Rental car insurance changes - beware!

[GrySql]

My Dealer provides loaner cars by using the on-site Enterprise Rental Company and I asked the Enterprise agent the following information about insurance, he finally admitted 'it was possible, depending on your personal insurance'.

He really didn't want to discuss it. Read on.

--

Recently I read an article about the way these Rental Car companies charge renters if they have a collision or a tree falls on the rental car.

If you choose to simply use your own personal automobile insurance policy and have a collision, sure, your insurance will probably repair the rental car.

Then things get interesting.

#1: Diminution in Value

#2: Loss of Use of the Rental Vehicle

 

#1 - DV

In the first case if your rental car was worth (example) $25k before the accident the Rental Company has the car re-appraised after repair because it now has a Car-Fax ding against it.

The new value of the repaired car becomes $21k, so the Rental Company bills you for the difference in the cars new value - they sue you for the $4k difference.

Even worse, the rental car damage is so high (say $8k) that the Rental Company chooses to sell it at auction for $11k.

Your personal insurance may send the Rental Company the $8k for the repair damage but you are billed the difference from that and the auction sale price - the Rental Company wants $6k from you. ($8k + $11k + $6k = $25k)

 

#2 Loss of Use

If the rental car is repaired it is out of service, it cannot be part of the rental fleet and the Rental Company loses revenue from it.

The Rental Company will bill for every day the car sits in the repair shop.

If it's a $50 @ day car and out of the rental fleet for 2 weeks you owe them another $700.

 

So, next time you rent a car, give some thought to the Rental Companies own 'Walkaway' insurance, it averages $13 - $30 per day.

--

After talking to the on-site Enterprise Rep I went out to my SA at my Dealer and asked him if he knew about this Rental Company insurance policy change, he did not.

I asked him to to have the Dealer pay the additional $13@day Enterprise Insurance fee - he was stunned.

I further suggested that if they didn't want to pay the Enterprise fee then to give me a Dealer-owned vehicle that they paid the insurance on. They don't have any.

 

My SA said he would bring this subject up with the Facility Director but felt I was within my rights to have them pay for this additional insurance.

We'll see, I have this Enterprise car 'loaned' for a week and I may end up being stuck for the $90 Enterprise 'Walkaway' daily insurance I added to this 'free' loaner.

Life is getting more complicated every day.

I hope the A/C repair was worth it.

Edited July 28, 2014 by GrySql

[Sleddog]

I had someone back into a rental car when I was in Albuquerque. The guy just drove away. I found it the next morning.

 

My Visa card and insurance company paid the tab. But it took 7 months. I had to jump a bunch of hoops with the insurance company to get them to pay my deductible.

 

The credit card company said they never pay the loss of use. As for DV the credit card company called bs on that one also. They negotiated the price they wanted to pay. And that was that.

 

As I said, I paid nothing out of pocket. But the experience was something I never want to repeat.

 

I now always take the CDW insurance. This way if the car is stolen, someone hits it, or Godzilla steps on it, I have nothing to worry about. I grab my bags and walk away.

Edited July 29, 2014 by Sleddog

[jeff_h]

I have probably rented a car somewhere between 100-200 times, used to travel a lot... and never got the insurance. Now have a trip next weekend and would be cursed if I read the above from GrySql and opted out again, would hate to be the guy writing "I wish I had taken the advice" :doh:

[GrySql]

Jeff, I too have rented cars a few million times when the old rules applied but things seemed to have changed recently.

My Credit Union magazine article was a warning, their advice was for us to call our personal auto insurance carrier and discuss their rental car policy and this 'DV and Loss of Use' issue.

 

I can now see why my Dealer does their loaner cars this way, they have zero liability and the total loss problem is on the customer and their insurance, very clever.

[hybridbear]

Very interesting info. Thanks for sharing.

[talmy]

My only accident in a rental car was 13 years ago when I was hit head-on in Hawaii (a no-fault state). The car, a Ford Explorer, was totaled. While the rental company (I forget which one, but it was a major brand) bill included loss of use as well as the full value of the vehicle, we never had to pay any of it. I don't expect the insurance company paid loss of use either. This is Big Company versus Big Company. I'd expect if your insurance didn't include rentals you would be liable for all the charges unless you went to court, and I can easily guess the outcome there!

 

We did have to sign off on the bill before we were given another car, which did cause some nerves. I think it was about $18,000.

 

As far as I'm concerned, CDW is a racket -- it's a cash cow. Just make sure your insurance company will cover you, decline the CDW and enjoy your trip.

Edited July 29, 2014 by talmy

[GrySql]

As far as I'm concerned, CDW is a racket -- it's a cash cow. Just make sure your insurance company will cover you, decline the CDW and enjoy your trip.

I just talked to my car insurance carrier and they will repair the rental car.

However, they do not cover the items #1 & #2 in my original post.

#1: Diminution in Value

#2: Loss of Use of the Rental Vehicle

 

Before you blindly decline the rental car CDW insurance call your personal insurance company and discuss this - or, roll the dice and take your chances.

In my case the information I provided in the original post applies to me and I will be getting the rental car insurance from now on.

