Yes, a collision damage waiver covers scratches on a rental car. A collision damage waiver is an optional rental car insurance add-on that covers most damage to a rental car, from damage caused by a crash to cosmetic damage from a scratch. The only real exception is damage caused by illegal acts or behavior that violates the terms of the rental contract.
You can purchase a collision damage waiver for $10 - $30 per day when you pay for your rental car. If you’re paying for the rental with a credit card, you should check ahead of time to see if your network automatically offers coverage similar to a collision damage waiver.
Yes, you need collision insurance if your car is leased or financed. Collision insurance is not required by any state laws, but most lessors and lenders require drivers to have it until the car is paid off. Even if you’re not required to have collision insurance, you should still purchase it if you cannot afford to pay for damage to your vehicle after an accident.… read full answer
Why You Need Collision Insurance
Collision insurance pays to repair or replace your car after an accident, regardless of who is at fault. If you cause an accident, collision coverage is the only way to have your repair costs covered by insurance. Even if you are not at fault for an accident, you can file a collision claim to pay for your repairs while you wait for a final determination of fault. Your insurance company will then recoup your costs from the other driver’s liability insurance.
Factors to Consider When Deciding if You Need Collision Insurance
Price of coverage
Likelihood of an at-fault accident
Cost of repairs
When to Consider Dropping Collision Insurance
A general rule of thumb is that if your collision insurance premium is more than 10% of your car’s value, you can consider dropping the coverage. However, this is just a general guideline. If you can’t afford to pay out of pocket to repair or replace your car after an accident, then you should continue to carry collision insurance. You should also keep it if your car is particularly valuable or you live in a high-traffic area where you are more likely to get into an accident.
You should drop your collision insurance when your annual premium equals 10% of your car's value. If your collision insurance costs $100 total per year, for example, drop the coverage when your car is worth $1,000 since, at that point, your insurance payments are too close to your car's value to be worthwhile. Drivers can easily find a car’s value with the online vehicle appraisal calculators from Edmunds or Kelly Blue Book.… read full answer
When to Drop Collision Insurance
When you rarely use your car
The more you drive, the higher your risk of being in an accident – so if you don’t drive often, your risk is lower than average. That means you could be paying for collision insurance that you’re unlikely to need.
When repairing a car would not have a big impact on your finances
Maybe you have an emergency fund that you could use to fix your vehicle. If you're willing to spend your savings on car repairs, then it's safe to drop collision insurance. However, people often prefer their emergency fund to be a safety net for when they leave their job, face health issues, or need home repairs. It all depends on what you're comfortable with personally and how much you have saved.
When you’re paying 10% of your car’s value in premiums annually
The cost of repairs goes down as your car gets older, so you don’t want to overpay as your car loses value.
Other Things to Consider Before Dropping Collision Insurance
The 10% rule for dropping collision insurance is not set in stone. But it’s a good milestone to keep in mind because as the value of a vehicle falls over time, the value of its insurance coverage does too. And when you start paying a significant portion of your car’s value in premiums each year, you’re simply overpaying to offset the actual level of risk that remains – at least as far as collision damage to your own vehicle is concerned.
Collision insurance repairs or replaces your insured car if it's damaged, whether by another vehicle or an object like a tree or mailbox. This insurance covers up to the cash value of your car - which is where the 10% rule comes in. This rule most frequently applies to older cars or vehicles with a lot of mileage, as they are worth relatively low amounts. There are a few other situations where it might be a smart move to drop collision insurance, too.
When Not to Drop Collision Insurance
Every state requires car insurance except for New Hampshire and Virginia. However, the law doesn't mandate collision insurance. The only legally-mandated car insurance is liability coverage, for damages to someone or something that you accidentally hit with your car. Although collision insurance is optional, it's well worth purchasing for many people.
If you're financing your car, collision insurance is usually required. Otherwise, you might be stuck with a repair bill equivalent to the value of your new vehicle! If you're leasing your car, the same logic applies – most lessors require drivers to carry collision insurance, too.
In summary, it's a smart money move to drop collision insurance when your car is old or has high mileage, but you should definitely think twice about doing so.
You need some form of rental car insurance to drive a rental car, but you only need a special policy if you don’t have personal auto insurance, you’re traveling internationally, or you want extra peace of mind. Standard car insurance policies usually extend to rental cars, so most drivers are already covered. Many … read full answercredit cards also provide insurance against damage to the rental car itself.
You Might Need to Buy Rental Car Insurance If You:
Don’t have a personal car insurance policy.
Have a personal car insurance policy but your limits are low.
Are traveling internationally and your personal insurance won’t cover you.
Are traveling for business and your personal insurance won’t cover you.
Don’t want to pay your normal deductible or see your premium increase if you file a claim.
Don’t want to pay fees that your normal insurance won’t cover, like loss-of-use charges.
Are renting a car for longer than your insurance or credit card will cover you.
Want to avoid filing a claim with your normal insurance company if you get into an accident with the rental car.
If your car rental is covered by your standard insurance and you’re willing to pay your normal deductible, it’s fine to go without separate rental car insurance. In this case, just be sure to ask your insurer about any exclusions before the rental begins.
It’s also worth noting that even if your standard car insurance policy only includes liability coverage, you might be protected in other ways. For instance, some credit cards allow you to file claims for damage to a rental car, while homeowners, condo, or renters policies cover personal possessions.
In other words, you should consider your current insurance policies before deciding if you need rental car insurance. Additionally, if you plan on using a credit card as coverage, be sure you know about any exclusions and actions you need to take for the coverage to apply, such as declining the rental car company’s insurance options. For more details, check out WalletHub’s complete guide to rental car insurance.
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