Do You Buy The Loss Damage Waiver For Rental Cars?
If you’re like me, you don’t rent cars very much outside of work. But when I do, I’m always of mixed emotion when it comes down to the inevitable question: Do you want to buy the Loss Damage Waiver (LDW)? It costs around $20/day, but it basically absolves you of any liability if the car becomes dented, breaks down, gets scratched, blown up, or whatever.
Your Existing Car Insurance Might Extend To Rental Cars
This is the most basic thing to know, but according to a survey by Progressive only about 25% of people bother to ask. Find out if your own insurance will act as your primary rental car insurance! My policy with State Farm does extended to the occasional rental car, but the deductible still applies.
But That Might Not Help…
I have high insurance deductibles, and I’m not worried about a full-on accident. I’m more worried about scratches and dents. If it was my own car, I’d never care about a dented bumper. But a rental car company can charge me $500+ for a new bumper, and also $75 a day that the car is unavailable for rental while they fix it (”loss-of-use” fees). Or they might just charge me $100 for a scratch because they want to squeeze every penny out of me… 2 months after I return the car.
In addition, your own auto insurance may cover collision (damage to the vehicle), but not other things like those “loss-of-use” or other administrative fees. Finally, making a claim on your insurance may jack up your future rates, which is partially why my deductibles are so high in the first place.
Credit Card Secondary Coverage To The Rescue?
The next layer of protection to consider is that offered by your credit card company. All of the biggies - Visa, MasterCard, American Express, and Discover offer some sort of coverage. According a review of the policies done on Wikipedia:
The main difference among the four credit card companies listed below is that MasterCard and Amex cover collisions, theft, vandalism and weather; Visa covers collisions and theft, but omits vandalism and weather; while Discover covers only collisions. However MasterCard is not useful in areas with dirt or gravel roads [paved roads only].
However, details can still vary depending on the specific type (Classic, Gold, Platinum, etc.). Look for specific wording in the paperwork that they mail you with the tiny print on amazingly thin paper. Here’s an excerpt from MasterCard coverage:
MasterRental will pay for covered damages on a secondary basis for which you are, or any other authorized driver is, legally responsible to the rental agency.
Covered damages include:
–Physical damage to and theft of the vehicle, not to exceed the limits outlined below.
- Reasonable loss-of-use charges imposed by the vehicle rental company for the period of time the rental vehicle is out of service. Loss-of-use charges must be substantiated by a location- and class-specific fleet utilization log.
- Reasonable towing charges to the nearest factory-authorized collision repair facility.If you have, or an authorized driver’s primary automobile insurance or other indemnity has, made payments for a covered loss, MasterRental will cover your deductible and any other eligible amounts not covered by other insurance.
Secondary insurance means that they will cover what your primary insurance doesn’t. Together, this seems like a pretty solid combination. Of course, I’ve never made a claim through any of these card companies so I have no idea how easy they are to deal with. (Anyone have stories?)
An Immature Reason To Buy The LDW
I couldn’t find the clip online, but I remember a stand-up act by Jeff Foxworthy or somebody about rental car insurance that went something like this…. “You mean for 15 bucks I can drive this car like a maniac? Heck yeah I want that insurance! Time to grab some airtime!” I must say that the only time I’ve ever been in a car that did a doughnut in a empty parking lot…. that was a rental car. Of course I don’t drive like that. However, I will admit that have tested to 0-60 times of a few of my rental cars. Too bad in a Chevy Aveo that’s about 38 seconds downhill…
In the end, I have gone both ways depending on my mood. I have bought the waivers on short rentals because I just didn’t want to deal with any potential hassles. Most times, I have refused. I am making another rental later this week, so that’s why I’m pondering this…
February 19th, 2008 at 7:53 am
Another point worth mentioning is what is the best option for people who have no primary insurance? I don’t own a car, thus no insurance, as I use mass transit.
I’ve only ever rented for business, and generally have added the LDW, but am about to rent for 1 mo + and decided to skip the LDW and only use AMEX. My understanding is that when there is no primary, credit card insurance will become the primary.
February 19th, 2008 at 7:53 am
For personal rentals: I tend to roll the dice and not buy the insurance on rental cars. I justify the decision by using a CC with rental car protection, but it’s still a risk and one that I am (typically) willing to take to save the money.
