In a recent Pennsylvania decision it has become clear that when you rent a car from a rental car agency you should accept and pay for the loss damage waiver. All of us have had the experience of arriving at a rental car counter and being asked if we want the company’s damage insurance for an additional fee. We are all under the impression that we are covered for any damage caused to the rental car by a combination of our own automobile insurance as well as the insurance often provided by our credit card companies. As you will see below that impression may be wrong and could cost you large sums of money if the rental car you are driving is involved in an accident.
In the case of Benson vs Budget Rent A Car, decided by the United States District Court of Pennsylvania (No. 08-cv-4512), the court decided that Mr. Benson was obligated to pay Budget the loss of value of the rental car as well as storage, towing, loss of use and appraisal fees. Apparently the Budget Rent A Car contract states that in the event of an accident that causes damage to their vehicle they have the option of either repairing the vehicle or selling it in the open market. If they repair the vehicle you are only responsible for the cost of repairs. If, on the other hand they choose to sell the vehicle you are responsible for the decrease in value of the vehicle as a result of the accident calculated by taking the value of the vehicle prior to the accident minus the proceeds of the sale after the accident. You may also be responsible for the cost of the damage appraisal, storage and towing and some amount for the loss of you use of the vehicle. Your insurance company is responsible, under the terms of your insurance contract, only for the cost of repairs if the vehicle is repairable.
When you rent a car you either read the contract very carefully or simply pay the fee for the loss damage waiver to avoid this potential problem.