Question: I drive an older vehicle, so I don't carry collision on it, just liability coverages. If I rent a car and don't accept the collision damage waiver and am involved in an accident, do I have any collision coverage?
Answer: Nope. If you’ve dropped collision from your auto insurance policy, which is a smart move when you have an older car (See “Is it time to drop comp and collision?”), and turned down the collision damage waiver (CDW) from the rental car agency, then there won't be any collision coverage from your car insurance company or the rental company for the rental vehicle. You need to pay for collision coverage to have it as a benefit from your auto insurer or the rental car agency.
If your car insurance policy has only coverage for bodily injury liability and property damage liability that pay for damages you do to others in an auto accident (up to your stated limits), then this is all that may extend to a rental car -- and that’s not even a guarantee.
While most car insurance policies extend coverages from your personal auto policy to a rental, not all do, or there may be certain exclusions, like only personal use and not business. To make sure that your liability coverages will extend to a rental, review your policy and then call your agent for clarification, if necessary.
As for collision coverage for a rental car, some drivers go without collision for a rental car, but if you do then you’ll be held personally responsible for damages to the rental car if you’re at-fault in an accident. Some rental companies will also tack on charges for the loss of revenue they’re unable to receive while the rental vehicle is being repaired. That can add up quickly.
Purchasing a CDW or LDW (loss damage waiver that also includes theft coverage) from a rental agency can give you the physical damage coverage that you need for the rental vehicle, but with a cost usually between $12 and $25 a day.
If you don’t rent cars often, then purchasing a CDW or LDW from the rental agency may be fine, just expensive. But if you rent cars on a frequent basis, then adding collision coverage back to your own vehicle may be worth the cost.
Price out your auto policy with collision, with your own insurer and others since comparison shopping for auto insurance with other providers may shave your rates by hundreds of dollars a year, if not more. If you do add collision back to your personal vehicle, make certain that it will extend to rental cars and check to see if there are any restrictions.
Many auto insurance policies will extend collision coverage only up to the value of the car you listed on your policy. This means you if rent an exotic car or even just a nice new sedan, but only own a Ford Escort, then you may still owe many thousands of dollars if you totaled out the rental vehicle.
If you don’t want the extra expense of adding collision back on your policy or buying a CDW, then check to see if the credit card you use to pay for your rental car offers you any insurance coverage benefits. Some credit cards have benefits that include covering damages to a rental car that were the result of a collision or theft.
Credit card CDW benefits typically come with many restrictions and exclusions, so if this is the collision coverage you are counting on for your rental car, read over your credit card rental car benefits in detail to make sure it gives you all the coverage you need.