For work related rentals: My previous employer carried their own insurance that covered rental cars, so we were not allowed to purchase the insurance, or if we did we had to pay for it out of pocket.
My real disgust with the system is how much the rental car companies have inflated the insurance costs. That $20/day equates to approximately $600~ per month for insurance coverage. I certainly wouldn’t pay that for my own vehicle, so it’s hard to justify paying that much to cover their vehicle.
For quick reference, here is a sampling of average insurance charges from the top rental car companies:
Company — Loss damage waiver — Supplemental liability insurance
Alamo — $10.50-$22.99 — $11.95-$12.95
Avis — $9-$35.99 — $10.95 or $12.95
Budget — $9-$35.99 — $10.95 or $12.95
Dollar — $8.95-$34.99 — $8.95-$12.99
Enterprise — $10-$15 — $10-$16
Hertz — $9-$35.99 — $10.95-$12.95
National — $10.50-$22.99 — $11.95-$12.95
Thrifty — $8.95-$34.99 — $8.95-$12.99
February 19th, 2008 at 8:00 am
I personally use the credit card to for collision/damage coverage. However, I do purchase liability coverage if it’s not already covered by the car rental company.
February 19th, 2008 at 8:10 am
After college I was a manager for a rental car company at a major US airport where we had thousands of cars coming through our lot. LDW is almost never a good deal for a renter if you have your own car insurance and a credit card that will help with coverage, just like you mention.
Rental companies see rental insurance as pure profit and counter personnel are expected to upsell. In some cases we would have daily bonuses for the person with the most upsells. The company would almost never go after a renter unless the damage was major.
The one thing that they will get you with every time is rims and tires. If you bang a curb and bend the rim and/or damage the tire, expect to pay.
The best advice is to have a person in the lot document every ding, dent and scratch on the car before you leave. If you show them that you paid attention from the beginning, they’ll be less likely to come after you when you get back. And even if they have the bad spots noted when you’re inside signing the paperwork, have them go over it again outside at the car.
If you get back to the lot and the person checking you in starts making comments about damage, immediately go inside and speak with the manager on duty. Handling the situation while you’re face to face is the easiest way out. If you just drop the keys and leave and they decide to come after you, you’re going to have a much tougher dispute on your hands because the higher ups in the main office will be the one handling everything. The manager on duty is more worried about making sure he/she has the cars available to cover the overbooked reservations.
February 19th, 2008 at 8:23 am
I’ve gone both ways as well. I don’t have car insurance (I don’t own a car), and my MasterRental agreement states that in the case of no primary insurance, MasterRental is the primary insurance. I haven’t had to file a claim, so I’m not sure how comprehensive their coverage would be in reality.
February 19th, 2008 at 8:42 am
For business, I get it every time and no one has ever told me to do any different. We have a corporate account and I never even see the bill.
For personal use, I just can’t justify it. In many cases, I would prefer to have my own vehicle anyway and I’m covered by my own personal vehicle insurance policy, so getting additional coverage is redundant.
February 19th, 2008 at 8:51 am
Most of the credit cards companies do not cover trucks, only cars and Mini-vans. Because of how they define trucks, you may end up without coverage for many larger SUVs.
February 19th, 2008 at 8:58 am
I never purchase the optional insurance. My insurance company (Allstate) covers me and I always pay with a credit card for secondary information. Thanks for the info on different card brands, though. I usually use my Visa due to the higher cash rewards payout but I think I will use my Mastercard from now on for rental cars. Better safe than sorry.
February 19th, 2008 at 9:06 am
My guiding principle is to never buy insurance to cover a loss which I could eat without major hardship. My own auto insurance has a rather high deductible, but on the off chance I wound up paying Avis $500 for a bumper, it wouldn’t be a major loss. I’d bitch and moan about it, but I’m sure I’ve saved way more than $500 in today’s money by not buying LDWs in the past, and I don’t even rent all that often.
February 19th, 2008 at 10:06 am
There are other options available that might be worth considering, especially if you don’t want to turn in claims to your personal car insurance company.
- Diners Club charge card and Citi Professional credit card both provide primary rental insurance. Diners Club has an annual fee though and Citi Professional is only supposed to be used for business charges.
