By Jordan W. Charness
For the past two weeks we’ve been following Peter’s rental car experiences. Renting a car may seem simple, but it is actually one of the more complex and onerous transactions people do on a regular basis. If you think about it, a rental car company is renting a very expensive item to someone they don’t really know. No wonder there are so many strings attached!
Many of them have to do with insurance, and last week we discussed the additional programs and plans that you could buy such as “additional liability insurance” (ALI) and loss damage waiver (LDW).
Legally you’re not required to take any of these additional insurance products. Be aware, however, that if you do not, you will be responsible for any of the losses that may occur that could have been covered by insurance.
Many premium credit cards cover you for many of these insurable events for free as long as you charge the car rental to their card. If your trip is uneventful you can even choose to pay in cash at the end of the rental period and still benefit from the insurance coverage provided by your card. Obviously, if you have an accident, make sure that you leave the payment on your credit card.
Your private insurance for your own car may also include coverage for rental cars. Speak to your insurance broker and find out what you really are covered for.
Rental car contracts include a paragraph that refers to damage that may be caused to the car. Basically, it says that unless you purchase the LDW, you will be responsible for all loss or damage to the car regardless of fault due to theft, collision, and vandalism, or any other cause. In addition, if the car is stolen or damaged beyond repair, you’ll be responsible for its retail fair market value minus whatever the rental company can salvage for the parts.
In addition, you’re responsible for loss of use based on reasonable downtime, as specified by law. The downtime is the amount of time that it takes the rental car company to find another car to replace yours in its fleet. They used to charge huge amounts as compensation for lost rental income while the car was being repaired or replaced. These numbers have been reduced somewhat due to legislation which varies from place to place.