If you have hired a car and taken out the appropriate insurance, you may understandably think that there is little or no possibility of ‘unexpected costs’ coming from the car rental company. Unfortunately you could be mistaken – even if you have purchased from the hire company something called Collision Damage Waiver insurance.
Collision damage waiver or CDW, is a form of insurance that covers you, the renter, against any costs arising from an accident than damages the rental car. CDW may be included in the rental price or in some countries, most notably the USA, the rental company may offer it to you as a separately chargeable option.
If the rental company have not bundled CDW into the rental price, it may be worth thinking about buying it from a specialist provider of car rental insurance. Such companies operate in the open insurance marketplace, usually on the Internet and often sell various forms of rental car insurance at far cheaper prices than the car rental companies.
What to look out for
If you have taken or purchased your collision damage waiver insurance from a car rental company, you may have to watch two aspects of their policy cover and this is where the risks of unpleasant surprises and additional costs come from.
It is highly likely that their insurance will not cover all areas of the rented vehicle and may exclude the wheels, tyres, windows, undercarriage and roof. The second potential issue relates to the subject of policy excess. The car rental company’s policy will almost certainly carry excess to the value of 500 to 1500 pounds. That is the amount the rental company could bill you following an accident as your ‘obligatory contribution’ towards the cost of any accidents even if you have their insurance in place.
So even if you have only a minor accident AND you have the rental company’s collision damage waiver cover in place, you could still find yourself with a large and unexpected charge to your credit card for repairs. This does happen and when it does, the amounts can be high – so be warned!
You can pay the car rental company for additional insurance that may reduce or remove the excess and possibly cover the often-excluded areas of the vehicle.
Buying it independently
The good news is that if you have purchased your CDW from a specialist provider then there may be no areas of the vehicle excluded from their policy and another large bonus is that their policy may also not carry excess. This could work out far cheaper than paying for additional ‘top-up’ insurance through the rental company.
One final point relating to the collision damage waiver products sold by the specialist insurance providers is that they are sold for a period of time (a daily or annual basis) rather than a specific car rental. What this means is that the policyholder can use their insurance to cover any vehicle they rent during the lifetime of the policy, with the exception of some specialist vehicles such as sports cars or those over 100,000 US dollars in value. It may be worth finding out more through one of these web sites if you’re interested in saving yourself a lot of money.