Here's the scenario:
You are in Las Vegas for a vacation, or business. You have a personal auto policy at home. For this trip, you decide to splurge and rent a BMW convertible and do not buy the Collision Damage Waiver (CDW). These waivers can be quite expensive. They average about $25 a day on top of the rental car fee.
Does your policy cover you for liability in the event of an accident with the rental car? The short answer is yes. You would be protected for the limits of your policy as the Rental vehicle is considered a "Non-Owned Vehicle".
What about damage to the rental car. Does my policy cover that? To answer that, lets look at the policy wording and see what it says.:
We will pay for direct and accidental loss to “your covered auto” or any “non-owned auto,” including their equipment, minus any applicable deductible shown in the Declarations
So it seems we're good right? As long as I have Comprehensive and Collision coverage on my policy I should be covered and don't need to purchase the CDW. Again, these waivers are costly and there seems to be duplicate coverage in many cases. Having said all that, why should I get the coverage? Here are a few reasons to consider purchasing the CDW coverage:
Remember, you rented this car in Vegas. You live in NY. It's hard enough settling a claim when you are in the neighborhood. It's much harder to work on a claim from over 2,000 miles away. Think time difference, the fact that you have no experience in these matters and the fact that the rental car company claim adjusters are experts at this. They do it everyday. You do it once in a lifetime.
Your policy deductible applies here. There is nobody to "work with you" on the deductible. So the first $500 or $1,000 is on you!
Loss of Use Charge is Waived Under the Collision Damage Waiver:
If you have an accident, you have to pay for more than the repairs of the vehicle. You also have to pay for the lost usage of that car. For example, if the damaged car is layed up for 30 days for the repair, they could have rented that car for $50/day. That's $1,500 more you have to pay!
No Claim Filed Against Your Insurance Co:
Not only will a claim count against you, the insurance company has the right to increase your rates as a result of the claim. A "Chargeable Accident" is generally 20% increase.
Difference between ACV & Replacement Cost:
If you read your rental agreement (I read them for fun!), you will see that you are required to settle the claim at Replacement Cost, not Actual Cash Value(ACV). The difference could be startling. If you wreck a brand new BMW the average depreciation off the lot is about 15-20%. This is a $60,000 car. 15% of that is $9,000
Last point, what about credit cards? I have an American Express Platinum Card. Doesn't this cover me? I stay away from answering these questions because every credit card company has a different insuring agreement and they constantly change. To play is safe I wouldn't rely on a credit card company to properly protect me.
So with all that, do you still think you should not buy the CDW? While it's expensive, if you have a wreck you will find it was money well spent.