Another Look At Rental Car Insurance

It's the age old question. At the car rental counter, you are asked if you want the company's insurance coverage on the vehicle.

It's not cheap. The insurance carries a fee for each day of the rental, so it can easily add $100 or more to the cost.

In the past the smartest course of action seemed to be to decline the coverage if you already had insurance coverage on your own vehicle. It usually covered you for liability for another car you happened to drive.

Reconsidering the damage waiver

But now, with car rental companies aggressively seeking to recoup from their customers even minor wear and tear on the vehicle, some are taking another look at rental car insurance.

Ironically, Amir, of Toronto, Ont., rented from Enterprise at the direction of his insurance company when his car was damaged in an accident. His insurance company told him he didn't need to take the insurance.

"When I rented the car the agent said it is a new car, there is no damage," Amir wrote in a ConsumerAffairs post. "I showed him a couple of scratches and he said these are small we never claim them."

But when Amir returned the car, another agent checked him in. This agent wasn't quite as laid back about minor scratches.

Found a dent

"The agent inspected the car and showed me a small dent maybe one to 1.5 inches in length and one millimeter deep on the door of back passenger that was not event visible and you had to touch it," Amir wrote. "I had to compare it to the other side of the car to make sure it was a dent since the paint was intact. Now, they probably want to charge me a few hundred dollars for something that I didn't cause, probably existed before I rented the car and probably has no cost for them to repair. The sad part for me is that I always buy the damage waiver but this time I listened to the insurance adjuster who said if they offer you any insurance just decline. My lesson is the damage waiver is what you have to pay to be protected against the enterprise."

Amir may be right. While your own insurance policy will protect you in the event of an accident where the police arrive and make a report, it isn't much good if the rental car check-in agent finds a dent or a scrape that they contend wasn't there when they rented the car.

The charges for this kind of minor damage can be several hundred dollars. In addition, some companies have been known to charge for the days the car is in the repair shop.

Technically, a damage waiver

The rental car company's insurance is more accurately described as a damage waiver policy. That means that the rental car company assumes the liability if the customer gets into an accident. It also assumes responsibility if the car returns with a few dings.

That may be why, amazingly, so much of the minor damage to rental cars seems to occur when they are rented by customers who decline the damage waiver. By accepting the waiver coverage, you may be insuring yourself against an unexpected extra expense.