10th Circle of Hell: Renting a Car: Just as a follow-up to last month's mini rant about rental cars, I looked into the whole insurance angle a bit. Selling you optional insurance is high on the nickel-and-dime list for car rental agencies. Neophytes to the auto rental process may not realize that they will get asked if they want to spring for insurance, perhaps assuming that their personal car insurance covers them. Nope; unless you have a very unusual sort of policy that I don't know of.
There are usually three kinds of insurance they ask about: Collision damage, Personal accident, and Liability. Buying this coverage from the rental company for these can easily cost an excess of $40/day. It's outrageous and generally it's pure profit for the company. (It's also one of the things that really holds up car rental lines, folks who didn't know this question was coming and have no idea what to do about it.)
Probably the best answer for this is comes from your credit card. Many cards (but certainly not all, check before you assume) automatically insure you if your pay for the rental with that card, thus enabling you to decline the optional insurance. Usually it's only the Collision and Personal Accident, not Liability; but that's good enough for me. Still, it's not like you're completely in the clear. The card company only acts as secondary insurer, meaning any other source of insurance comes first. So you are likely to have to jump through any number of paperwork hoops to get reimbursements. One card, Diner's Club, actually acts as primary insurer in these cases so there would likely be less paperwork.
Apart from not covering liability, the other thing that may not be covered by your credit card is Loss-of-Use: the theoretical amount of money the company lost because they couldn't rent the car while it was being repaired. The chance of a company actually having a loss like this is small. But if you have an accident you can pretty much count on getting slammed for this too. Some credit cards don't cover this at all. Some will cover it provided the rental company will show them that they had a certain usage rate on their cars during the period of the charge (say 85% or something like that) to demonstrate that they really did lose money by not having that car in service. But, the problem here is that some (most) rental companies will simply not open their books.
So how's that for a fine mess? You get in an accident. The rental company charges you say $500 for loss of use. You credit card company says they'll pay it but they need to see the usage log from the rental company. The rental company says no, that's against our policy, so your card company won't pay it -- tough luck. By the way, the rental company doesn't send you a bill; they just hammer your credit card for these charges right away and let you go through the trouble of fighting it if you've got the willpower. In truth, I expect if you want to dispute anything the rental company charges you that credit card insurance won't cover, you can likely plan on calling a lawyer and heading to court.
Let me state quite plainly that any rental company that will hit you with a loss-of-use fee then refuse to verify it is an outright swindler. Seriously, there should be class-action suit or some kind of legislation that requires them to at least verify that they had a loss of use if they are going to change you for it. If I owned a congressman I would sick him on this. Imagine the political benefit of demagogueing this rapacious behavior by an industry that everyone already hates to begin with. Can you say "re-election"?
Apart from the scam aspect of all this, another problem is how much learning you have to do to get this done efficiently and cost-effectively. The quagmire of rental insurance, credit card coverage policy, loss-of-use policy -- coupled with questions about buying gas up front, hourly/daily/weekly rates, etc. -- means you have to rent cars often enough to have made your mistakes and learned your costly lessons before it sets in. This is just another example of how the travel industry has taken a straightforward service and disfigured it into a nightmare. All because of what? Fear of liability? Onerous regulation? Distrust and suspicion? Greed? Stupidity? Whatever that case, it obviously isn't working since bankruptcies are rife in the auto rental industry.
So what should you do when you rent? What does your card cover? Which companies supply log books for loss-of-use charges? The best description I have come across is in an SFgate article by Ed Perkins. It discusses what cards cover what and what rental companies open their books. Looks to me like I'm doing fine using Amex, although Diner's Club might offer some marginal benefits. Also, my main rental company is Alamo, which apparently has a policy of providing supporting logs for loss-of-use. It seems I may have blindly stumbled into some reasonable choices.
Here's the problem: the article is from 2007. Is it still accurate? It's not like headlines are made when one of these companies changes a policy out from under you. I guess the only thing to do is check for yourself. Having a simple, reliable answer would be just too easy. If you only rent cars once a year, and then only for a short time -- you may as well just buy the rental company insurance rather than waste however many hours trying to sort this all out. Maybe that's why the travel industry ends up with these twisted policies. The beat down succeeds in the end -- you pay.
Of course, if I did open a vein and pay for the optional insurance I might bang up the car a bit before returning it just to get my money's worth.