- Amex has a Premium Car Rental Protection plan where you pay $20 or $25 flat fee per rental when you bill the rental to an Amex card enrolled in the program - no annual fees. This is also primary rental insurance. If you happen to be a CA resident the fee is stupid cheap - $16 or $18 per rental. Either way this is usually going to be cheaper than the rental companies option - unless it’s just a 1 or 2 day rental.
February 19th, 2008 at 10:09 am
One other caveat - just because you have personal insurance doesn’t necessarily mean you’re covered in a rental.
I recently purchased a 2nd car and bought insurance with a new company. They informed me that since I owned two cars but my first car was insured with someone else that the extension of coverage provision (that usually protects you in a rental) didn’t apply to me until I switched my other car over to them as well.
February 19th, 2008 at 10:10 am
had a friend that rented a car and did not take the insurance…was involved in an accident, increased the rental period for another few days and fixed the damage. He spent $800 fixing the damage but the rental company would have charged him over $3000 for that kinda damage.
February 19th, 2008 at 10:45 am
The best answer to this dilemma is probably found in the anecdotal evidence of drivers who did not take the rental insurance, relying on their personal auto policy and/or credit card coverage, and were involved in an accident. How well their insurers provided coverage, and how the insured’s rates were impacted, could make all the difference. Auto insurance, like medical insurance, can be deceiving, and policy holders can end up holding the bag no matter how the policy reads. Insurance providers of all stripes, in my experience, are more in the business of NOT paying claims fully and honorably than the business of paying them.
February 19th, 2008 at 11:49 am
If the company is paying: yes. If I am paying: no. And remember, (I can say this as a consultant who has traveled a lot and seen what happens to rental cars) NEVER EVER EVER BUY a previously-used-as-rental car. Ever.
February 19th, 2008 at 11:51 am
A few years ago my brother came to visit me in Arizona during early spring. One thing he really wanted to do was rent a convertable and enjoy the weather. We got a Camaro and I did get the extra insurance coverage. As we were cruising around, a big river rock came off a truck in front of us. It hit the ground and bounced up perfectly to dent the hood and crack the windsheild.
I turned in the car and asked the rental associate if the insurance covers the car if a rock hits the windsheild. He said “yah, let’s check it out.” He saw the car and just said “Oh” then turned around to go take the car off of availablity.
The damage was totally covered… I was very glad to have bought the insurance.
February 19th, 2008 at 12:03 pm
When traveling on business my company explicitly tells us to decline any additional fees like that. The company has its own car insurance policy that covers all employees traveling on business, so they don’t need to pay the rental companies more for it.
February 19th, 2008 at 1:26 pm
My girlfriend and I rented from enterprise from LA to SF over the weekend. We did not get the damage waiver ($11 per day). About 100 miles into the trip, a rock chips the glass and there’s a quarter sized circular rock crack on the windshield. We spent the entire time STRESSING over the trip. We went to a windshield crack repair place to get it fixed for $35. It was still partly visible. Luckly it was raining when we returned it and the rain hid the crack from view. We haven’t heard anything from enterprise since. Next time I think I’ll get the damage weiver for rock chips and other things.
February 19th, 2008 at 1:33 pm
I was driving a rental car on a freeway when a large fist-size rock flipped up into the air thanks to a nearby semi. The rock hit my hood and caused a pretty good dent. I hadn’t purchased the extra coverage. Luckily I used an AMEX card that provided coverage.
When I returned the car I showed them the dent. I had to fill out some type of accident report paperwork. I didn’t have to pay anything on the spot. The rental car company was supposed to contact the credit card company to resolve the issue. I let AMEX know that they would be contacted.
Several weeks later I called AMEX to see what had happened. They told me they had never been contacted by the car rental company. I don’t know if it ever got resolved. Perhaps the car company thought the recovery amount would be too small to justify dealing with AMEX. But if I hadn’t used a card with coverage, I’m convinced they wouldn’t have let me out of the building without charging me on the spot for the damage.
I use AMEX for every rental because of how smoothly this all went. To sweeten the deal, AMEX has a card that gives 2% cashback for car rentals.
February 19th, 2008 at 2:26 pm
I also don’t have any auto insurance because I don’t own a car.
I wouldn’t take the LDW either because I would rent using a Mastercard. However, I do take the liability coverage, which ends up being more that the LDW anyways.
The last thing I want to do is get in any kind of accident, but I do want to have some protection against being liable for damages or personal injuries.
The process worries me because it seems like filing any kind of claim with matercard masterrental can be a serious hassle.
