Car rental companies offer a loss damage waiver to relieve renters of liability for theft or damage to the vehicle. Renters should carefully consider coverage options and check with their insurance company before accepting or declining the waiver. Liability insurance may not cover rental vehicles, especially in foreign countries.
A loss damage waiver, also called a collision damage waiver, is a form of insurance offered by car rental companies to customers when they rent a vehicle. The purpose of a loss damage waiver is to relieve the renter of any liability in the event of theft or damage to the vehicle while the renter is responsible for the vehicle. A renter is generally not required to agree to a loss damage waiver, but should consider the possible consequences if they decline the option.
When a renter books a vehicle through a car rental agency, there are a number of additional options that they can add to the rental. The basic daily rate for a vehicle rental may not include any insurance coverage of any kind. As a result, car rental companies offer different levels of insurance to renters to cover mechanical breakdown, theft, collision or other losses that may occur. If a renter does not want to be held responsible for any damage that occurs to the vehicle itself, a loss damage waiver is a good choice. Additional coverage options often include liability insurance coverage or towing coverage.
It is important that the renter understands the extent of coverage provided as part of a damage waiver. If he or she is involved in a collision and is ultimately found to be at fault, he or she will still be held personally liable for any resulting personal or property damage. Coverage for personal injury or property damage, other than the rental vehicle, would be covered under a liability coverage option. The different coverage options can often be confusing and the renter should be very careful when selecting coverage and signing the LDW to be certain that the coverage paid for is the coverage needed.
A renter should check with their insurance company before deciding whether to accept or decline the waiver option. Many renters make the mistake of assuming that the liability insurance coverage they have in place for their personal or business vehicle also covers any loss or damage to a rental vehicle. Some policies will cover a rental vehicle in the event of loss or damage, but not all. Those that provide coverage for rental vehicles may have limitations on coverage. Notably, most liability insurance policies will not cover a rental vehicle if the car is rented in a foreign country.
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