Insurance adjusters and others: Why is rental car insurance so costly? (car rental, auto)
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Why, from the perspective of the insuring company, must such high rates be charged per day compared to 1/30 of a normal monthly car insurance premium for car owners?
Is there a much higher rate of claims on rental cars than owner-driven cars? Or is it due to more miles driven per day?
It can't be solely due to "loss of use" cost; since the insurance often costs as much as the rental itself, this wouldn't make sense unless nearly 50% of car rentals resulted in major accidents, which is absurd.
People are driving on unfamiliar roads in an unfamiliar automobile. I would think there should be a substantial risk premium based on that alone.
Also figure a lot of people use rentals for vacations/getaways. Which means there's a good chance of a lot of miles being driven, a lot of wear and tear, a lot of passengers in the car, and more chance of the driver being impaired.
Why, from the perspective of the insuring company, must such high rates be charged per day compared to 1/30 of a normal monthly car insurance premium for car owners?
Is there a much higher rate of claims on rental cars than owner-driven cars? Or is it due to more miles driven per day?
It can't be solely due to "loss of use" cost; since the insurance often costs as much as the rental itself, this wouldn't make sense unless nearly 50% of car rentals resulted in major accidents, which is absurd.
What am I missing here? What gives?
Is it? Amex has always covered it and it costs me $20~ per rental
Because they can charge those rates. It's a huge money maker for them. If you have auto insurance you have rental car coverage already up to a certain amount, our's is $35,000 for damage. Check your policy.
Is it? Amex has always covered it and it costs me $20~ per rental
here is the problem with using the credit card coverage or your own insurance and not the rental car companies. .
if anything happens to the car and it has to be out of service you are liable not only for the damage to the car but the lost revenue and so called administrative fees while it is out of service being fixed.
your cards and own insurance will cover damage claims but none cover the lost revenue or administrave fees. only colorado has a supreme court case pending contesting these charges and that is still in effect too.
here is the problem with using the credit card coverage or your own insurance and not the rental car companies. .
if anything happens to the car and it has to be out of service you are liable not only for the damage to the car but the lost revenue and so called administrative fees while it is out of service being fixed.
your cards and own insurance will cover damage claims but none cover the lost revenue or administrave fees. only colorado has a supreme court case pending contesting these charges and that is still in effect too.
Because the rental car company buys insurance for X dollars and resells it to you for Y dollars, and Y=100X and the car rental company takes the 99X markup for itself.
It is the "free enterprise" that you are so proud of, and dare not question..
Because they can charge those rates. It's a huge money maker for them. If you have auto insurance you have rental car coverage already up to a certain amount, our's is $35,000 for damage. Check your policy.
This.
Quote:
Originally Posted by jtur88
Because the rental car company buys insurance for X dollars and resells it to you for Y dollars, and Y=100X and the car rental company takes the 99X markup for itself.
It is the "free enterprise" that you are so proud of, and dare not question..
And this. Employees at the rental company are pushed hard to sell you the insurance. There's a reason for that.
here is the problem with using the credit card coverage or your own insurance and not the rental car companies. .
if anything happens to the car and it has to be out of service you are liable not only for the damage to the car but the lost revenue and so called administrative fees while it is out of service being fixed.
your cards and own insurance will cover damage claims but none cover the lost revenue or administrave fees. only colorado has a supreme court case pending contesting these charges and that is still in effect too.
I'm sure the rental company told you this. Amex covers "Loss of Use".
I should also mention that it is 24.9x per rental for Amex if you want the extra protection (we use for the premium SUV coverage and also have USAA which waives loss of use for most rental companies.
Quote:
What is Covered
Car Rental Loss and Damage Insurance reimburses a Cardmember for payments for damage to or theft of a Rental Auto that the Cardmember is required to make, up to the lesser of: 1) the actual cost to repair the Rental Auto, 2) the wholesale Book value minus salvage and depreciation costs, or 3) the purchase invoice price of the Rental Auto minus salvage and depreciation costs. The coverage also reimburses the Cardmember for reasonable charges (those charges incurred at the closest facility that are usual and customary in the vicinity in which the loss or disablement took place) imposed by the Rental Company, such as towing or storage and Loss of Use.
“Loss of Use” means the unavailability of a Rental Auto and consequent loss of revenue by the Rental Company due to damage or theft.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
