Car Rental Quandary

CAR RENTAL INSURANCE MAY be the last thing travelers worry about when it comes to their vacation. Yet if your clients don't take time to consider it, they may be left paying more than they'd expected for a car rental—and not just because of higher prices at the gas pump.

Now is a good time for clients to get straightened out on whether they need to pay for insurance (usually called a damage waiver) when renting a car, according to the National Association of Insurance Commissioners (NAIC), a Kansas City-based organization whose objective is to assist state insurance regulators in protecting consumers. "As travel increases around the holiday season, the NAIC encourages consumers to investigate whether their existing auto insurance provides sufficient protection for car rental," says Walter Bell, NAIC president and Alabama's insurance commissioner.  Doing some research on insurance beforehand could make for a much smoother car rental experience

A new study by the association indicates that nearly half of U.S. consumers are befuddled over whether or not to purchase insurance when renting a car. Many consumers are inclined to go ahead and buy it without even knowing if they're already covered under their own auto insurance or credit card benefits.

In a survey of 632 consumers conducted by the NAIC in September, 42 percent of respondents said they were completely confused or had only a rough idea about insurance coverage when renting a car; 34 percent said they purchased the rental company's insurance just to make sure they were covered; and 24 percent said they were not sure if their credit card provided insurance coverage for car rentals.

"Drivers should educate themselves before they reach the auto rental counter," says Catherine Weatherford, the NAIC's executive vice president and CEO. "Carefully review your auto insurance policy and check with your credit card issuer about auto insurance benefits. Protect yourself and save money by taking a few precautions and asking the right questions."

So just what are the correct questions to ask? Remind your clients to ask their auto insurance agent if there are any situations where their policy does not cover rental cars. Also, tell them to check with their credit card company about provisions and limitations on rental car coverage. All of these questions should be asked and the responses understood before making a car rental reservation.

Finding out the answers is important for another reason: It could save your clients money, and who doesn't want that? "When renting a car, many consumers purchase unnecessary insurance and end up wasting money," says NAIC president Bell. "Meanwhile, other drivers inadvertently underinsure their rental car, placing themselves at risk."

Most auto insurance policies, says Jane Klein, insurance commissioner of West Virginia, protect consumers when renting a car, rendering the purchase of collision damage waiver unnecessary. "We are trying to encourage consumers to understand what their actual insurance needs might be," Klein says. "On top of that, it's smart to know so they don't spend money needlessly."

The issue is also an opportunity for travel agents to educate their clients. Car rental insurance is not the sexiest topic to talk about, but showing clients you care about every aspect of a trip can encourage future business from them. "The better travel agents understand the insurance aspects and credit card companies, the better off their clients will be," Klein says. "They can then educate their individual clients upfront and, in some instances, save them a great deal of money."

To find out more about the types of insurance products that car rental companies tend to offer to customers, as well as additional auto insurance information, visit the NAIC's consumer-education web site at

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