A friend of mine on a business trip returned his rental car with a tiny dent on a fender. The rental car company sent him a $100 repair bill. That sounded reasonable, but then there was the three day “loss of use” charge for $750. He hadn’t taken the expensive collision damage waiver at $9 per day, but fortunately had primary auto rental insurance through a credit card company which covered the entire bill.
In 1988, legislation was proposed in New York, which many hoped would become a national trend. It would have made rental companies responsible for the full cost of collision repairs. The aggregate costs would have then been passed on to consumers via higher basic rental rates. Joseph Russo, then spokesman for the Hertz Corporation said,
We’re all in favor of anything that moves in the direction of eliminating the collision damage waiver. There’s too much deception, coercion and intimidation in the car-rental business in the sale of the collision waiver.
Needless to say the collision damage waiver is still around, as is customer coercion by some rental car companies to purchase it. I ran into that in Hawaii last year. Moreover, for customers who don’t sign up for it, they are at risk for being charged for any damage to their rental car, regardless of how minor it is. In today’s economic climate, rental car companies are under increased pressure to maintain the value of their fleets.
There are steps each of us can take to minimize our risk, and our cost of rental insurance.
Essentially, there are three choices for rental car insurance: your own auto policy, rental car company coverage, or third-party insurance. You also might want to use a combination of your own insurance and rental car company coverage. (Note this is only for U.S. citizens renting in the U.S. or Canada, and not Mexico. I personally don’t know of any U.S. auto insurance company which covers driving in Mexico.)
Renters can use their own auto insurance, but many policies exclude coverage for some potential charges such as “loss of use” which can be hefty. Considering the balance sheet pressure the rental car companies are under, I believe it’s financially prudent to at least supplement one’s own auto policy to cover its excluded charges.
I just reserved a rental car with Hertz for 10 days. Their charges for insurance, should I accept them, are: $12.95 per day for liability insurance, $9.00 per day for the loss damage waiver (collision and comprehensive) and $5.95 per day for personal accident insurance. That’s $27.90 per day, or $279 total, more than 20 percent of the total cost of the rental including taxes and fees. If you have your own auto insurance, the only coverage I would consider is the loss damage waiver, which would cover your policy’s excluded coverage.
I think a better deal can be obtained through some credit card insurance plans. For example, I carry American Express’ Premium Car Rental Protection. Each time I charge a car rental through my AMEX card, I pay them $24.95 total, for up to $100,000 in coverage for damage, theft, or loss for as long as 42 days in most states. That’s less than one day of Hertz’s fee, and lasts for the entire rental, and I’m covered for “loss of use.”
I highly recommend following some specific check-in and check-out procedures to help prevent unjust claims by rental car companies. While you’ve got to have insurance, it’s still better to not have to use it.
I’ve found rental car agents barely inspect outgoing cars, but get out a magnifying glass when you return them. Before leaving the rental car lot, I inspect the car carefully myself, and use my cell phone to photograph (date and time stamped) all damage no matter how minor. If there is damage, even small bumper scratches, I get an agent to note them on the inspection sheet.
While I’m at it, I check to make sure the spare tire or donut is in or on the car, and properly inflated, and that the jack and associated equipment is there. I do this for my own safety and to make sure I don’t get a bill for missing equipment which wasn’t there when I took possession of the car.
When I return the car, I have the rental agent inspect the car and sign off, “no visible damage, all parts returned.”
Drive safely!
{ 11 comments… read them below or add one }
Living in NYC and not owning a car, I’ve always purchased the LDW and the liability coverage (at least for me, my renter’s insurance does not cover liability from auto accidents), while it greatly increases the cost of insurance the piece of mind far outweighs the price in my eyes.
As Ned suggests, the AMEX coverage is a great option, but does not include liablity coverage, so if your own coverage doesn’t include it, you could be on the hook for a lot of money if you’re at fault for an accident.
At least for me, the cost of the rental car is not the main issue, sure I don’t want to be out tens of thousands of dollars, but compared to potential liability if someone is injured, that’s peanuts.
If they want to get loss of use they MUST prove that they turned someone away at that location for lack of cars – otherwise- no loss of use. . . .
the tire, jack and equipment charges are more difficult for both sides to prove. . .
