How to Avoid Disaster and Save Money At Car Rental Agencies

Difficulty: Moderately Easy

Instructions

Things You'll Need:

Detailed copy of your own personal auto insurance policy’s provisions for rental car coverage
Detailed copy of your credit card’s rental car coverage provisions
Detailed copy of rental car company’s rental agreement terms and provisions
A willingness to wade through, analyze, and understand all of the above fine print

Step 1

Know the hidden risks, which include:

 Diminution of value: this is the loss of value of a car which has been repaired after significant damage. For example, let's say an undamaged rental car worth $25,000 sustains $8,000 worth of damage in an accident. When those $8,000 in repairs are completed, the value of the car does not magically return to the original $25,000. The value might decline to $22,000, since a car that was damaged and subsequently repaired is not worth as much as the same model car that had never been in an accident.
 Loss of use: When a rental car is damaged, it must be taken out of service until it is repaired. Rental car companies count each day's loss of rental revenue for the damaged car as “loss of use”. If the rental car is in the shop for two weeks, you may be required to pay the car rental fee for the full two weeks.
 Failure of renter to adhere to all terms of the rental contract. Wreck a rental car while driving under the influence of alcohol or drugs can leave you liable for all damages no matter how many sources of coverage you have. The same goes for allowing someone to drive the car who is not listed on the contract. Sometimes even driving the car on an unpaved road is enough to void the CDW/LDW and secondary sources of coverage on the rental car such as personal auto insurance or credit card rental car coverage.
Step 2

Coverage: Get it in writing. In the cases of diminution of value and loss of use, this can be surprisingly difficult. Surprisingly, many, many auto insurance companies do not cover diminution of value or loss of use, meaning the car rental company will come after you to recover all or part of these costs incurred as a result of damage to a rental car. I have an auto insurance policy through a major, highly-rated national carrier, and I was shocked when they told me they do not cover diminution of value or loss of use on rental cars. Perhaps even more shocking, no major credit cards of which I am aware provide for diminution of value or loss of use in their rental car coverage.

If you do find coverage for loss of damage or loss of use through your personal auto insurance or credit card and plan to rely on it, get it in writing from the coverage source, and keep copies.

If you choose to rely on the coverage from the rental car company, make sure you purchase the correct coverage (CDW, LDW, etc. ) product. Some rental car companies offer a dizzying array of choices. Make sure the one(s) you purchase cover all direct damages to the car, as well as the indirect costs of diminution of value and loss of use. Get this in writing, and keep a copy. A rental car company can discover damage to the car even after you turn the car in, and come after you to recover the costs of those damages.
Step 3

Stick to the terms, my darling! The terms of your car rental contract, that is. Do not ever let an unauthorized driver operate the car, even “for just a couple miles”. Do not operate a rental car even if you have had just one alcoholic drink in the last 12 hours. Do not operate a rental car if you take medication that can in any way adversely affect driving. If you think you might need to drive the car on an unpaved road, check with the rental company before doing so. Violating the terms of your rental agreement can void your coverage, regardless of the source(s) of that coverage.

Also be aware that if you rent an exotic car such as a Ferrari, or if you rent an oversize vehicle such as a full-sized van, most auto insurance policies exclude rental car coverage for such vehicles. The rental car company coverage is pretty much the only option in these cases.
Step 4

Read the fine print. All of it. Front and back. Make sure you understand it. This includes your rental agreement, as well as any and all sources of liability coverage, whether it be from your auto insurance company, credit card company, or both. Speak with your agent or credit card company representative about ANY questions you have or things you do not understand.
Step 5

Be prepared to fight. Even if you find complete coverage through your insurance or credit card company, be aware that the car rental company’s loss recovery department is going to come after you. You, in turn will likely have to spend hours on the phone as the liaison between the car rental company and your coverage provider(s).
Step 6

Watch out for rate increases. If you wreck a rental car and rely on your personal auto insurance policy it will go against your loss record, which is used to set your premium. In this case you may find you need to shop around for a new auto insurance policy.
Step 7

Make the decision that is right for you. If you have done your due diligence and find bullet-proof coverage through your personal auto insurance or credit card company, and are willing to navigate the sea of red tape if you damage your rental car, great. You’ll be able to avoid spending $19.00 to $30.00 a day on the rental car company’s collision/loss damage waiver coverage. In my case, even though I hate the high price, I pay for the rental car company CDW/ LDW whenever I rent a car since I cannot find bullet-proof coverage through my auto insurance policy or any of my credit cards. The peace of mind is worth it to me.