Did you know that when you sign a rental car agreement, you obligate yourself legally to be responsible for ANYTHING that happens during the term of the rental–even if you would not otherwise be liable if you hadn’t signed the agreement?
Yep. Read the agreement. Each rental car company phrases its contract differently, but every contract I’ve ever read says that when you sign the agreement you agree to pay for everything that happens to the car, or involving its use, while you’re renting it. Even if you’re not at fault and even if the event that causes damage or injury is outside your control.
Example: You’re driving your rental car down the street and a drunk driver rear-ends you, pushing your car onto the sidewalk, where you strike a pedestrian. If you did not purchase additional insurance or the LDW/CDW, you are contractually and legally responsible not only for the damage to the rental car but also for the injuries sustained by the pedestrian and any other fees and costs incurred by the rental company, including attorney fees if the pedestrian files a lawsuit. Yes, I know the drunk driver was at fault. But you signed a legal contract that said you agreed to be legally responsible for everything, no matter what. So you are.
There is a way to avoid this situation. At the time you rent a car, rental car companies offer a Loss Damage Waiver or Collision Damage Waiver provision that can be added to the rental contract, in the same fashion that any amending provision can be added to a contract. The purchase is like adding a codicil to a will or an endorsement to an insurance policy. The LDW/CDW provisions remove some or all the language in the rental agreement that requires you, the renter, to be 100% responsible for any losses and damages that occur.
A full or comprehensive waiver generally states the rental company removes the rental agreement’s provisions deeming the renter legally responsible for damages and costs. A partial or limited waiver states the rental company waives the renter’s responsibility up to a certain dollar amount (e.g., $25,000) and/or only for certain types of loss or damage (e.g., damage to the rental car).
Of course, the good news comes with a cost. The price tag for a LDW/CDW ranges from $15 to $25 per day, on average. As far as I’m concerned, that’s a small price to pay for the peace of mind knowing you don’t have to handle any insurance claims on your own (or pay the rental company’s costs and attorney fees) if your rental car is involved in a loss. Especially since every auto policy I read does NOT extend all the coverage necessary, in the manner required by the rental agreement, if you wreck the rental car. But that’s a story for another day.
Free advice: If you become a member of the car rental company’s rewards program, the savings you realize on the daily cost of a rental offsets some or all of the extra cost you incur when purchasing a LDW/CDW. As a licensed insurance agent, I haven’t EVER rented a car without purchasing a full LDW/CDW. You shouldn’t either.
P.S. Thanks to my Enterprise associates, Rebecca and Keith, for the photos taken at the IAIP convention earlier this month.