Insurance Insights ~ May 2000

The Rental Car Dilemma

With the vacation season in full swing, one of the most frequent questions an insurance agent is asked is whether or not the collision damage waiver needs to be purchased on a rental vehicle. The answer to this question can determine the amount of money you will spend while renting a car. You first should have an understanding exactly how your personal auto policy will respond as well as any credit card coverage that may be provided to you, and finally understanding your rental car agreement.

The rental car company may provide a limited amount of liability insurance if the renter complies with the rental agreement, generally minimal limits. (In some states, the rental car company provides no liability for the renter.) The vehicle is required to be returned in the same good operating condition to the company. If you decline the CDW (collision damage waiver), also known as LDW (loss damage waiver), you will be responsible for any damage to the vehicle, possibly including acts of nature. You may also be required to pay the extra expense and the loss of use of the rental car resulting from the damage.

You may have the option to purchase the following coverages from the rental car company:

1. CDW or LDW
2. Higher limits of liability insurance
3. Personal accident insurance
4. Personal effects coverage

So the question is -- should you buy the CDW or LDW? Consider the advantages of purchasing the CDW or LDW; waives your responsibility for all damage to the auto, waives loss of use, there is no deductible, and there is no waiting for settlement. The disadvantage of the CDW or LDW is the cost, and if the contract is violated, CDW coverage is voided. Your credit car company may provide CDW for damage to the rented car usually excess over any other collectible insurance, and the coverage is usually void if the rental car contract is violated.

You may also want to contact your personal automobile insurance agent to discuss your policy limitations. Be prepared to provide the following information:

1. The type of vehicle you are renting?
   - private passenger auto, pickups, or vans
2. Is the vehicle being used for pleasure or business use?
3. Where will you be using the vehicle?
   - generally no coverage outside the US territories and possessions, and Canada.
4. How long will you be renting the vehicle?
5. 5. Who will be driving the vehicle?
6. Will the vehicle be rented in the name of a business or in a personal name?
7. Are you aware of the rental agreement’s "Use Restrictions"?
8. Do you understand the advantages of purchasing the rental car company’s CDW?
9. If you decide to rely on a credit card to provide coverage, do you understand the limitations of this coverage?

By having a general understanding of your coverages, you will make the proper decision based on your situation.

Please see your policy and agreements for information regarding coverages as automobile insurance policies, rental car agreements, and credit card agreements can differ.

Preserve Your Piece of the World

Summer is coming and everyone is busy planning outdoor activities. Maybe you’ll be relaxing by your backyard pool, or doing home improvements such as painting or building a deck. Others will be planning their favorite sports activities: golf outings, biking, camping, boating or water skiing. Even more of us will be driving our cars on family vacations. Don’t these things sound great?

Did you know that these and other typical summer activities you may consider "safe" put you in a position of facing one of those million dollar lawsuits that you hear about? Here are some sobering judgements that resulted from just these types of activities. A friend who was helping paint a house fell and hit his head. The lawsuit that followed cost the homeowner $1.2 million. An end-of-school swim party ended in a $1.5 million settlement when a 16-year-old dove and hit his head on the bottom of the pool and became a quadriplegic.

Can you enjoy all that summer offers while still protecting everything that you have worked for? YES! Consider making a Personal Catastrophe Liability Policy (you may know it as an umbrella policy) part of your insurance program. This type policy will help to protect your assets if you ever face one of those million dollar lawsuits.

This type of policy is a supplement to your home and auto policies; therefore it can provide a great deal of protection for a low cost. Typically, a million dollars of protection against lawsuits will cost just $150 - $200 per year. Compared to all that you stand to lose, this is a very smart insurance investment.

You’ve worked hard to provide your family with many comforts and enjoyments. Consider purchasing a Personal Catastrophe Liability policy -- the smart way to protect your assets. Give our office a call, speak to your agent, and then go ahead and plan your summer outings! Enjoy!

INSURANCE INSIGHTS is an electronic newsletter published monthly by G. C. Weimer Associates, Inc. Information contained herein is accurate to the best of our knowledge and belief as of 5/1/2000. If you have a topic of interest for a future issue, e-mail us at info@gcwinsure.com.