Why Are Car Rental CDW Costs so High with Major Rental Firms?

man-key-car-rental-insurance

The CDW, or collision damage waiver, that the car rental companies offer is not actually a type of insurance, although many people mistake it for such. Instead, it is a waiver, which means the rental company will waive their right to collect a massive deductible from you if you happen to damage their vehicle. The waiver does not remove the deductible entirely. It will lower it though, and since they are generally so high with car rental companies, this might seem like a good deal at the outset.

What Do the CDWs Cost?

The price of the CDW varies from company to company, naturally. The average price tends to hover around $26 AUD, but it could be higher depending on the company you choose. If you are renting a vehicle for a full week, then you can expect to pay around $188 AUD on the waiver at least.

Some see the CDW as being a waste of money, and when you consider just how expensive it can be, it’s easy to see that reasoning. However, those who do not have supplemental insurance to cover collision damage could be in for a rude surprise if they damage the vehicle. The cost of the deductible, in the Australian market, can be as high as $6000. The insurance companies charge high rates because they know that people will often pay them so they can reduce the deductible, and that consumers are often ignorant of other options, such as excess reimbursement insurance.

One of the other things to consider with the CDWs is that they may have coverage gaps. This means that they might not cover damage to certain parts of the vehicle, such as the windshield, for example.

See the below table which illustrates what Thrifty Australia covers as a standard cover, compared to their two CDW options over a 7 day rental. In the 4th column is a comparison with Australia’s leading car rental excess reimbursement insurance from Tripcover.com.au

comapre-thrifty

Do You Need to Have a CDW?

Some people automatically buy the CDW and just factor it into the cost whenever they rent a vehicle. However, that might not always be necessary. In fact, many times, the insurance policy for your regular everyday vehicle might extend to rental cars. This usually isn’t the care in Australia, but often is in the US. In this case, if your deductible on your regular policy is better than the CDW, and you do not have to pay for it, then simply using your current insurance is a smarter and more cost effective option.

Two other alternative options

There are several alternatives to buying the CDW, are your travel insurance policy and your credit card company. Some credit card companies offer collision damage coverage free to their users. Others may charge a small fee. They can cover more than just the collision damage as well. If you have a travel insurance policy for your trip, it will generally have some type of car insurance included along with it. However be very careful with this option, given standard travel insurance policies tend to cover only the “standard damage” covered by the rental company CDW. So if you look at the third column from the left of Thrifty’s coverage, these are the only things that are covered by standard CDW e.g. windscreen, undercarriage and hail damage are all not covered by the standard Thrify CDW, hence unless your travel insurance policy explicitly says that it covers “windscreen, undercarriage and hail damage” then chances are that you wont be covered.

While choosing or not choosing the CDW is ultimately your decision, some far better alternatives are out there that will help you save money and actually provide you with better coverage. Always look at all of your options before you simply buy what the rental company tells you do buy.

What is car rental excess reimbursement insurance cover?

Reimbursement Cover: In the event that the rental vehicle is stolen or damaged, the rental car company will charge your credit card for the excess or gap amount. You can then claim for reimbursement under your Tripcover Rental Vehicle Excess Reduction and Luggage Insurance policy underwritten Allianz Global Assistance. Your claim will be processed within 10 business days of receiving completed documentation.

Why Pay for the Whole Buffet When You Just Want the Dessert?

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We’ve all been there before. All you want is to get your apple pie, but they make you pay for a whole buffet just so you can get that one item you really want. While renting a car is quite different from having a meal, this actually does still apply.

Anyone who has ever tried to rent a vehicle knows that when they head to the rental counter, there will be a tug of war between your wallet and the company. They will tell you that you need to have A. B, and C, when the only thing you want to do is get into your rental and drive off the lot.

Of course, if you are not careful, you will be paying far more than you imagine before you get to drive away. Instead of paying for that whole buffet, let’s look at some tips you can use to help keep the costs down so you are only paying for what you really want and need.

How to Alleviate the Problem

The first thing you need to do is to think about what you really need from the rental. How and where will you be using the vehicle, and how many people will be traveling with you. When you are renting, choose the vehicle that meets your needs, but that does not exceed them. This will allow you to choose cheaper cars in most cases.

Some rental companies will offer an upgrade, but this is rare. It still does not hurt to ask though. Just make sure that they do not talk you into getting a larger vehicle than you need. They will usually try.

If you have coverage through a credit card, or through your travel company, then you might not need to have additional coverage through the rental company. Make sure that you know the policies regarding your credit card’s insurance offerings and see if it is enough to cover your rental requirements e.g. rental excess, that windscreens are covered, single vehicle accidents and undercarriage damage. If they are not listed as covered then they are probably not. This can help you save a substantial amount of money.

