If you regularly rent cars, you know that the rental agent will ask if you want to purchase the “Loss Damage Waiver” (LDW). What should you say?
If you have a personal auto insurance policy for your own vehicle(s), it will extend to cover your use of a rented car. However, there are important limitations that could result in large out-of-pocket expenses. Consider the following:
You may have to pay for any coverage gap. Your auto insurer will pay if you currently carry collision and/or comprehensive coverage on at least one of your personal vehicles. Even so, your auto policy will cover only the actual cash value of the damaged rental. This is the cost to replace it minus depreciation. Your rental contract likely makes you responsible for paying the cost of the depreciated amount as well as other administrative costs, and these could add up to hundreds or thousands of dollars that your personal auto policy will not pay.
If you do not purchase the LDW and you damage the rental car, you are responsible for paying the rental company’s loss of use. At best, your personal auto policy severely limits payment for loss of use to a rented car. Often, such costs are not covered at all.