Not All Rental Car Damage Waivers Are Created Equal
By: Bill Wilson
When I rent a car, I ALWAYS buy the loss damage waiver (LDW) from the rental car company. When I’m pricing rental car agencies, I include the cost of the LDW in making a purchasing decision. My reasons are explained in several articles I’ve written on this subject…just search my web site for “rental car” to get a list of articles.
The point I make here is that I buy the LDW from the rental car company itself, not from third parties. For example, I found a great Hawaii vacation package on Expedia that included a rental car. When I booked the trip, I could also buy a “damage waiver” through a business partner of Expedia. These waivers are rarely as comprehensive as the waivers sold by the rental companies themselves.
Most rental car company LDWS cover any loss or damage to the vehicle as long as you don’t violate the rental agreement. Third-party damage waivers, in my experience, are rarely as generous, though their cost is enticing, often less than a third of the ‘real’ LDW charge.
For example, I’m renting a car in New Hampshire in September through Expedia and they offer a “collision damage waiver” for 60% less than Alamo, the rental company. The Alamo LDW is $25/day. The faux LDW costs only $10/day. But what do you get in the way of a damage waiver?
The Expedia product covers collision, theft, and vandalism. That’s it. No comprehensive coverage. There is also an exclusion for diminished value. If I bring a damaged vehicle back to the rental company, they don’t care what caused the damage or whether I’m at fault. I’ll pay the extra $90 that the real thing costs for the duration of the rental. That extra expense is a small percentage of the overall cost of my trip and well worth the piece of mind to me.
The promotion for the Expedia includes a testimonial from “Ms. K” who raved about the claim service. She’s lucky the damage was due to one of the three named perils covered by the product. I know an expert witness who bought one of these third-party damage waivers and thought he was actually buying the real LDW. He discovered that wasn’t the case when he had a wreck. Everything went pretty well except the rental company wanted him to pay $2,500 in diminished value. He ended up going round and round with them for 2-3 months until they settled on $1,500. The real LDW would have cost him less than an extra $50.
Just like insurance policies are not a commodity, neither are rental car damage waivers, credit card programs, or other alternatives to the real deal.
About Bill Wilson:
Bill Wilson is the founder at InsuranceCommentary.com
One of the premier insurance educators in America on form, coverage, and technical issues; Founder and director of the Big “I” Virtual University; Retired Assoc. VP of Education and Research from Independent Insurance Agents & Brokers of America.