Something else you may want to do is check online for discount codes. These can save you a fair bit of money in some cases. Not all car rental companies will have coupons available, but it is worth checking. They may offer a discount, or they could offer a free upgrade. If you were to get an upgrade, though, be aware that other costs could be higher as well. For example, if you were to rent an SUV, the cost of petrol would be more simply because you use more while driving and need to fill up more often.

Know What You Are Buying

Always take the time to read the fine print of your rental contract to know what you are paying for. If you find any tacked on elements that you do not need, make sure that you talk with the rental company about removing them before you sign and pay for the rental. With some attention to the minute details, you can make sure you are getting just the pie and not all the broccoli that you don’t want!

Had similar car rental experiences? share them with other readers.

Six Ways To Save $$$ On Your Xmas Rental Car

  1. Book Early: Firstly, save by booking your rental car two months ago, sorry :-) If you leave it any longer you will get really stuck, so book ASAP. At least you will know this for next holiday season.
  2. Use comparison sites: like VroomVromVroom.com.au , http://www.discovery-carhire.com.au/ and www.Oodles.com.au and you are bound to get the best rates.
  3. Off Airport Rentals: Don’t get the rental at the airport as there are airport loading fees and generally the rates are more expensive.
  4. City Versus Suburbs: Check out  the rates suburb by suburb as you can sometimes get better deals outside the city centre locations.
  5. Standalone Car Rental Excess: Don’t take up the car rental companies’ offer to reduce your deductibles or excess liability, more commonly called CDW (collision Damage Waiver) This can nearly double your rental. Use standalone car rental excess reduction sites like tripcover.com.au . Their cover starts at around $9 per day and reduces down to around $5 per day over 15 days and covers ALL incidences including windscreens, single vehicle accidents, overhead damage etc. Use your AU or NZ Frequent Flyer number for a further 10%.
    tc8
  6. Discount Codes. Look out for discount codes like this one:  47684365   This will give you a 15% discount with Europcar, for example:

With Code:e1
Without code:
e2

The power of patience

The power of patience – Flying Solo Article

By Peter Crocker – In a world that glorifies rapid growth, romanticises rags-to-riches stories and lauds overnight sensations, you’d think that business success hinges on dreaming up the next big idea. Does it really? …..more

My Comment:
After reading the E-myth about 12 years ago Peter, I was inspired to do business a better way. The internet facilitates this type of thinking and can potentially earn us relatively passive income if done correctly. 12 years on, going bankrupt, and losing about 100K, I still grasp onto that belief or hope but understand that it still could be a pipe dream.

I will let you know if I get there with my latest venture TripCover car rental excess insurance, but I agree with you one needs patience, patience and more patience.

Peter’s reply:
Hi Des, I read the e-myth ‘contractors’ version quite a few years ago too and it made a big impression on me. I checked out your new venture too, looks interesting, I liked your proposed advertising images especially :)
I wish you patience and all the best with the new venture! Hopefully you’ll fill us in as you progress.
Cheers

iPhone and Android apps are Now Available

Yahooo! After much delay our iPhone and Android apps are now available for free download at the iTune and Google Play stores. Simply go to iTunes and Google play sites and search for Tripcover.

View on iTunes website

View on Google Play website

Now, when you are at the rental desk you can decide to by-pass the car rental companies expensive excess reduction offer (between $22 to $27) and simply use the Tripcover app  to cover your rental, from $9.30 per day, while you are heading to pick up your car.

Thrifty, The Smiling Assassin and Debit Cards

Thrifty Smiling Assassin

I hired a car today from Thrifty.

Of course I used Tripcover to cover my excess and reduce it to $0 for $13.60 per day.

When I got to the Thrifty rental desk I was told that if I wanted to use my MC debit card that they would need to take the $3300 excess out of my account right now. Otherwise I was going to have to take out their very expensive $27 or $33 excess cover. I told the guy that I did not have $3300 in my account and he simply smiled and said “I knew that, as most people usually don’t”. Ca-Ching!! His eyes lit up with $  $ signs.

I told him that I already had insurance with Tripcover and he smiled again and said his hands are tied. Finally When I told him that I thought that this was outrageous he simply smiled again and said ” I know!”

I think Thrifty should make their policy clear with regards debit cards as the car rental company knows that once we get to the desk we have little or no choice at that point.