For $13 @ day it may be a cash cow for Enterprise but it is very little to pay for 'walk-away' insurance and peace of mind.

[acdii]

It is really no different than buying GAP insurance. Consider it cheap POM. I was SO frigging glad I paid $600 for the GAP, it saved me from an $8000 balance due after the Flex was totaled. Sure there is cheaper GAP insurance, if you shop around after you buy, but doing it time of sale is a matter of convenience too.

 

Thanks for the heads up on this GS, had no idea of these changes, and we have a Camper on rental this weekend, will make sure to get the coverage too.

[mwr]

What is the source that makes you think these items will be charged and that you will have to pay them?

 

#1: Diminution in Value

#2: Loss of Use of the Rental Vehicle

[GrySql]

What is the source that makes you think these items will be charged and that you will have to pay them?

 

#1: Diminution in Value

#2: Loss of Use of the Rental Vehicle

As I pointed out in Post #4, I read an article in my monthly Credit Union magazine.

It was written by the CU CEO who does a monthly column and he felt this was important new information.

I cannot link the article so I summarized it here.

 

Instead of questioning me about this, why not call your own auto insurance company and see what they know and what liability you may have if you rent a car.

Ask them about #1 & #2.

I'd imagine some insurance companies see this a bit differently, but most all are in lock step with the industry.

I called mine and it was as advertised, they will not pay #1 or #2.

 

As mentioned, this is big company vs big company with you thrown in the grinder.

It is up to you to consider the consequences if things go amiss.

I am just passing on a helpful tip, make of it what you will.

[mwr]

As I pointed out in Post #4, I read an article in my monthly Credit Union magazine.

It was written by the CU CEO who does a monthly column and he felt this was important new information.

I cannot link the article so I summarized it here.

 

Instead of questioning me about this, why not call your own auto insurance company and see what they know and what liability you may have if you rent a car.

Ask them about #1 & #2.

I'd imagine some insurance companies see this a bit differently, but most all are in lock step with the industry.

I called mine and it was as advertised, they will not pay #1 or #2.

 

As mentioned, this is big company vs big company with you thrown in the grinder.

It is up to you to consider the consequences if things go amiss.

I am just passing on a helpful tip, make of it what you will.

I definitely thank you for bringing this up, and I will ask my insurance company about it. I'd still like to hear from anyone who knows if #1 and #2 are being imposed on renters who don't take the rental company's insurance.

[GrySql]

I definitely thank you for bringing this up, and I will ask my insurance company about it. I'd still like to hear from anyone who knows if #1 and #2 are being imposed on renters who don't take the rental company's insurance.

I simply did an internet search and these two are examples of #1 and #2.

There are quite a few more if you want further info.

 

http://www.stltoday.com/travel/christopher-elliot/losing-it-over-car-rental-loss-of-use/article_c10deef4-bbbe-552b-b762-6956d87c5af6.html

http://businessinsure.about.com/od/commercialauto/a/Owned-Autos-Rental-Vehicles-And-The-Diminution-In-Value-Exclusion.htm

[Waldo]

What kind of credit cards do you guys have that don't cover this? Even my no-fee Citi card covers this stuff, at least I think it does, I can't find the fine print online.

[hybridbear]

What kind of credit cards do you guys have that don't cover this? Even my no-fee Citi card covers this stuff, at least I think it does, I can't find the fine print online.

Will the credit card cover Loss of Use & Diminished Value? As far as I know our credit cards will only cover the collision damage when used to pay for a rental car. And the credit card coverage does not apply when you get the rental car paid for by someone else (like the dealer or your insurance company when you car is in an accident).

[GrySql]

What kind of credit cards do you guys have that don't cover this? Even my no-fee Citi card covers this stuff, at least I think it does, I can't find the fine print online.

Read the last paragraph in the second link I provided above in Post #12.

Things are changing.

[GrySql]

I sold my hot rod Mustang GT yesterday so I had reason to discuss insurance with the senior office manager of my insurance carrier.

We discussed this CDW situation and I was told that no insurance carrier covers #1 or #2, neither do credit cards.

Credit cards only pay the remaining amounts of any repairs that your insurance does not cover, or in the absence of your insurance they will pay it all.

My agent had also heard that the Rental Companies are aggressively pursuing #1 & #2 from the customers now.

 

In the end I asked if it was wise to get the CDW and my agent says that she always buys it.

My agent also pointed out that the Rental Company CDW is not an insurance policy but an offered condition of rental, Enterprise takes on the liability for a fee.

Secondly, if you incur damage to the rental car and have bought the CDW, you owe nothing and the important thing is the collision/repair/replacement of the rental car will not record on your personal insurance and raise your rates.

 

All in all, after two conversations with my insurance agents I think I'll buy the basic CDW coverage from now on.

Edited July 30, 2014 by GrySql

[jeff_h]

Secondly, if you incur damage to the rental car and have bought the CDW, you owe nothing

 

This reminded me of the below clip - the part about opting for insurance is at the 2:00 mark.

