Summer is the perfect time to take the family on a road trip. It’s also a favorable season for rental car companies since people across the country go on vacations. However, since more people are renting vehicles, there is bound to be an increase in accidents. That’s when a collision damage waiver (CDW) is crucial. Those who own a rental vehicle business should educate customers and provide them the opportunity to purchase a CDW. In this blog, we will discuss all the ins and outs of utilizing a CDW and how it can protect your business.
What Is A Collision Damage Waiver?
A collision damage waiver, also known as a loss damage waiver (LDW), is an optional agreement that can be purchased from a vehicle renter. It typically covers financial losses from theft or damage to a rental car. Customers that purchase a CDW pay an additional daily fee on top of the rental fee, which is usually $10 to $30 per day for economy vehicles.
It’s not a requirement to purchase this policy in the U.S. but if the customer does not sign a CDW, then they are on the hook for any repairs or loss of income faced from damages. It’s important to note that this policy doesn’t cover liability-related expenses. It will NOT cover:
- Damage to other vehicles caused by the driver of the rental vehicle
- Personal injury of anyone involved in an accident
- Damage caused by unlawful behavior such as speeding, off-roading, or driving under the influence
- Some policies don’t offer damage coverage to windows, tires, or mirrors
Some rental companies offer partial loss damage waivers which cover losses only up to a predetermined amount.
What Does A Collision Damage Waiver Cover?
CDWs cover most physical damage to a rental vehicle, as well as additional costs that may not fall under insurance policies. For example, a CDW usually provides “loss of use” coverage for when the car is under repair and therefore can not be rented out. Also, they usually cover towing and administrative fees for the rental company.
The following is exactly what collision damage waivers cover:
- Damage caused by an accident
- Damage caused by vandalism or natural disaster/weather
- Administrative and towing fees
- Lost revenue while the car is under repair
- In some cases, theft
Alternatives To Collision Damage Waivers
Although collision damage waivers are great for protecting both the customer and the rental company, there are some alternatives.
Major credit card companies such as Mastercard, VISA, and American Express have some built-in rental insurance. Customers need to ensure that they use a credit card to reserve the vehicle and pay for the reservation. Also, to utilize credit card benefits, customers must deny any damage waiver offered by the renter.
Some private car insurance policies also include coverage provisions when driving a rental car. It’s called a Rental Vehicle Insurance Endorsement and these policies generally only apply to rentals in North America.
Personal liability umbrella policies are programs that include many forms of insurance under one umbrella which often includes rental car damage waiver policies.
A Team Of Pros At Your Side
Even when a customer purchases a collision damage waiver, dealing with accidents is a huge headache for renters. This is when you need a team of professionals at your side. At RRL Insurance, we have the experience and knowledge to help your company through all your insurance needs. For more information on how we can be of service, please contact us today.