Accepting payment for the assumption of risk is insurance, regardless of what car rental companies call it.
A car rental company recently advertised “Optional CDW is $17.95 or less per day.” My Gawd, thats over $6500 per year for coverage that my insurance company charges about $700. I have teenage drivers which rental car companies don’t allow. So my question is: Why don’t state insurance commissioners regulate these guys like other insurance companies?
I am sorry I do not have a decent answer to your question…but how about this; $6500 per car, per year, per rental agency, could supply a heck of a lot of campaign contribution money. Methinks the answer lies in there somewhere.
(Especialy in Taxachusettes!)
CDW is just another profit tool. Check the benefits of the credit card you use. The majority of cards provide insurance when you use them to rent a car.
Be sure to read the part about how full the car renter expects the gas tank to be when you return the car. If you return the car with half a tank to Hertz or Avis, they’ll fill it up for 75% more per gallon than standard and charge your card.
OTOH as late as last year it was best to return a car to Alamo that was running on fumes.
You should first ask your own insurance carrier if your policy pays for insuring a rental, most do. If so, you can just blow off the CDW.
Some rental companies really like to push it. I had a rental last week (paid for by the repair shop) as my car was having some warranty work done. The rental agent tried to sell me the CDW. I explained that I had insurance. She asked me if I knew what my deductible was.
“Wouldn’t you hate it if we had to call your insurance company and you would have to pay out for that deductible?”
Of course, I could just drive the car and not get in an accident. Or could I have been driving my own car and gotten into an accident and had to pay off the deductible that way.
I didn’t see how the extra $12 a day was to my benefit.
only fools but the CDW.
‘only fools but the CDW.’ Then I’ve been a fool but then my insurance didn’t cover it…at that time.
Also, your own usually has a deductible, theirs doesn’t.
You can get your decuctible to 0 for the time you get the rental if you call yourinsurance agent. Its about $2/day.
I used to work at a car rental company and while I do not consider myself an expert, I do know a bit on how the industry works.
The CDW is a way for the company to make money, obviously, but at the same time a car rental company is charged a very high rate for insurance themselves. I know the company I worked for charged $12.50 a day for CDW with a $250 deductible. The deductible for there cars through their insurance company was $2000, that’s a lot of money to make up considering most fender benders can cost you at least $1000.
that insurance varies from state to state and company to company. Some policies insure the driver, regardless of what you are driving. Of course, they prefer you to drive your own car, but the coverage is on the named driver. Some companies insure the vehicle, regardless of who drives it (with permission of course).
So if your policy insures you the driver, then you probably don’t need this coverage from the rental agency. If your policy covers your vehicle, then yes, you need the collision waiver from the rental place. Unless of course, as has been mentioned, your credit card offers some or you don’t want it at all.
First of all, I don’t think that there is anything inherently illegal in charging ridiculous premiums, so there would be no reason for the commisioner to intervene.
But I do not think that the rate is that high. Look at it this way: They are offering low or no deductible insurance to a total starnger without the benefit of a driving record or a DMV record. For $12-17/day they are absolving this person of any responsibility for a $20,000 item.
While any premium is meant to make money, you have to balance the premium against the losses. Teh premium you pay may be $17/day, but if you wreck that car, they have to pay $1,000-20,000. It takes a lot of small premiums to pay for a car.
Don’t know if you reallly want the govt. to regulate it. I never used to buy the CDW because I was covered through credit cards and my own insurance. Then NY paseed a law which said rental companies could only hold you responsible for $100 worth of damage. Amazingly, the rental rate went up by about what the CDW used to cost, only now there was no way out.
I have no problem getting the waiver since the company pays for it. In fact, I once caused $6,000 to a rental car in an accident and had the waiver. No questions asked, they had the car towed and brought me another one (actually an upgrade) for free, and no report to my insurance company. Yes, my insurance does cover rentals, but I neither want the hassle, nor the mark on my driving record, nor the hit to my car insurance bills (which skyrocket after that) if I get in an accident in someone else’s car.