Should you purchase a rental car loss damage waiver?

Every time you rent a car, you ask “Should I purchase the (LDW) Loss Damage Waiver?”  Here is some information that will help you decide.  It depends on your financial situation and willingness to accept the risk.

Rental car contracts make you completely responsible for any damages to and related to the car you are renting, regardless of your fault.  In addition to paying for the damage to the rental car, you are also responsible for diminution in value, loss of use/rental, and other unspecified ‘administrative’ costs.  So what does your auto policy cover?

Your auto policy will cover the physical damage to the rental car using same kind and quality parts.  However, insurance will not pay for the reduction in value of the car as a result of the damages.  The rental car company will hold you responsible for the difference in value, which could be thousands of dollars.

Your auto policy will also cover the actual loss of use and sometimes includes a time deductible.  However, the rental car company will require loss of use reimbursement for the full time the car was out of service, even if the car had not been reserved for rental.  This also can amount to a significant out-of-pocket expense to you.

The rental company can also legally charge you for the vehicle to be towed hundreds of miles to their specified location.  This could be several hundreds of dollars.

Also ‘administrative’ costs are usually vague in a rental contract and can include significant costs that your auto policy will not cover.

Another issue could cause a problem, when your insurance company wants to investigate the claim and appraise the damages.  Most rental companies want to get the car repaired immediately and return to the car rental fleet.  Some rental companies will charge your credit card for the damages until reimbursed by your insurance company.