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Auto Insurance FAQ

Auto FAQ

Why buy CDW/LDW (Collision/Loss Damage Waiver)

There are several reasons why you should purchase the CDW/LDW.

  1. Loss Valuation. The personal Auto Policy (PAP) covers the lesser of the "actual cash value" of the vehicle or the amount "necessary" to repair or replace the damaged property. The rental agreement may very well contractually obligate you to reimburse the rental company for the "full value" of the vehicle, nor any "diminution" of value (if the value of the vehicle after repairs is less than that before the accident).
  2. Loss Settlement. As implied above, there may very well be disagreement over the value of the vehicle or the amount charged for labor and materials to repair it. Your auto policy's Appriasal clause may be invoked with its accompanying costs. More importantly, the insurance company has the right to "...inspect and appriase the damaged property before its repair or disposal." However, the rental company, unlike you, is not contractually obligated to the insurer... It may choose to make the repairs immediately, potentially resulting in a lack of PAP coverage because of failure to comply with this contractual condition. In any case, purchase of the CDW usually allows the renter to "walk away" without the headaches involved in adjusting an auto claim.
  3. Loss Payment. The rental agreement may require reimbursement for damages, and it is customary to practice for the rental company to charge your credit card. This can create a significant debt, "max" out the card's credit limit (perhaps shortening a vacation or business trip), result in litigation, etc.
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  5. Loss Damage Waivers (LDW). Rental agreements often make the renter responsible for any loss in value beyond normal wear and tear, regardless of the cause and regardless of fault. In order for your PAP to respond, you must insure at least one vehicle for both collision and other-than-collision (often called "comprehensive") coverage. If not, your policy will not respond to rental car damage and loss of use claims.
  6. Indirect Losses. You will most likely be responsible for the rental company's loss of rental income on the damaged unit. Your policy has limited coverage for these charges.
  7. Administrative Expenses. The rental contract may make the insured liable for various "administrative" or loss-related expenses such as towing (e.g., one insured was charged for a 230-mile tow), appraisal, claims adjustment, storage, etc. Some of these expenses may not be covered by the PAP.
  8. Other Insurance. The PAP says that it is excess over: (1) any coverage provided by the owner of the auto, (2) any other applicable physical damage insurance, and (3) any other source of recovery applicable to the loss--Travel policies, credit card coverages, etc. The potential controversy over who plays what is obvious and can result in litigation. In addition, keep in mind that many states have statutes, proprietary policy forms, and/or case law precedents that may govern this ans other rental car exposures.
  9. Excluded Vehicles & Territories. The PAP normally does not provide physical damage coverage for motorcycles, mopeds, motor homes, or other vehicles that are not private passenger autos, pickups, vans, or trailers. In addition, use of covered vehicles is limited to the U.S., its territories and possessions, Puerto Rico, and Canada (the rental agreement may also exclude operation outside a specific geographical area). If you rent a trailer (U-Haul, camper trailer, etc.), coverage is limited to $500.
  10. Excluded Uses & Drivers. The PAP may have limitations on use of vehicles that are not otherwise excluded by the rental agreement CDW or LDW. Also, the PAP may include an exclusionary endorsement for certain drivers or may apply only to designated individuals--the CDW will probably also only apply to certain individuals, but operators for which no PAP coverage is available may be afforded protection under the rental agreement by adding them as designated drivers.
  11. Additional and/or Future Costs. The PAP will most certainly include a deductible in the range of $100-$500 or more. In addition, payment for damage to a rental car may result in a significant premium increase (if not nonrenewal) via surcharges or loss of credits.

Although most CDW/LDW fees are considered outrageous, if not unconsiderable, we advise you to purchase the CDW/LDW for short-term rentals. If anything, this will give you peace of mind while on vacation or busines, and it could save you from a lot of inconvenience and lost time and money.
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Other Tips:

  • for information about driving requirements and rental car programs in Europe and other countries around the world.
  • Be sure to inspect the rental vehicle for existing damage to the interior and exterior and get their acknowlegement of such damage in writing before leaving the premises.
  • Be sure to take proof of insurance with you on your trip.
  • Carry an inexpensive disposable camera with you on your trip to document existing damage or damage that may occur while using the vehicle.

Copyright 1999 by Independent Insurance Agents of America. All rights reserved. Reprinted with permission.Page Top

How do I change vehicles on my policy?

When you acquire a vehicle (new or used) you need the following:

  1. A Title or Certificate of Origin. The title must be completed on the reverse side indicating to whom the vehicle is being transferred - The name MUST match your current registration in order to transfer plates. Please note: There CANNOT be ANY mistakes, cross-outs or white out on the back of the title.
  2. The title and your current registration should be brought to our office so we may prepare the new registration form. (If you purchased your car form a dealer, they must fill out this form for you; we will need to stamp it).
  3. ***MOST IMPORTANT*** Before you begin driving your new vehicle, please contact us to verify coverage! Many times dealers have allowed customers off the lot telling them they are covered and they were not. Please call us first!Page Top

How long do I have to transfer my registration?

NEW or USED auto from a dealer or private party sale now has 7 Business days in which to transfer the plates provided the following:

  1. You must be 18 years of age or older
  2. You must lose possession of the vehicle you are transferring from (i.e. sold or traded) and the 7 business days start on the date you signed/assigned ownership via your title - not the day you purchased your new vehicle!
  3. If you are transferring to a vehicle you already own, or if you did not lose possession of the vehicle you are transferring from, you have NO DAYS in which to ride on your current plate. You CANNOT attach your plates until the transfer at the Registry is complete.

Inspections: (There are two different kinds your vehicle may need)
EMISSIONS: You are allowed 7 days from the date of registration in which to make your vehicle inspected for emissions.
INSURANCE: If you are purchasing Collision or Comprehensive coverage for your vehicle, you must have a picture inspection done within 10 days from the date of registration.

Should I pay my current bill if I have made changes?

Yes! Any changes you make should be reflected in your next statement. Keep in mind, if you make a change and receive a statement a few days later, the current changes will not be shown. It takes about 30 days for changes to be reflected on your bill.

What do I have to do to cancel my insurance?

If you sell a vehicle, you must surrender your plates and registration to the Registry of Motor Vehicles and provide us with a Plate Return Receipt in order for us to cancel your policy. If you move, you can mail us your plates and registration by Certified Mail, Return Receipt. You will receive proof that we received your plates and we will cancel them for you.Page Top

What do I do when I have paid off my car loan?

In order for us to remove a lienholder off your policy, we will need a copy of the title showing the loan was satisfied. Failure to do this would mean the lienholder would continue to be listed on your policy and would be named on any claim checks.

When should I add a driver to my policy?

Anyone living in your household who has a license should be listed on your policy, even if they don't drive the car on a regular basis. If they have their own insurance, it will not cost anything to list them. Children receiving their license have 30 days to drive, then you must call to add them.

Do I need a Bill of Sale when buying a vehicle?

In most cases, the Title is considered a Bill of Sale. You do not need a separate Bill of sale if you have the back of the Title filled out. However, a Bill of Sale is needed when the title does not have an amount paid for the vehicle.

What if I buy a car and don't want to register it yet?

If you don't want to register and insure your vehicle yet, remember you MUST Title it within 10 days. Failure to Title your newly acquired vehicle and pay sales tax within 30 days will subject you to a daily fine.Page Top