You are at the counter picking up the keys to your rental car and the desk clerk asks if you would like to purchase the Collision (or Loss) Damage Waiver. You have personal auto insurance, so do you need this extra coverage?
First you need to know what your personal auto policy covers. Do you have comprehensive and collision coverage for at least one of your vehicles? If so, you are mostly covered. But there are two coverages you are missing: diminished value and loss of use.
Diminished value and loss of use could cost you thousands of dollars if you damage the rental car. If the damages result in the value of the car being less than when you picked it up, the rental car company could charge you for the difference. Say the car was worth $15,000 when you picked it up, and now that it has been damaged and repaired is it only worth $12,000. You may be charged $3,000!
If you damage the car and it has to be repaired, they could also charge you for lost rental income for the time that the car is out of circulation for repairs.
Your weekend trip, or once in a lifetime vacation, suddenly got very expensive.
We recommend you purchase the Collision (or Loss) Damage Waiver. This is usually not cheap, but the cost is worth the peace of mind while you are travelling. The coverage from the waiver could save you from a lot of inconvenience and unexpected expense if you are unfortunate enough to get in an accident or otherwise damage your rental car.
Don’t forget, you still need proof of personal auto insurance because the damage waiver does not include liability coverage, so be sure to take a copy of your auto insurance card with you!