Which Collision Protection Fghts for You?
Which Collision Protection Fghts for You?
There are two types of coverage available for the rental car operator to offer a customer: Collision Damage Waiver (CDW) andRenter’s Collision Protection (RCP). Unfortunately, when it comes to rental car collision coverage, what might be considered a ‘no brainer’, really takes some thought. Jim Schalberg Auto Rental Solutions  wants to help you understand what each offers so you can make an informed decision about the best choice for you and your customers.


What is CDW?
CDW is an agreement between the operator and the customer that the operator will not charge the customer for damages done to the rental car in excess of the deductible set on the CDW, which is set by the operator or the state. Note the operative word here is waiver. The customer waives responsiblity.
A typical customer responsibility could be $250. Most operators charge $15-25 a day and that money should be set aside to pay for damages. At the end of the year, what is not used for fixing vehicles could be counted as profit.

When did it become a part of the rental car world?
CDW came into being somewhere in the early part of the 1960s. It was developed by the large rental car operations. For big rental operators running large fleets, there is the possibility the income from CDW will exceed expenses, yielding some profit. Smaller fleets simply cannot sell enough to make it work financially.

Does CDW have to be offered?
Some customers will ask for it, some expect it and others really don’t think about it. It is not mandatory to offer this product. But if you offer it to one, it must be offered to everyone.

Meet Jane. She was offered CDW: 
Jane comes to the counter and wants to rent a midsize car for two days. She agrees to two days CDW at $20 per day. She leaves the parking lot. Early the next morning she calls you to say the car was in an accident. You sold CDW.

You cannot collect damages from her. Technically, you cannot turn the claim into your insurance company either. CDW takes away the right of subrogation from your insurance company. This leaves you with a damaged car and $40 to pay toward the damages.

The problem with CDW: the rental car operator gets the money, but also gets the damages.
If you choose to turn in the claim to your insurance company, they could refuse to pay. In some cases you could see a rate incrase or, suffer insurance cancellation.

This is why we (here at Auto Rental Solutions) recommend Renter’s Collision Protection.
RCP is real collision insurance. It is held in the customer’s name. It is sold by the day. It is offered at the counter (just like CDW). 
In case of an accident, a $250 deductibl e is collected (as a deposit) from the customer. 
Unlike CDW, if there is an accident you can receive up to $20,000 to fix your car, which is much more than the $20 per day you collected.

 Meet Jane (again). She was offered RCP instead of CDW:
Jane comes to your counter. You present the RCP option at $20 per day. She agrees to two days and the $250 deductible (which you get as a deposit.) She leaves your parking lot. Early the next morning she calls you to say the car was in an accident. She pays the $250 deductible and walks away.

Because Jane purchased RCP from you, you already got the $250 deductible. She signed a Direction to Pay. Once the claim is filed, this Direction to Pay ensures the check will come directly to you, not her (since RCP is owned by the renter).Meanwhile, you get the car repaired because you know a check will be coming for the full amount. You did not have to file a claim with your own insurance company and therefore did not have a $1000 deductible.

Here is the no brainer part of the story.
With CDW, Jane’s accident could have gone one of two ways:
1) Cost you the full cost of fixing the vehicle, minus the $20 a day you collected (because you  have chosen not to file with your insurance company) or,
2) You choose to file with your insurance company and lose the $1000 deductible (and tender the risk of an increase or cancelation of your own insurance.)

With RCP, Jane’s accident costs you nothing.
Jane and RCP pay for the damages.

So, which coverage is in your corner?

Call us to learn more about Renter’s Collision Protection. 800-396-9128

Note: Renter’s Collision Protection is one of the many products Auto Rental Solutions offers rental car businesses. We developed this product because we saw a real need for neighborhood rental car businesses to be able to cover losses due to accidents, and possibly help reduce their loss runs. Renter’s Collision Protection covers not only cars but vans, trucks and handicap conversion vans up to 10,000 GVW.

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