We all know how expensive the Damage Waiver can be when renting a vehicle. Sometimes the daily cost of the Damage Waiver exceeds the daily cost of the vehicle itself. It’s “highway robbery” or a “license to steal” I’ve heard many times, and I tend to agree when I am the customer at the rental counter.
I have heard far more times though, “I don’t need it, my credit card company covers it”, or “my auto insurance policy covers it”. Does it? Have you read the fine print of your credit card agreement or reviewed the terms of coverage under your auto policy? I don’t believe that many people do. They simply assume they are “covered”.
Many credit card companies and both commercial and personal auto insurance policies do in fact provide coverage for the “damage” to rental vehicles. The definition of the “damages” covered is where we, the public, tend to get into trouble. The credit card agreements and auto insurance policies I’ve reviewed that include benefits/coverage for rental cars are all very similar with respect to the damages covered. If you damage the bumper for example, then the repair or replacement cost of the bumper and labor are typically covered. But what about the administrative costs of the rental car company? How about the loss of use / loss of rental revenue while the vehicle is being repaired? And possibly worst of all, the devaluation of the vehicle? Are these items covered benefits of your credit card or auto insurance policy? From my experience, NO they are not. You are likely personally responsible for these items if you chose to decline the damage waiver from the rental company and the costs can be significant.
The administrative costs are the rental car company’s overhead/expense of processing the paperwork for the damaged vehicle. These costs are usually under $500 and I’ve seen some as little as $125. These costs however could be the least of your worries.
The loss of use charges are accrued daily. A damaged vehicle is taken out of the rental fleet until repairs are completed. The rental car company will gladly invoice you for their lost rental revenue during this time period. To make matters worse, the rental car company may not make their best effort to get the vehicle repaired as quickly as they could. A vehicle that could be repaired in 5 days might be out of the service for 15 days or longer. All the while you, the customer, are being charged for the lost revenue.
Lastly is the devaluation of the vehicle. The large national rental car companies typically have Repurchase Programs with car manufacturers. The manufacturer will agree to buy-back the vehicles after a given period for pre-determined depreciated value contingent upon the vehicle(s) not sustaining a defined amount of damage (or mileage) during the contract period. If damage is sustained that voids the agreement, then the rental car company is stuck with that vehicle for its likely lower market value in lieu of the predetermined depreciated value. This is the devaluation of the vehicle and you the customer will likely be financially responsible for the difference.
In addition to the above items, I should also mention the cost of your time to deal with the rental car company throughout this entire process. I guarantee it won’t be a couple of quick phone calls before you write them the check. I do not dispute the cost of the Damage Waiver can be significant (and frustrating), but it is likely far less than your out of pocket expenses if you damage the vehicle without it. With this in mind, we certainly recommend you consider purchasing this coverage when renting your next vehicle.