Car rental is often an integral part of business trip planning. Before you or your employees touch down on a business trip, you’ll need to have ground transportation figured out. There are circumstances where a rental car will fit your needs better than grabbing a cab or rideshare. Beyond the specific requests regarding the car itself, the car rental process also includes finding suitable insurance, one that will not include unnecessary expenses but will also cover you in any case.
Insurance in the event of an accident or damage is definitely an important thing, and in case you do not have it car agencies will not hesitate to sue you for even the slightest damage to the car. This article presents important details that are worth knowing when deciding what insurance to take out for the car you have rented.
Car Rental companies rely on CDW insurance, which covers the potential damage to the rented vehicle. In the event that the rental vehicle is damaged, you are not liable to the entire cost of repairing the damage and you should only pay a certain amount known as “excess”. In order to reduce the excess to zero, car rental agencies often try to persuade customers to purchase an excess waiver. This means that for a fixed amount per day the car rental company waives its right to sue you in the event of damage to the car. Although officially not insurance, it is presented as such and costs between $20-$30 per day, a rate that is usually double the cost of the rent.
What are the benefits of excess waiver insurance?
The insurance offered by car agencies to some extent negates their right to sue the customer in case of damage to the car, but there are some exceptions, including tire damage and negligence. In general, the terms of the CDW and the excess waiver vary from company to company so it is important to read the entire contract carefully before signing. Assuming that we discover no serious damage, this insurance is pretty much the only one that allows at the end of use to return the keys and get going quickly, no matter how many scratches or dents the car has received.
You can also obtain excess waiver insurance from a 3rd party insurer. In this case, you will usually have to block a certain amount on your credit card to cover the damages and then you will have to deal with the paperwork and chase after the insurance companies to get the refund. In other words, this insurance offered by car rental companies is the only one that provides flexibility, comfort, and peace of mind.
How much does it cost?
As mentioned, the cost of excess waiver is about $20-$30 per day, but it can reach even larger amounts. In any case, this is a price that is usually higher than the rental price itself. This is no small profit for the rental companies. Out of the price they pay, they allocate around $ 3 or $ 4 per day to a general pool to cover damages, and the rest is profit for them. This is probably why employees are making considerable efforts to persuade customers to purchase the insurance through them.
What are the alternatives?
A. Use your existing insurance, which may also be valid in other countries. You should of course check the terms of the policy in advance and see if it covers rental cars. Keep in mind that you will have to participate in the self-expenses and accidents that you do abroad may have an impact on your future insurance premium later on.
B. Use of insurance offered by credit card companies. Many credit cards offer coverage for accidents as long as you pay with the card for car rental. However, this is usually secondary coverage, meaning that the credit card company only covers the costs that the insurance company does not pay. In any case, it is advisable to pay attention to the fine print.
C. Third-party insurance. There is a number of sites that offer 3rd party car hire excess waiver policies. These policies might cost $10 per day (or even less if you are a frequent traveler and buy an annual policy). In this case, you can simply waive the car rental’s offer and save the cost of the rental car excess waiver. If the car is damaged, the rental company will charge you the lower between the actual amount of the repair and the excess amount that is listed on the rental agreement. You should then submit a claim with your insurer, submit the relevant documents that support your claim, and after your claim is approved the insurer will reimburse you.
In any case, if you use 3rd party insurance keep in mind that most car rental agencies will require payment in advance for the damage, and then you will have to claim it from the various insurance companies.
Many travelers prefer to forgo the expensive insurance of car rental agencies and do not encounter any problems at the end of use. However, there are cases when the insurance company, credit card, or third-party insurance does not agree to cover an extraordinary cost charged by the rental company. If you prefer to avoid risks, it is better to purchase excess waivers and pay the higher price, but keep in mind that in most cases, the other insurances will cover you as well.
Keep in mind that the “insurance” offered by car rental agencies has one significant advantage: If the rental car has a scratch, you do not have to deal with bureaucracy and repairs. With external insurance, you may have to pay a down payment as a guarantee and deal with the claims afterward. In any case, remember that this independence comes with a high price tag and an impressive profit for the company.