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Drivers Pushed to Spend $390 Extra at Car Rental Desks

rental car insuranceBy Aaron Crowe

Before getting the keys to their rental car, the average driver this summer was pushed by car rental desk clerks to spend $393 more on extras such as insurance and a GPS system, adding up to a 73 percent increase from the average $554 to rent the car.

Once the four “extras” of an extra driver, GPS, child’s car seat and insurance are added, drivers saw their average cost for a one-week, mid-size rental go up to $947 on average, according to data collected by Insure My Rental Car.

One in five people felt “pressured” to spend more money at the rental desk, a survey by the company found, and 19 percent were “shocked” at the price of the extras.

Car insurance the priciest extra

Of the four extras the report looked at, Collision Damage Waiver (CDW)/Loss Damage Waiver (LDW) was the costliest, at $143 on average. CDW/LDW was described by 36 percent of the customers surveyed to be a “ripoff.”

LDW covers damage to the rental car and loss of use of the car to the rental car company. Most people rely on their car insurance — and whatever deductible they have — to cover a rental car accident where they’re not at fault, says Ernesto Suarez, CEO of Insuremyrentalcar.com. It’s insurance that 40 percent of people buy at the rental counter, Suarez says.

A lot of the damage to a rental car happens when it isn’t being driven. Of the rental cars that are damaged, 33 percent happen when the car is immobile, he says.

Suarez’ company sells CDW/LDW from $5 per day, $17.50 per trip or $94 for an annual policy. LDW coverage is for up to $100,000 and can be bought from six months to a day in advance.

Of the five national rental car companies in seven U.S. cities it surveyed, Hertz was the most expensive, charging $213 for a week’s policy in Dallas, Denver, Orlando and Seattle.

Orlando had the highest average for the extra insurance: $192, with Dallas only $1 behind at $191. Buying the extra insurance in Dallas added up to 43 percent of the original car rental charge — the largest percentage among the seven cities.

“Many people choose their rental car provider because they offer the best price, but the added extras make this a false economy,” Suarez says.

Insurance through credit card

If you use a credit card to rent a car, chances are the card provides free CDW coverage for the rental car. There are some caveats.

Most credit card collision coverage is secondary, meaning it only pays what you can’t recover from other insurance. You may not want to file a claim with your insurer, which could lead to your insurance premiums rising.

Secondary coverage requires you paying for the full damage upfront and getting reimbursed later.

Also, most credit card coverage requires you decline the rental company’s CDW, but rentals in some foreign countries may include some CDW in the base rate, which you can’t decline. That CDW has a high deductible, and your credit card company may refuse to cover it if you didn’t decline it.

For primary coverage or more complete coverage than a credit card offers, third-party collision coverage can be a lot less expensive than what a rental car company charges.

Why people buy rental insurance

Car renters may want or need to buy the insurance for a few reasons. Without LDW insurance on their own car, renters may be required by the rental company to buy their car rental insurance policy. Liability requirements vary by state, so check your state’s minimum liability limits before renting.

If you don’t have any auto insurance at all, you also may have to buy CDW/LDW from the rental car company or elsewhere.

Another reason to buy it is if your car — the one you own at home that you’re not renting — has a low market value. Many people don’t realize that insurers only pay the value of your car, not the rental car that’s damaged, Suarez says, so if your car is old and isn’t worth nearly as much as a new rental car is, you’d have to pay out of pocket.

“You could find yourself in a financial gap” if the rental car is worth more than your car, he says.

Costs of other extras

The average weekly rental car price is $554, according to the report. Here are the the average costs of the “extras” it looked at:

  • Add a driver: $80
  • Child seat: $80
  • CDW/LDW: $143
  • GPS: 88

Those costs can easily be avoided by driving yourself, bringing your own child carseat, not buying the extra insurance, and using your smartphone for directions.

Buying all four extras results in paying $393 more on average, or 73 percent of the original car rental price.

Aaron Crowe is a journalist who covers the auto industry for CheapCarInsurance.net.