5 Reasons You Should Purchase a Rental Collision Damage Waiver (CDW)

Many people opt not to purchase the additional collision damage waiver (CDW) when they rent a car. This has the potential to be a devastating mistake should an accident occur and you are not covered adequately.

The rental car insurance covers a limited amount of expenses and a CDW can provide you with additional protection should you need it. Let’s look at some of the reasons why you may need to pony up the extra cash.

1) Your Car Insurance Might Not Be Enough

One of the biggest reasons people deny the coverage is because they have rental car insurance through their normal automobile insurance policy. But, you need to double check with your insurance company to ensure that your coverage will extend to all damages done to the rental car.

2) Cheaper Premiums

In some cases, the collision damage waivers (CDWs) are included with the loss damage waivers (LDWs) which can replace your personal car insurance. One of the biggest benefits of purchasing the collision damage waiver is that it’s fairly cheap and may be less expensive than adding the rental car rider on your personal car insurance plan. You would just need to check with your car insurance company and compare the two plans.

3) Information May Not Get Back to Your Insurer

Collision damage waivers are not exactly an insurance product because they are not underwritten or sold by an actual insurance company. A CDW and the LDW are a rental car company’s version of comprehensive and collision automobile insurance. Because of this, there’s a chance that a collision would not be reported back to your regular car insurance company, which would keep your normal premiums at a low level.

4) You Do Not Have Full Insurance Coverage

Many people have dropped collision coverage from their own insurance policies because they have paid off their cars. While this is a great milestone for most car owners, it would put you at a vulnerable spot when you went to rent a car. This is one case where you would most likely want to purchase additional rental car insurance to cover you.

5) Your Credit Card May Not Always Cover You

Many credit card companies offer rental car insurance if you charge the car rental on your debit or credit card. While this is fine, you want to once again check the fine print of your credit card agreement to make sure that you have enough rental car coverage.

While most people try to zip through the rental car counter at the airport, many are skipping the purchase of collision damage waivers and loss damage waivers. This might be a great way to save a little money, but there are times when customers should consider taking the rental car insurance. We are not always as covered as we think we are, and in many cases, a little extra rental car coverage might not hurt.

Hank Coleman is the founder of the personal finance blog Money Q & A and several other financial websites. He is a freelance writer, entrepreneur, and professional in the government sector. Hank holds a Bachelor’s Degree in Business Administration, a Master’s Degree in Finance and is currently studying for his Certified Financial Planner (CFP) credentials. Be sure to follow him on Twitter.