Rental car insurance

[LeslieG]

I have never purchased the rental car company's coverage, but just wanted to share an email that a relative received from her personal insurance company regarding this issue and see what you all thought:


"We have kept an eye on these rental car contracts and they became more and more “unfriendly.” Only several months ago did we change our recommendation procedure on this. That is why it seams to have changed from your perspective.

How any rental car company out there can treat there own customers by dumping the vehicles lost value onto them is beyond me!


i.e. – say you rent a $25,000 car. You have an accident and the estimate to repair the damage is $5,000. But the rental car company decides they don’t want to repair it. And instead sells it for salvage at auction and they get $10,000 for it. (perhaps the frame may be slightly bent and they don’t want to risk the safety/integrity of the vehicle)


$25,000 value - $10,000 collected at salvage = $15,000 difference charged to your credit card. And your auto insurance would only pay for the actual damge done - $5,000.


$15,000 owed by you to the rental car company - $5,000 settlement from your auto insurance = A $10,000 bill out of your pocket. Not a good contract that they make you sign!! So it’s good to buy there coverage."

 

[jlewisinsyr]

This doesn't make sense from an insurance perspective. Insurance covers actual damage, no one can claim for more damage then is deemed evident from an accident (this would be considered fraud), to me this doesn't hold much truth.

 

[rgf207]

I have never purchased the rental car company's coverage, but just wanted to share an email that a relative received from her personal insurance company regarding this issue and see what you all thought:


"We have kept an eye on these rental car contracts and they became more and more “unfriendly.” Only several months ago did we change our recommendation procedure on this. That is why it seams to have changed from your perspective.

How any rental car company out there can treat there own customers by dumping the vehicles lost value onto them is beyond me!


i.e. – say you rent a $25,000 car. You have an accident and the estimate to repair the damage is $5,000. But the rental car company decides they don’t want to repair it. And instead sells it for salvage at auction and they get $10,000 for it. (perhaps the frame may be slightly bent and they don’t want to risk the safety/integrity of the vehicle)


$25,000 value - $10,000 collected at salvage = $15,000 difference charged to your credit card. And your auto insurance would only pay for the actual damge done - $5,000.


$15,000 owed by you to the rental car company - $5,000 settlement from your auto insurance = A $10,000 bill out of your pocket. Not a good contract that they make you sign!! So it’s good to buy there coverage."

I don't buy it. What you described is fraud.

 

[LeslieG]

I was a little surprised when she forwarded the email. Usually the only people telling you that you need the rental car company's coverage is them! I told her I still won't purchase it, but she thinks she has to now.

 

[LeslieG]

She forwarded me this second email from her agent. The attachment he's referring to is something from the Independent Insurance Association, but I don't know how to show that attachment in this email.


"Attached is a copy of some of the issues that are possible when relying soley on your own personal auto insurance policy to provide the coverage on a rental car. We now recommend that our clients purchase this coverage to avoid potential gaps in coverage.



Loss of Rental income – This is the loss in revenue the Rental Company claims you owe them. I.E. – if the car was in the body shop for 10 days, they could have rented that car to someone else for 10 days and lost revenue. That can be passed on to you and your personal auto policy may not cover this type of exposure.



Loss Valuation – The Rental Company and the Insurance company of your personal auto policy may not agree on the value of the damaged rental car.



Dimunition of Value (indirect losses) – This is the perceived loss in value after the vehicle has been damaged. At the Rental Company’s discretion, they can decide a damaged vehicle will not be repaired. Instead they will sell it at salvage auction and assess you the difference in value! Again, personal auto policies may not cover this exposure, most of them only cover the repair cost of the actual loss sustained.



Personally I’m surprised that these Rental Car Companys have been able to do this for this long. I thought a class action suit might have developed by now… But the “coverage” that they are offering to their clients is technically not insurance. Therefore they can charge what they wish, as well as have tremendous flexability in how there contracts are written."

 

[GreatDane]

Pay with a VISA card and they take care of the "Collision Damage Waiver" insurance for you.

