Do the terms CDW or LDW sound familiar to you? Probably not, and that’s because it’s a step that many of us overlook when booking a rental car. The Collision Damage Waiver and Loss Damage Waiver are two fees from a rental company that are commonly set aside, from the position of thinking it’s not necessary.
At Frost and Remer, we are here to help counsel you in your best insurance decisions. As a highly asked question, we’ve outlined a few reasons why you definitely should opt in for the collision damage waiver and loss damage waiver when booking a rental car.
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To cover the damages and necessary costs to repair the vehicle to it’s condition when you first rented it, the Personal Auto Policy (PAP) will provide a safety net to cover the lesser of “actual cash value.” In the contract agreement, look closely to see if they obligate you to reimburse for the full value of the vehicle. The PAP will cover for this premise, but not any work that would increase it’s pre-damaged value, or would hinder it.
In the event of an accident, there will likely be a disagreement on the value of repairs and labor that the vehicle will need to be fixed up. The insurance company has the right to “inspect and appraise the damaged property before its repair or disposal,” which means your auto policy’s appraisal clause will be receiving the costs.
If a rental company chooses to make repairs immediately, you could find yourself with not enough PAP coverage because of the failure to stick to the contract. When you purchase the CDW, it gives you, the renter, the chance to resolve the costs without the tedious task of adjusting an auto claim.
The form of payment for any loss or damages could be defaulted to whatever credit or debit card they have on file for you. Reimbursement could potentially lead to significant debt, or even max out a credit card’s limit if expensive enough. Loss Damage Waivers (LDW) In order for your PAP to kick in, you must insure at least one vehicle for collision and comprehensive coverage. Your policy will not insure rental car damage and loss of use claims otherwise. Keep this in mind as rental companies often will make the individual renting responsible for any loss in value beyond “normal wear.”
Indirect losses occur as a result or consequence. When a rental company has a vehicle get damaged, they are losing rental income. Your policy has limited coverage for these types of charges if you are responsible.
Loss-related expenses may also be categorized as administrative expenses. This includes towing, appraisal, a claims adjustment, storage, and so on. The PAP may not cover all or any of these additional costs.
The PAP is excess over any coverage provided by the rental car company, any other physical damage insurance, and any other source of recovery that can apply to loss travel policies, coverage via credit card, and so on.
Litigation can also result, stemming from heat and frustration over who pays what in the event of an accident. Also look into Michigan’s state statute and case law precedents that may have a say on other rental car exposures.
You Should Consider Purchasing CDW/LDW for a Rental Car, So You Can Vacation Stress Free
It only makes sense to opt-in to something that will provide greater peace of mind. Protect your savings, you and your family’s lives, and the vehicle you are renting.
The CDW/LDW fees are usually between $10 – $30 a day. For a long term rental, that can add up pretty quickly. With short term usage, it’s not a bad idea. If your questions are more specific than what we’re able to answer here, don’t hesitate to reach out to us today, so you can start planning your next vacation and be prepared for the road ahead.