Rental Car Damage Waiver FAQs

Planning to hit the open road this Summer? It may make logistical or financial sense to rent a car to get where you're going.

Deciding whether or not to purchase rental car insurance or a rental car damage waiver can be confusing. But looking into coverage ahead of time, learning about what to expect and having a good understanding of your own personal car insurance policy can help make your decision easier. Our partners at Crane Agency shared an FAQ to help you plan for your upcoming trip.

1. What Is a Rental Car Damage Waiver?

When you rent a car for a short term, you become responsible for all of the repair costs and other associated expenses if that car is stolen or damaged, even if you are not at fault. Most rental car companies will offer to waive this obligation for an additional daily fee. However, the cost of this waiver is often quite high and can significantly increase the total cost of the car rental.

2. My auto policy has coverage for rental cars. Why not just use it instead of paying extra for the damage waiver?

Many personal and commercial auto policies can include automatic physical damage coverage for rented cars. However, this may not cover the full value of the auto or all of the costs demanded by the rental car company following an accident.

3. What do you mean? My policy says it will pay to fix the damaged rental car? 

Here’s the catch. The majority of auto policies only pay for repair of the direct collision or comprehensive damage of a vehicle, and then only up to its “Actual Cash Value” (ACV). There may be a maximum dollar limit. 

Rental car contracts often require you to pay the “full value” of the car, which may be higher than ACV. In addition, rental car companies may also charge for:

1) Lost rental income – because the car cannot be rented to others while it is being repaired; 

2) “Diminished value” – a used car with an accident record is not worth as much as a car that has never been damaged. The rental car company will often charge you for this loss of value; 

3) Administrative fees – this is for the extra internal paperwork expenses incurred by the rental car company in handling the repairs and processing your claim. 

These extra costs are typically not covered by your insurance policy. 

In addition, your insurance company may end up in a dispute with the rental car company concerning the repair costs – the rental car company may want $7,000 for repairs that your insurance company believes they could have done elsewhere for $5,000. You could end up with the bill for the difference. 

Finally, there can be limitations under your insurance policy with excluded types of vehicles or situations, unauthorized drivers or uncovered territories. For example, most personal auto policies don’t cover large trucks or not every auto policy includes comprehensive and collision coverage.

4. My credit card says it covers rental cars. Can I use it to fill in the gaps? 

Rental car physical damage coverage provided by a credit card suffers from the same issues as most auto insurance policies. Be sure to read the fine print in your credit card agreement. 

Both credit cards and insurance policies typically state they are excess over any other coverage available. This can lead to finger pointing as to which should pay first. 

Finally, laws concerning these issues vary by state. A coverage situation that works out in one state may be a big mess in another when you’re traveling.

5. So, purchasing the Damage Waiver from the Rental Company solves the problem? 

One inquiry to a rental agency at the Fort Lauderdale airport indicated that 15 rental cars a day were returned with some type of damage. Renters are typically in a car they are not used to driving, often in a city that is unfamiliar to them. This makes it easier than normal to have an accident, even if it is not the renter’s fault. 

As such, it is a good idea to consider purchasing the waiver, but even this solution is not perfect. It is possible to void your waiver if you drive off-road, operate the vehicle while impaired by drugs or alcohol, engage in illegal use or allow an unauthorized person to drive.

So whether you are on a road trip to the beaches of Florida 🏖️, the Rocky Mountains ⛰️ or just exploring our beautiful country 🛣️, consider adding on a little extra coverage for your trip.


Contact our team at: (636) 537-5611 today to learn more about protecting your next adventure. 

Source: Crane Agency