Melanie_Alnwick's Blog

So, you get a great quote on that rental car this summer, and you're going to save lots of money by declining any of the company's expensive add-on insurance and waivers.  That used to be a smart move... but it may not be any more.   According to the Insurance Information Institute... rental car companies are increasingly pursuing "loss of use" and "diminished value" claims if your rental car is damaged.   Auto insurance companies in most states say they do not cover those claims... and customers end up getting stuck with the bills.    So now, insurance companies are advising their policy holders to actually BUY the collision damage waivers  -- at a cost of  $13 to $26 a day -- if they want total protection. 

Credit card companies have their own damage waiver products that are supposed to cover loss of use and diminised value claims -- but there's a catch.  Visa, MasterCard and American Express all say they require vehicle logs from the rental car companies to substantiate the claim of "loss of use" -- and rental car companies say, they don't give that information out -- once again, leaving the consumer with a potentially costly bill.

Michael LaPlaca, an attorney who represents rental car companies.. says there's a basic misunderstanding on the part of the credit card and auto insurance companies.  LaPlaca says the claim is not for loss of revenue, which would have to be proved, but for loss of use... which is a "common law" right for property claims.   Just the fact that the car isn't on the lot, at the company's disposal for anything..even just to LOOK at... is loss of use.   He says consumers should press their insurers to pay the bill -- and it seems that insurance companies would prefer you buy the collision damage waiver instead.  Still, I think it brings up the question... just because the companies CAN charge for loss of use, should they?   Should our insurance companies pay for claims that can't be substantiated? 

There are a few interesting things to consider:  Though it seems like a gouge... the Collision Damage Waiver may be a good idea if 1) you don't want your auto insurance company to ding you for a claim or 2) the total cost of the waiver is less than your auto insurance deductible.    We've done a lot of the research for you & it's here on our website... but you should always check with the rental company, your insurance company, and your credit card company first.

Got any good rental car insurance stories?  We'd love to hear them.