What Is a Damage Waiver and How Does it Work?

A damage waiver can go by several names: collision damage waiver (CDW), damage waiver or loss damage waiver (LDW). These are not insurance products and, in the rental industry, do not constitute the sale of insurance. However, most states have defined regulations regarding how you sell these products, your rental agreement wording and how these products are defined. Some states even dictate how much you can charge for a CDW.

If they are not insurance products, what are they? A CDW is a contractual waiver between you and your RV renter. It prohibits your insurance carrier from holding the renter responsible for any damage — and paying for any damage — to the RV rental while it’s in the renter’s possession. This means that any claim paid out on an RV rental covered by a CDW will be paid completely by your insurance company, which will not be able to recover the costs. This will affect your loss experience on your insurance policy. Rental insurance is a very limited product with few carriers. A large collision loss could jeopardize your rates or even your ability to secure insurance. While the sale of CDW may seem like a great way to make “easy” money, it’s a gamble.

Many RV rental companies prefer a “partial” or “deposit” waiver, meaning that they will only retain the renter’s deposit in the event of a loss to reimburse their insurance deductible. While in theory this works well for rental companies, it still exposes them to the same gamble, as it only accounts for the deductible amount, not the payouts for the remainder of the claim. Furthermore, it is illegal in many states, so before instituting this, make sure they you are compliant with state statutes.

To put this into perspective, let’s say you sell a CDW for $10 per day for a one-week rental. The vehicle has a $1,000 comprehensive and collision deductible and comes back with damage that totals $2,350. Because you sold the CDW, your insurance will pay for the entire claim minus the deductible. If you operate in a state that does not allow a partial CDW, then you’ve earned $70 for the CDW and now have to pay out of pocket for the $1,000 deductible. Even if only one in 10 rentals results in damage, you’re still expending extra money. If the claim doesn’t even make the deductible, then you are stuck paying the entire repair.

When an RV is damaged in an accident, each individual model has many variables that usually make a repair much more expensive: fiberglass vs. aluminum work, custom parts, etc.

When does the sale of a CDW work for RV rentals? Most underwriters would respond “rarely.” S CDW can work if you have the “perfect storm” of good conditions. These conditions are as follows:

  1. If it’s only occasionally used, and you have a large fleet (over 50 units) that can absorb a larger loss
  2. If you have lower-value vehicles
  3. If you’re renter does not evoke “red flags,” i.e., cash rental, no insurance, walk in, etc.
  4. Your rental unit is an auto body type of unit only.

Some rental companies use the sale of a CDW as a “small claims fund,” where they set aside any monies earned with the CDW to pay for small claims that would otherwise be submitted to their insurance carrier. This can work in your favor by keeping nuisance claims off your record. But, remember, one very large claim can undo any good that comes from this practice.

CDW is not the same as supplementary liability insurance (SLI). Briefly, SLI is a separate insurance policy that you, as the rental agent, would obtain and sell to your renter. Some states require an insurance license to sell this product. This is not part of your rental vehicle insurance. However, RV rental does not have any true SLI products available at this time.

Stay Competitive with Concierge Services

One way to set yourself apart from other auto rental agencies is to offer concierge services. Here are a few ideas of how you can use concierge services as the “carrot” to entice customers:

  • Partner with local places and offer coupons or incentives
  • Facilitate restaurant reservations for ”must-try” local establishments or those with regional food specialties.
  • Assist with reservations for shows, movies, local attractions and other area highlights.
  • Offer door-to-door service: Arrange to deliver the car to the renter at the hotel and pick up the car. That way, renters don’t have to cut into their valuable vacation time.
  • Offer “accessories”: umbrellas, beach chairs, bikes, etc.
  • Include a welcome package: weather forecast, local coupons, emergency locations (hospital, urgent care, pharmacy, etc.), places of worship and more.
  • Calendar of local celebrations – best times to visit based on what’s going on in their “town/city.” Most cities have a calendar of events, so link to it.
  • Go into more detail with a mini-newsletter, complete with enticing photos: parades, competitions, shows, expos, etc.
  • Local travel: what roads to avoid due to construction or congestion (rush hour)
  • Insider tips: Share information so that renters can experience the area like a local.

And if you really want to go the extra mile (pun intended), consider these types of concierge services:

  • Invest in a mobile app that includes some of the items listed above
  • For areas with tolls, offer a free responder
  • Partner with a towing company for roadside assistance (although we hope your renters will never need it!)

You can offer such services to all renters, or use them as an incentive for repeat business. Start a loyalty club, and reward your best customers with these perks.

Put yourself in the shoes (or driver seat) of those renting your vehicles. They’re looking for value-added services. Your partners get extra exposure. You’re looking to one-up the competition. It’s a win-win-win.

Hurricane Season Begins Today. Are You Ready?

Whether you’re leasing one car or a fleet of vehicles, you — and your customers — must be prepared for the unexpected. In the summertime (and beyond), particularly in coastal areas, that means you need to take into account hurricane season and its associated risks.

The Atlantic hurricane season runs June 1 – Nov. 30, and scientists at Colorado State University are predicting this year’s storms to be slightly above average. They forecast 14 named storms, half of which they predict will become hurricanes, and three reaching strength of Category 3 or higher.

Just as the meteorologists keep tabs on hurricanes, you’ll want to put them on your personal radar. In short, you should keep your eye on the eye of the storm, especially while your renters are on vacation. Make sure your know the destination of your renters and contact them if there are hurricane warnings. In terms of auto insurance, for adequate protection you should recommend coverage that includes “acts of God.”

Have a plan of action ready PRIOR to the threat of a hurricane or severe weather. Here’s what you should do to protect your assets:

  • Start putting your Emergency Preparedness Plan into effect as soon as you become aware that the storm is headed your way. Today’s prediction abilities usually give several days advance notice of the most likely areas to be hit.
  • If you are in a flood-prone area, make sure your plan includes getting your vehicles to higher ground.
  • With heavy rains, make sure the placement of your vehicles is on solid ground so they don’t get mired down in mud.
  • If you are in a hail-prone area, is there a covered area to place your vehicles?  Or can you cover the vehicle in a way to minimize damage? Example: cover windshields or areas that are vulnerable to breakage.
  • Hurricanes produce high winds. Get the vehicles out of harm’s way of potential flying debris, trees or unstable objects that may become a damaging projectile. If your vehicle is an RV (motorized or towable) make sure all slide outs and awnings are pulled in and all stabilizer jacks are down to help avoid overturning.
  • Take steps to make sure none of your active rentals or reservations for that time period is headed for the hurricane zone.
  • Make sure you have additional drivers / tow vehicles available to help you enact your protection plan.

Remember, you need to protect your assets, but this should be done well in advance. Then you have time to take care of your personal wellbeing.