February 19th, 2008 at 2:41 pm
Yeah, it may be more expensive on a monthly basis, but think of how much more recklessly people drive rental cars, e.g. this article.
February 19th, 2008 at 2:47 pm
My car was in the shop once for a recall service. They paid for an overnight rental (so my AmEx secondary coverage didn’t apply.) I also have very high deductibles on my insurance but it was for a short period and I wasn’t going far. As I’m checking out the guy doing the inspection made it pretty clear that he would find a new scratch if I didn’t buy the waiver. The car was pretty banged up and he wasn’t putting down any of the scratches I was pointing out (”oh, that’s just dirt” he would say to obvious plastic damage.) I felt violated but ended up paying for the waiver anyway. That’s the last time I will use Enterprise if I can possibly help it.
February 19th, 2008 at 2:47 pm
I always bought the LDW for work as well, but that was because I had to per company policy, and they paid for it. So I really never had a choice there.
February 19th, 2008 at 3:39 pm
If you to an other country, It could be mandatory to have this kind of insurance. Even if you cross the border with the car, you could need this kind of insurance.
February 20th, 2008 at 4:25 am
I just enrolled in the Amex program and it seems like such a no brainer. It is free to enroll and you only pay like 15 dollars when you rent a car instead of a daily charge the scam artist rental companies charge. Thanks for the info. Last time I rented a car we were in a rush to catch our plane and I made the unforgiveable mistake of not filling up the gas tank prior to drop off and didn’t even realize it until I was paying and there was an extra $75 charge! Most expensive gas I have ever purchased.
February 20th, 2008 at 7:34 am
For those who don’t own a car, a good insurance to get would be the ‘name - no owner’ insurance coverage from Geico. It provides liability coverage for $300/year and covers liability for all rental cars but NOT LDW. I guess if you combine the AmEx, Visa or Mastercard LDW coverage with a ‘name - no owner’ policy, you would be covering all bases!
February 20th, 2008 at 7:42 am
When it comes to worrying about damage to rental cars, some companies I trust, other I don’t. At Enterprise they always go over the car in excess before and after, I’ve heard accounts of them charging for mystery damage. Same is true with the other “discount” rental companies, Dollar, Thrifty, Budget, etc.. However, this never happens with Hertz (and I assume also true for Avis and National) a business class rental company. I’ve even scuffed some rims on a Hertzmobile and never got hassled about it. I think over time you’ll save money by renting from the big three over the “cheaper” alternatives. You’ll also save time as the “cheapo” companies usually have long lines of people who seldom rent cars and have no idea what they are doing, whereas Hertz will quickly and efficiently get you on your way. Using AAA CDP and various PC #’s I can usually get Hertz for the same price anyway.
February 20th, 2008 at 9:15 am
I’ve heard only good things about using AmEx Gold cards to cover the LDW. I never stress over it and just use the AmEx card. Even if they don’t cover a small fraction of damage, still cheaper than buying the LDW consistently in the long run. Of course, if you KNOW you’re a bad driver and have a high premium on your everyday car, it might pay to just buy the LDW from the rental company.
February 20th, 2008 at 2:39 pm
I bought the insurance from Armada van rentals when I needed to transport a lot of people to an event. Going into a parking garage I hit the top of the van on the “height” marker of the parking garage and made a small dent on the roof. Guess what - in the fine print of their insurance contract the roof is excluded along with a couple of other items. Big hassle from them for over a year and a half with them trying to milk me of charges that my insurance carrier said were not legitimate charges. Moral of the story - Read the fine print if you get the insurance.
February 21st, 2008 at 8:15 am
Ha - your comment about a rental car being the only vehicle you ever did a doughnut in is the primary reason I wonder why ANYONE looking for a used car would ever buy from a rental car place.
February 21st, 2008 at 8:51 am
I never buy LDW and have never had a problem, but this does remind me of two jokes:
What is the best off-road vehicle in the world?
A rental car.
And what car can go 0 to 60 the fastest?
Again, a rental car.
February 21st, 2008 at 10:53 am
A data point for those wondering about making a claim with a credit card company:
A few years ago I picked up a car late at night and stupidly did not check for damage. The next morning I noticed that the front and back bumpers were all messed up, with paint peeling and cracked, it looked terrible. When I returned the car I mentioned it to the return guy, and said I didn’t do it, and he said not to worry about it.
