Not long ago, I was reviewing my car insurance policy with my insurance agent.
I asked for clarification of what would be covered while renting a car if I declined the overpriced “loss and damage waiver” policy the rental car company offers.
In my opinion, car rental insurance is second only to refueling charges in terms of price gouging. It typically provides you with zero-deductible coverage for loss or damage to the rental vehicle — and usually costs $20 to $30 a day or more. I believed individual car insurance almost always covered rentals. Many credit cards provide car rental insurance if you pay for your rental with the card. Am I ever glad I asked my agent the question! I learned something that changed my opinion about whether I should decline car rental insurance in the future.
While it is true most personal car insurance and credit card companies cover collision and damage, there are two areas they don’t typically cover — and it could cost you a lot of money.
The first is diminished value and the second is loss of use. My agent advised me that recent court decisions upheld the right of car rental companies to recover those losses from the renter personally. Let’s say you rent a typical full-sized car that sells new for $26,000 to the car company. You have an accident and the car is repairable but costs $8,000 to repair. After repair, the diminished value after adjustment for depreciation is $6,500 less than it would have been if the car had not been wrecked. You guessed it. You could be on the hook personally for the diminished value of $6,500.
Let’s say with that same car, it took a month to get it repaired and the car rental company lost the regular rate of $89 per day (they will charge you their regular rate, not a discount rate) it would normally have been able to rent the car for but couldn’t. You could be personally responsible for the $2,670. Be sure to check with your car insurance agent about whether they cover diminished value and loss of use before you decline the rental agency insurance.
Other areas to watch when you are renting a car are:
• Refueling charges: It’s no secret that rental car agencies stick it to you if you return your car with less than a full tank of gas. When picking up your car, you have two main choices: Prepay for a full tank of gas and return it on empty or refill it yourself. The upside of prepaying is you don’t have to bother with finding a service station or hassle with it. The downside is that you don’t get any credit for unused gallons. Thus, you end up paying for any gas that’s left in the tank when you bring it back, plus the full tank. Given the recent run-up in gas prices, you’re paying a lot for convenience. Keep in mind if you choose to refuel it yourself and fail to do so, they’ll gouge you with a price that may be as much as $3 per gallon over the normal price. If you don’t mind paying $7.39 a gallon for gas, I guess it would be OK.
• Airport fees: If you rent at the airport, you can count on paying additional “concession” fees. These are fees that are charged to the rental agency for the right to do business at the airport, and they’re passing it on to you. Here’s a tip: If at all possible, pick up your car away from the airport. Most off-site car rental companies have complimentary shuttle buses that pick you up and drop you off at the terminal.
• Additional drivers: You can find a great price on a rental car, but if you neglect to factor in the fact someone else will need to drive as well, you will be charged around $11 a day (capped at five days) for the other person to be allowed to drive.
• Drop-off charges: If you pick up at one location and return at another, you might be subject to a drop-off fee, even if the other location is just down the road. This isn’t always the case, though, so check at the rental counter. If you are in Europe, this can be quite hefty if you are picking up in one country and dropping off in another. That is where you may want to use a European company such as EuroCar that may not have the drop charges, since they may have cars from your drop country available. On our recent drive from Barcelona to Paris, I saved more than 600 Euro in drop fees by doing this (convert that to U.S. currency and you have saved nearly $1,000).
• Partial days: Almost without exception, car rental agencies charge for each day, or portion thereof. Thus, if you pick your car up at 10 a.m., be sure to return your car by 10 a.m. on the day you’re dropping it off or you’ll be charged for another full day.
• Child safety seats: When traveling with kids, it’s important to find out how much you’ll have to pay to rent a child safety seats. Hertz charges $60 per week for a child safety seat plus tax.
• GPS rental: If you want/need a global positioning system in your car, be prepared to pay $15-$20 per day for the privilege. A much better option would be to print out directions from MapQuest or Google Maps before you depart. Also keep in mind that many hotels have free Internet connections for looking up directions. Alternatively, if you absolutely have to have one, you might want to just buy your own and take it with you. For example, you can get one for $150. This would practically pay for itself with a week-long rental, then you’d have it for future use. My cell phone has GPS capability built in and wherever I go in the U.S. that Verizon has service, I have GPS.
• And last, carefully inspect the car before leaving the lot. Documenting any flaws in appearance, damage no matter how minor, as well as performance problems is a good way to avoid some unwanted damage charges that may ensue at a later time. This is especially true in foreign countries.
Federal Way resident Jerry Vaughn is president of World Voyager Vacations. Contact: jvaughn@worldvoyagervacations.com
