Homeowners and Lawmakers Speak Out
about Proposed Citizens Insurance Rate Increases
9/19/2012
By: Christine Giordano
Investinganswers.com
You've probably heard for years that it's a waste of money to buy rental car
insurance. It's just another way to get gouged, and you already have car
insurance, right?
In fact, it's not that clear-cut. There are a number of reasons you should
consider it. For example, one little-known clause in your contract with the
rental car company could cause you trouble if your existing auto insurance
doesn't cover it.
It’s called "loss of use." This means that when there is an accident, and the
rental car is out of commission for, say, a week, your contract with the rental
company calls for you to reimburse it for the loss of that auto's use during
that time. You'll be charged for the amount of money the car rental location
lost while the car was in the repair shop.
Most major car rental companies now have the clause in their contracts,
according to consumer experts. Is it a scam? Or should the new little clause
push you over the edge to spend an extra $10 or even $25 per day in car rental
insurance?
The small-print risks that aren’t always clearly defined can make you liable for
things you never considered.
"More and more these days, consumers need to check out the fine print of their
insurance policies and make sure they're getting what they think they're
getting," said Carmen Balber, Washington D.C. director of Consumer Watchdogs, a
nonprofit consumer advocacy organization.
Granted, most of the time when you're deciding these things, you're at the car
rental counter and you just want to sign on the dotted line and drive to your
destination. But while planning your trip, it may be worth a few extra phone
calls to your regular car insurance provider and your credit card to make sure
you're covered.
Tip: Credit cards offer additional coverage for car rentals. MasterCard and
Visa, for example, both have limited coverage for car rental damage. They don't
cover personal
liability, but they do cover "reasonable" loss of use and a
list of other things, according to the card companies' websites.
If you stack up all the things that might not be covered by your own car
insurance, rental car insurance is worth pursuing. Here's why:
1.
Your insurance may not
cover all the medical bills if you get into an accident. Sometimes state-mandated insurance doesn't cover more than $50,000. Credit
cards can help, but one broken bone can sometimes run more than $100,000.
Personal Accident Insurance on the rental car covers the renter and passengers
for medical bills resulting from a car crash.
2.
Your coverage isn't the same in different states. It can
vary by state, said Johanna Keep, vice president and director of personal lines
at CBS Coverage Group in Plainview, NY. Unless you want to check out all the
states where you're traveling, it's safer to choose the renter's umbrella
coverage.
3.
Your insurance probably won't cover you if you're leaving the country. If you go out of the U.S. and Canada, you're probably not
covered by your U.S. insurance. And even if you are, you need to check to see --
that country may not accept your U.S. insurance, Keep said. That means even if
your insurance company wants to pay out, the country may reject it. Then, you
definitely will need supplemental rental car insurance.Tricky things can happen in foreign countries, said Mark McAndrew, CEO of
Charitycountry.com. After he took a rental car to England's Glastonbury
festival, he said he brought it back unscathed, but with the festival sticker on
the windscreen -- which was apparently not easy to scrape off."They tried to keep the 500-pound deposit, supposedly for damage, because the
guy was annoyed at cleaning that sticker," McAndrew said. He got his deposit
back only after recording a phone call with the rental rep, then playing it back
to the rental car's head office. The call demonstrated he had not been swearing
and threatening as the rental rep had claimed and included the rep's admission
that the "damage" was just the sticker."After that, I video/photo every hire car before I leave and when I return it,"
he said.
4.
Your own insurance may not cover the rental car for the time you rent it.
Beware if you're renting a car for long periods of time. Many insurance
companies drop their coverage after the first 30 days, Keep said."But some policies may have a shorter period," said Robin Smith Westcott of the
Florida Office of the Insurance Consumer Advocate. Some veteran travelers skirt
this rule by returning the car for a day, then renting it again.
5. Your insurance may not cover different types of vehicles. If you'll be renting a
truck or van, you'd better make sure your insurance plan that you have for your
sedan or sports car stretches to the new kind of vehicle. There's a chance it
won't. The same rule applies to moving trucks. If it doesn't, you either need to
extend your insurance, or buy the rental company's insurance.
6.
If you get into an accident, you might have a hefty deductible.
You might be on the hook for an initial deductible payment and administration
fees before your insurance company starts paying out. The deductible ranges
according to your plan. You need to know how much it is.
"The driver's personal auto policy will not cover these amounts but the
additional rental car coverage, if purchased, will," Smith Westcott said.
The
Investing Answer: Jay Davis was driving a rental car
while on his vacation in Los Angeles when another car sailed through a four-way
stop sign, crashed into him, damaged his rental and sped away. Davis hadn't
bought the optional rental car insurance. Weeks after he returned the car, the
rental car company pushed him to sign forms that would have made him personally
responsible for the costs of the damages and the loss of use of the car.
"They attempted to charge fees, but I refused to pay," Davis said. Instead, he
referred them to his auto insurance company.
"Never attempt to negotiate with the rental company -- that's why you have an
insurance agent and an insurance company to support you," he said.
In the end, Davis didn't pay a cent.
"Due to the fact that my accident was a hit and run I did not even have to pay
the deductible," said Davis