Of course, a month later I get a bill from a collection agency working for the rental car company (Alamo). I went online, got the Mastercard form, and filled it out. I don’t have a car, so I also filled out a form saying that I don’t have regular insurance, so this made the Mastercard coverage primary. I told the collection agency people that Mastercard would be handling the situation from here on out. A few weeks later I got a letter saying the claim had been paid. I checked online and they paid everything but the “loss of use” charge, because Alamo didn’t give them enough evidence. Mastercard was excellent about the whole process, very quick to respond and deal with issues.
Ever since then I have rented using Mastercard with no worries.
February 22nd, 2008 at 6:35 am
I rented a SUV in Belize using my AMEX card. Back home I don’t have a car or insurance, so AMEX became my primary insurance
A rock ended smashing into the hood which the rental car company wanted $500 to fix. I gave the charge to AMEX and a few weeks later, received a letter from AMEX telling me everything was resolved. Simple and easy. I highly recommend using AMEX (except in Australia where they have no coverage).
I’m surprised nobody’s mentioned liability insurance. For people like me without insurance, its a must. The potential cost far outweighs the $10-15 charge from the rental company.
February 24th, 2008 at 7:16 am
I’m driving a rental right now while my car has body work done on it (I hit a deer). I didn’t get the insurance they offer. I booked the card on my business AMEX card and while I was at the rental place I called AMEX and asked them about their rental insurance to make sure I was covered.
February 26th, 2008 at 8:47 pm
I had the awesome hard (HARD) sell last week on the insurance (”I just want you to be happy”) and even more so on the size (”it’s a 2-door aveo hatchback - have you ever seen one of those”). I asked if they needed to help a couple of people so they could conveniently run out (and upgrade me). I was assured that there was no way they would run out. “Only $10 more per day.” I walked out to the little shed where you get your keys and lo and behold, I had been “upgraded” for free.
The Ford Focus strained a little carrying 5 adults with luggage a half hour away, but the Aveo would have been 2 trips.
Don’t upgrade.
February 29th, 2008 at 1:25 pm
Interesting discussion here going on about AMEX *denying* coverage when coupons have been used
http://www.fatwallet.com/forum.....ls/811503/
Anyone else with a similar experience? I’ve always used my AMEX to cover this, but a little concerned now as I always use coupons too!
March 3rd, 2008 at 4:52 pm
I would not rent from Enterprise again:
Declined the CDW at the time of rental. Used Amex. Have personal insurance.
When I returned rental van the guy at the desk noticed a small dent on driver door side. I am not sure how it happened, it probably may have been there before. But it’s small dent that I wouldn’t fix if it were my personal car.
Anyway yesterday got the bill for $500 +.
Just filed a claim with Amex. The Amex rep says everything should be taken care. Let’s see how it goes. I will update.
March 7th, 2008 at 5:45 am
Here’s our rental car story:
We were invited to a wedding on the west coast. We live in the midwest. So four airline tickets and a week’s stay was going to be costly. After many many hours looking for the best deal on a national hotel chain, we ended up about 20 minutes outside a major metro area for $20 less per day. We rented a car, didn’t take the insurance as our insurance agent had confirmed before we left that we would be covered. We had three days of good driving getting our way easily around the city. Then the weekend came.
We were driving La, la, la, la, la BAM! The hood of the car was crumpled up so we couldn’t see out in front of us! Huh? What happened? Two cars avoiding debris cut right in front of us from the other lane as we were traveling on a busy four lane road going through the suburbs. (You see that’s how much space there was in front of us in our lane too.) Not having any time to stop, the car in front of us was hit by our car, and her car hit the car in front of hers. Our rental car took the brunt of the accident. Theirs had bumper dents. The whole front end of the rental was crumpled. Thankfully we including kids were not injured! We stood on the sidewalk for an hour talking with the other drivers, nobody injured. Just a hassle. Our insurance so far has taken care of the situation, paid the rental car company. Visa is going to pay our deductible after we turned in 10 documents. But, we’ve been briefly threatened with a lawsuit by the person we hit ! If we had taken the insurance the rental car company would have handled this without our involvement! Goodness knows we don’t want to spend the rest of our lives traveling out west for a lawsuit! Next time, I’ll pay $20 /day extra for the hotel downtown, manage without a car and rely on family members who got one.