Rental-Car Protection Under Fire

The most controversial topic in the auto rental industry is the collision damage waiver that customers are encouraged to buy.

There are other optional coverages such as personal injury and property damage, but collision damage is the big one.

Decline this protection and the counter clerk is likely to advise: “You do realize that you are liable for the cost of any damage to the vehicle, up to and including the total replacement value . . . in this case $9,800?� (Or $15,500 . . . or $23,000 . . . or whatever?)

In the face of such a statement a lot of people decide to take the coverage.

In any case, many experts claim that the collision damage waiver, whatever peace of mind it might provide, is little more than a revenue generating device for the car rental firms.

Car rental companies may disagree, but money raised from such “optional� sales to car renters generally exceeds repair costs in a given year.

Ruling by the Courts

If you’ve ever rented a car you’ve probably been asked for about $8.50 a day to absolve you from liability for damages. The courts have ruled that car rental companies are not offering you insurance. When you pay that $8.50, the company (which is, of course, insured) simply waives its right to charge you for any repairs as a result of damage to the automobile.

Critics charge that collision damage waiver sales represent pure revenue for the car firms--almost windfall profits, if you will. That income enables the operators, according to critics, to engage in what may be considered deceptive advertising. They offer a car for $29.99 a day, knowing that by the time they add the collision damage waiver coverage their income will be about $34.99 for each car.

Hidden Charges

A lot of the $60- or $70-a-week specials advertised by some of the smaller companies wouldn’t be possible were it not for hidden charges that renters pay.

Pay $70 for a week’s rental, plus about $7.50 or $8.50 a day for collision protection, and your outlay can run to half as much again as the rate advertised for the car.

At last count, 19 states had enacted or are considering laws that would make it mandatory to include all hidden (or optional) charges in an advertised rate. The Hawaii legislature, for example, passed a tough law requiring just that.

Iowa has a similar new law. California, New York, Illinois and many others are expected to follow.

Car rental firms, however, have not presented a united front on the subject. Some are strongly opposed to official regulation of collision damage waiver practices. Others, while they don’t necessarily welcome it, have indicated that it might be desirable.

All-Inclusive Pricing

Several months ago American International voluntarily began all-inclusive pricing for its cars.

In an open letter to competitors published in trade newspapers the American International president, Nicholas Yebba, challenged his counterparts to follow his lead and abandon the “optional extras� system.

“Let’s be honest,� he wrote. “We all know that the collision damage waiver (or loss damage waiver) is often unnecessary and misleading. Sometimes it’s downright abusive.�

Many car renters don’t realize that their own car insurance may already protect them.

Under Hawaii law, car-rental companies must explain to renters that they may be covered elsewhere. If the car renter already has coverage, the cost of optional coverage, which would be included in the price, is deducted from the published prices.

What Price Gasoline?

Other hidden charges in car rentals also are being addressed in pending or new legislation. One of those is for gasoline.

Now if you return a vehicle with less gas than was in it when you drove out, some firms will charge twice the retail price to replace the gas.

If, on the other hand, you take it back with more gas than when you took it out, some firms will credit you with less than the retail price.

I recently returned a car to the mid-town location of a rental firm in San Francisco. Knowing the danger of returning with less than a full tank of gas, I filled up three blocks from the lot, drove in and handed my keys to the attendant, who then did the customary inspection.

Minutes later, as the clerk in the rental office prepared my statement, I questioned a $6 charge.

“That’s for gas,� he said.

“I filled the tank less than a quarter of a mile away. How did I use up $6 worth of gas getting here?�

“Oh,� he replied, “perhaps the guy in the lot misread the gauges.�

And he quietly, without argument or apology, removed the offending item from the bill.

In any case, car rental companies are discovering that some of their practices in the area of additional charges, and how they are presented to customers, no longer will be tolerated.