 

http://www.youtube.com/watch?v=4T2GmGSNvaM

Edited July 31, 2014 by jeff_h

[mwr]

I emailed my State Farm agent about those two types of rental car company claims. The reply:

 

#1

 

I haven't heard of the "diminution in value" issue that you raised. We treat a claim with a rental car like any other. We fix the car, you pay your deductible & everybody is happy. So this diminution concept is not something I'm familiar with. I've heard that rental car companies make more money on their insurance than on the car rental, so I can see where they want to have you take out their coverage. But what you are describing doesn't even sound legal. I would just check with the particular rental car company you may be using & ask about their policy. But we stand ready to cover you in a rental car without any additional insurance (as long as you have Collision & Comprehensive coverage on your State Farm policy).

 

#2

 

I have heard about "Loss of Use". That is, the rental car company may charge you for the time they can't rent out the car. We do NOT cover that expense under your basic policy. However, we do have an endorsement we can put on your policy for about $20 semi-annually that would cover this exposure.

Edited July 31, 2014 by mwr

[GrySql]

Here's a link that you and your agent might like to review --> http://www.fhins.com/rental-car-insurance

 

I didn't make this whole thing up and am beginning to feel like the messenger that gets whacked because of the bad news, that oughta teach me a lesson.

I don't sell insurance or rent cars and am very happy for you, or anyone, to do as they wish.

 

[corncobs]

Here's a link that you and your agent might like to review --> http://www.fhins.com/rental-car-insurance

 

I didn't make this whole thing up and am beginning to feel like the messenger that gets whacked because of the bad news, that oughta teach me a lesson.

I don't sell insurance or rent cars and am very happy for you, or anyone, to do as they wish.

 

 

Don't feel bad GrySql I'm probably not the only one that thinks you did us a great service by letting us know.

You will always find skepticism on stuff like this. Just let them think what they wanna think that's something I learned as well over the years.

 

You did our community a great service sharing these news. Thank you!

Edited July 31, 2014 by corncobs

[mwr]

Here's a link that you and your agent might like to review --> http://www.fhins.com/rental-car-insurance

 

Thanks for that linked article. I sent it on to my state Farm agent.

[GrySql]

BTW, I was just reading my Enterprise Contract and it includes a provision that if an accident occurs they can use the car's on-board Event Data Recorder to view the pre-event driving conditions of the car.

More fun to be aware of.

I'm just a laugh a minute...

Edited July 31, 2014 by GrySql

[acdii]

IOW the days of abusing a rental are coming to an end? You break it you bought it is where it's heading.

[Waldo]

So even if this is true, let's do a little math:

 

Say the average loss of use and diminuation of value is $3600 as in the article you linked. Say the average CDW cost is $13 per day. That gives the odds of 1:300 that the insurance will be useful. Basically that means that you as a driver expect to have a crash once every 300 days while renting a car.

 

Now i don't know about you, but I've been driving 22 years and have only had 2 insurance claims that could have resulted in loss of use or diminuation of value had they been in rental cars. 22 years is about 8000 days, so that's about 1 claim every 4000 days. Buying the CDW in my case would be like saying I somehow think I'm 13 times more likely to crash the rental car than my normal driving day.

 

So even if it is true, the CDW is still a rip-off. Basically you would be financially better off spending that $13 a day on lottery tickets instead.

 

 

And here's another thought. Last winter when someone pulled out in front of my wife, resulting in a total loss of her vehicle, the other person's insurance paid for a rental car for my wife, in other words, the insurance covered the "loss of use" of my wife's vehicle. So if somebody crashes into my rental car, why wouldn't their insurance rent a car for the rental company while the car is getting fixed? Obviously there's some legal stuff involved, but conceptually it makes sense.

Edited July 31, 2014 by Waldo

[acdii]

Change it up a bit though, Usually a rental is done away from home, in unfamiliar territory, your chances of having a crash go up due to your not knowing where you are, on roads you never drove on, in traffic that can be worse than what you are used to, Your odds increase under these conditions though. If renting like GrySql, then you are right. Like anything else in life, its a risk you have to take, so the choice really is up to the renter, take a chance that nothing will happen while the car is in your possession, or spend a little bit for"insurance" in case it does.

 

In the 30 years I have been driving I have had a couple minor benders, due to my inexperience behind the wheel, those were 25 years ago, so I never expected to total out my Flex, yet one day the weather turned nasty and I did. Had I not purchased GAP insurance I would be $8k in the hole right now and out of a vehicle. I took a chance on buying the extra insurance and it paid off, I also have it on my Fusion, so if nothing happens and the car survives until the last payment, did I waste that money for GAP? Maybe, maybe not, its all in how you roll the dice.

 

Also as others have pointed out, you may not even be near the car and it gets damaged, but you are still liable for it, even though you weren't driving it, or even inside it at the time. It really comes down to Risk Assessment, that is what you have to decide on, do you take the risk of not getting the extra coverage or not. The information presented here is to help you decide, so you know that if something happens and you decline the insurance, you could be on the hook for some out of pocket expenses that your insurance will not cover. So it's up to you. If you do rent a car, something happens, you declined their coverage and later get a large bill, don't come back here, because someone here will say, I told you so. :)