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Top Five Reasons To Purchase Rental Car Collision (or Loss) Deductible Waiver (Fall 2006) << Back
AHTKY receives numerous inquiries from our clients whether or not they should purchase Collision (or Loss) Deductible waiver from a rental car company.  AHTKY’s recommendation is that in general, you SHOULD purchase this coverage, at least for short term rentals.  Our Top Five Reasons are:
1. Loss Valuation:  Your Personal Auto Policy covers the lesser of the “actual cash value” of the vehicle or the amount “necessary” to repair or replace your damaged property. Your rental car agreement may contractually obligate you to reimburse the rental company for the “full value” of the vehicle. In addition, your auto policy does not pay for any “betterment” (increased value of new parts replacing old ones) of the vehicle.
2. Loss Settlement:   There could also be disagreement over the amount charged for labor and materials to repair the rental car.  Your auto policy’s “Appraisal” clause may not read the same as your contractual obligation to the rental car company.  More importantly, the insurance company has the right to “...inspect and appraise the damaged property before its repair or disposal.” The rental company, unlike you, is not contractually obligated to the insurer.  They will, in all likelihood, choose to make the repairs immediately, potentially resulting in your losing coverage because of failure to comply with this contractual condition. In any case, purchasing CDW usually allows the renter to “walk away” without the headaches involved in adjusting an auto claim.  


Loss Payment:  The rental agreement may require immediate reimbursement for damages, and it is customary practice for the rental company to charge your credit card for the damages. This can create a significant debt, “max” out the card's credit limit (perhaps shortening a vacation or business trip), and result in litigation, etc.


Indirect Losses:  You will most likely be held responsible for the rental company’s loss of rental income on the damaged unit. Your policy has very limited coverage for these charges.
5. Additional and/or Future Cost: You will still be responsible for the deductible on your personal auto policy. In addition, payment for damage to a rental car may result in a significant premium increase via surcharges or loss of credits at renewal by your insurance company.   
Although most CDW/LDW fees are relatively expensive, we advise you to purchase the CDW/LDW for short-term rentals. If anything, this will give you peace of mind while on vacation or business, and it could save you from a lot of inconvenience and lost time and money.
Other Tips:
1. When you rent a vehicle, ask for an advance copy of the rental agreement in order to determine your contractual obligations for damage.  Some rental car companies post this information on their web sites. Here is a listing of several national rental car company web sites:
  Alamo www.goalamo.com
  Avis www.avis.com
  Budget www.budget.com
  Dollar www.dollar.com
  Hertz www.hertz.com
  National www.nationalcar.com
  Thrifty www.thrifty.com
2. Be sure to inspect the rental vehicle for existing damage to the interior and exterior and get their acknowledgement of such damage in writing before leaving the premises.
3. Be sure to take proof of insurance with you on your trip.
4. Carry an inexpensive disposable camera with you on your trip to document existing damage or damage that may occur while using the vehicle.
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AHTKY Insurance Agency, LLC
1451 W. Artesia Blvd, Suite A, Gardena, California 90248
CA License: 0C46036