Here is the link with the details. http://usa.visa.com/personal/cards/benefits/bft_dmg_waiver_personal.html

 

[KINGBOBOFTHENORTH]

Most "gold" and "platinum" VISA and MasterCards and AMEX cards come with that rental car feature. Charge your entire rental transaction to that credit card, DECLINE the CDW/LDW coverage, and you're protected. See the little brochure that came with your credit card or call and ask for it if you didn't save it. Please understand that you have to use your personal auto insurance first and they step in after that. (Outside the U.S. & Canada, where your personal auto insurance is not valid, the credit card feature is usable right away.) Not valid in some countries, not valid for certain luxury and sports cars, only valid for rental contracts up to a certain length.) If your rental contract requires a pre-payment, make sure you use the same card for the pre-payment as you do at the counter when actually renting the car.

BobK/Orlando

 

[jlewisinsyr]

Loss of Rental income – This is the loss in revenue the Rental Company claims you owe them. I.E. – if the car was in the body shop for 10 days, they could have rented that car to someone else for 10 days and lost revenue. That can be passed on to you and your personal auto policy may not cover this type of exposure.

This is a long standing item, most often the agency will back down on these charges as almost all insurances (personal, excess - Visa/Mastercard/AMEX and primary) will decline these without a fleet utlization schedule proving the lack of this vehicle prevented them from collecting revenue.

Loss Valuation – The Rental Company and the Insurance company of your personal auto policy may not agree on the value of the damaged rental car.

This would ultimately be sent to arbitration at the agencies expense if they do not agree with the valuation the insurance company is requesting. As long as the total damages do not exceed your personal coverage (plus excess), this should NEVER be an issue.

Dimunition of Value (indirect losses) – This is the perceived loss in value after the vehicle has been damaged. At the Rental Company’s discretion, they can decide a damaged vehicle will not be repaired. Instead they will sell it at salvage auction and assess you the difference in value! Again, personal auto policies may not cover this exposure, most of them only cover the repair cost of the actual loss sustained.

Dimunition of Value is not allowed in many states. Basically it's when the vehicles value is reduced because of an accident, this doesn't mean that it would be sent to a salvage auction. If this is a direct quote from an e-mail/letter it's concerning that the definition is not even really an accurate portrayal of what this is. No insurance claim requires that the claimant repairs the damage (this goes for even person to person claims), but if the damage is unrepaired, it cannot be reclaimed again (this would be fraud). Again if there is a disagreement about actual loss it would go through arbitration.

I think the larger concern people should have is that probably a good 50% - 75% of people are underinsured in their own policies/coverages, especially when it comes to liability and property damage.

 

[cm8]

I still don't buy it. It is a money making revenue off of scared people.

 

[seashoreCM]

Your own insurance company has these duties:
1. To defend you if a claim is made against you,
2. To pay the claim up to the limit of the policy if you are ordered to pay as a result of losing a court or arbitration case.
(Bruce Williams, a Disneyphile and talk show host last residing in Florida)

You need to call your insurance agent and find out what your policy limit is regarding rental cars and more importantly if you are indeed covered when driving a rental.

Same idea for credit card coverage. Say it's up to $25,000. If the rental company comes after you for $14,000. but the credit card company thinks the damage was $10,000. The credit card company has to, behind the scenes, negotiate it down to $10,000. or pay out the $14,000.

 

[KINGBOBOFTHENORTH]

Your own insurance company has these duties:
1. To defend you if a claim is made against you,
2. To pay the claim up to the limit of the policy if you are ordered to pay as a result of losing a court or arbitration case.

Not true for rentals. In most states, your personal auto policy covers a rental car under your Collision coverage. That's a 1st Party coverage; you have to have that coverage and there is a deductible. It is NOT paid for under your Liability Coverage. The duty to defend you is under the Liability coverage. So if the rental company sues you for damage to their car you rented, your insurance carrier has no duty to defend you. (NY is one state where rental damage is paid for under Liability coverage, but that's the only one I'm aware of and it only applies to NY insurance policies.)

BobK/Orlando