehicle is involved in an accident, you will have to wait for the claim adjuster to come inspect the car. Who wants to wait in a hotel room on vacation while the remainder of the family is out having fun?

For these reasons, it is generally recommended that you purchase the physical damage waiver.

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