PS. When I returned the car I pointed out that their terms and conditions on their website
did not indicate this new policy. I was told that it was so new that it was not on their website. Go figure! I am supposed to know about their new policy by rolling up to their desk and get informed on the spot. I think this is why the ACCC has targeted the car rental industry because of this type of treatment of their customers. Although they were apologetic this time, I will be calling their head office and requesting a refund of my $27 extra insurance that I was forced to purchase, with no mention in their T&C.

PPS: Yeah! I got a response from head office and all is good, I think.

Good afternoon Mr Sherlock and thank you for taking the time to get in touch with us.

As a Blue Chip member no bond is payable from you at any time.  There has clearly been an issue with our staff member on front counter misinterpreting an internal directive and I hope that you can accept my apologies for any confusion and any pressure to reduce your damage liability against your wishes.  I have today directed our accounts department to refund $27.94 back to your debit card.

Once again, I do apologise for any inconvenience.

Kind regards

Thrify

Sherlock Cracks the Case

Smart Traveller article from The Age and the Sydney Morning Herald on Tripcover
July 7, 2012

Sherlock Cracks the Case
Desmond Sherlock is a thorn in the side of Australian car-rental companies. About six months ago, he started tripcover.com.au, the first insurer to specialise in car-rental excess insurance.

Car Rental Excess Insurance

“Our premiums are about a third cheaper than what you get with the rental companies,” Sherlock says. “Their insurance rates are usually from $22 to $27 a day to reduce the excess to $300. Our rates start at $9.30 a day.”

Sherlock says that some car-rental policies have excesses up to $6000. Of 6.8 million annual car rentals in Australia, between 30 per cent and 40 per cent of people opt to buy excess reduction.

He agrees many travel-insurance policies also provide car rental excess reduction, but claims his company (managed by Allianz Global Assistance) is the only specialist in Australia and soon hopes to offer an annual policy and expand to New Zealand.

Read more: http://www.theage.com.au/travel/the-honeymoon-is-over-fivestar-divorce-hotel-deals-20120706-21m3n.html#ixzz1zv5NLKaI

Some Complaints from Car Renters

Car renters struggle to give up old tricks

What is it about the car hire industry that makes it a candidate for the most poorly behaved corporate sector in Australia?

Over a decade or more up until the middle of last year, it seemed to me the car renting business had become virtually incapable of telling the truth about the real cost of renting a car.

The headline rate that appeared in advertisements was usually about half what you’d be up for when you added all the asterisked charges, then put petrol in the tank. Heaven help you if you took the car back with a tank that needed topping up at the renter’s sky-high prices
Read more:  October 4, 2010

Comments

· I booked a car online for one day in Sydney for a fleeting day trip to be at a special occasion for an old friend. The email receipt I received for my reservation mentioned an additional fee for ‘excess reduction’ on top of what I’d already paid for excess cover, but did not mention what the excess would be if I did not pay the fee. I found out when I arrived to pick up the car that it was a whopping $3500 excess which I think is a risk few people would be willing to wear. So in fact my rental for the day was $30 more than I was quoted PLUS an additional airport fee of $18 which was also not mentioned along with the “airport concession fee recovery” of $11 quoted in the receipt. No way would I have rented a car for the day if I’d known how expensive it would be.

Commenter
BelaS
Melbourne
October 04, 2010, 10:46AM

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Read the contract. Be aware of your responsibilities. Ignore the super deals advertised and negotiate the full price at the counter. Use your phone/camera take photos of vehicle before you leave for damage reference. Would you lend your brand new car to a complete stranger without any conditions for $50 a day?? No, so cover your arse and read the fine print.

Commenter
Barney  Melb
October 04, 2010, 10:47AM

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If you have insurance, you shouldn’t have to worry too much about excessive charges for damage. Take a video camera and do a once-over of the car to identify any marks and report any that aren’t on the paperwork before you leave the car park. Other than that, there isn’t too much that can go wrong. If you forget to fill up before returning the car, it’s hard to blame the rental company. The fuel gauge will indicate full for a while after you fill up.

Commenter
jules
Location
melbourne
Date and time
October 04, 2010, 10:52AM

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Welcome to Tripcover’s Car Rental Excess Insurance Blog

Welcome to Tripcover’s blog! Car hire customers are starting to realise that no longer do they have to pay between $22 and  $27 to reduce their excess on their car rental.
Using Tripcover you can save up to 60% on the car rental companies’ rates for exactly the same cover. Tripcover is the first company in Australia that exclusively sell car rental excess insurance and the car rental companies don’t like us!

Why not take a look and get a quick quote at Tripcover.com.au and you will be pleasantly surprised.