Hi TMWNT,
You are generally right about “loss of use,” however, most states, to the best of my knowledge, only require the rental company to prove no cars were available at that location, in that class of vehicle. They don’t have be totally out of cars. Even so, if you ask for proof, many companies will walk away from the claim. In my friend’s case, they were actually out of cars. Over the years I’ve rented from locations (Maui last year for instance) where people were being turned away who had no reservation for a vehicle, so it can be a problem.
As to the spare tire, jack, etc., it’s your responsibility to make sure it’s in the car. I know of several people who had to pay up in my area. Whether the ruling was right or wrong since the prior renter was not charged for missing equipment it was considered to be there. It’s so simple to pop the trunk to make sure it’s there, I don’t know why anyone wouldn’t check. Actually, I started to check just to make sure I wouldn’t get stranded or seriously delayed if I got a flat. I always make sure the donut or spare is fully inflated too. I’ve only found the spare missing once. It had gone flat and was taken out to be fixed, but never returned, but I’ve had numerous occasions over the years when I found the donut flat.
LDW and Credit Cards ..
For those traveling to Europe, do not assume that your card will cover you. I know that most major cards do not cover auto damage in Ireland or some other European Countries.
Know before you GO!
Keep in mind that most credit card insurers will not cover you in some countries abroad, as well. Ireland, Israel, Jamaica and Italy are the most common – do check to see if you are covered!
The Dollar counter agent in Los Angeles tried to get me to buy the waiver saying that my Corporate AmEx didn’t cover loss-of-use. I called AmEx and confirmed I was covered. They were trying to pull a fast one. :-)
Why is Congress so scraed of the travel industry? Why aren’t these issues being dealt with? We the taxpayers are the ones who pay the salaries of both the industry and Congress, so why are they both ignoring us?
Be advised that Diner’s Club is the ONLY credit card that provides PRIMARY rental car coverage (i.e. they pay BEFORE you have to submit to your own insurance). All the rest are secondary – and you have to submit a claim to your company FIRST.
This is a fact that Diner’s Club, quite appropriately, is proud of. As a customer of theirs for many years, it is the ONLY credit card I am willing to pay an annual fee for. Sure is cheaper than all those LDWs.
No, I don’t work for them. Yes, I have had to use it (a broken windshield in Ireland, and a damaged bumper in Arizona).
Hi Kent.
Thanks for your comment. I appreciate you stopping by to read my column, and the time you took to help other travelers here at Tripso with your experience. I hope you’ll be coming back to read my future columns, and those of my colleagues here at Tripso. You might be interested in sharing your experience in our forums at Talking Travelers.
Kent, the Diner’s Club card certainly does provide “primary” rental car coverage, while many other credit cards provide only secondary coverage, meaning one’s auto policy, or the rental car company’s coverage, for example, kicks in first, to its limits, and then the credit card coverage supplements what they don’t pay, to its own limits.
That being said, the coverage that “Bruce InCharlotte,” who belongs to FFocus, an organization that I have belonged to for years, and I have through the American Express Card’s Premium Car Rental Protection plan (extra fee of $25 per rental on the card), is also “primary” rental car coverage.
Not only that, as Bruce InCharlotte confirmed, the AMEX plan does indeed cover “loss of use.” The Diner’s Club coverage also covers “loss of use.”
For the benefit of my readers, I would add that Diner’s Club insurance coverage is at no extra cost, while the AMEX coverage has a small fee. There are differences in the coverage, plan and card costs, and other variables, so as is always the case, travelers need to check with their and other credit card companies to find out what card and plan is best for them.
Regards,
Ned
Hi Christy,
Thanks for your comment. Like Kent and everyone who has commented above, I appreciate you stopping by to read my column, and the time you took to help other travelers here at Tripso with your knowledge. I hope you’ll be coming back to read my future columns, and those of my colleagues here at Tripso. You might be interested in sharing your experience in our forums at Talking Travelers.
You are most definitely correct that most credit card insurers will not cover you in some countries abroad. You mentioned Ireland, Israel, Jamaica and Italy. I would add Australia, and New Zealand to your list of countries which are generally not covered by insurance from credit card programs. The AMEX insurance which I use, and the Diner’s Club insurance Kent, who’s comment is above, uses doesn’t provide coverage in those six countries, for example.
Thanks for the excellent supplemental information to my article.
Regards,
Ned
Slight caveat with loss of use fee with AMEX — they need vehicle log records from the rental companies to pay the loss of use fee, which the rental companies gladly refuse. I got this by info reading from the web, specifically http://www.bargaineering.com/articles/american-express-car-rental-loss-and-damage-insurance-plan.html