Seriously, why is rental car insurance so expensive? (windshield, credit, brake)
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How can one explain having to pay $30/day or more on a rental car? Some are even $50/day. That's equivalent to $1500/month. Are we really to believe that someone driving a rental car is 5-15X as risky as an owned car? If so, that would be equivalent to someone with a BAC over the legal limit!
How can one explain having to pay $30/day or more on a rental car? Some are even $50/day. That's equivalent to $1500/month. Are we really to believe that someone driving a rental car is 5-15X as risky as an owned car? If so, that would be equivalent to someone with a BAC over the legal limit!
What gives?
I think its simply a profit item for the rental car companies and they charge more for it than they need too. They pray on the fears of some who rent cars. I never buy it. Your own car insurance should cover you as a matter of course when you drive a temporary or substitute automobile which a rental car is.
Last edited by markg91359; 02-04-2024 at 08:12 AM..
I can definitely understand that it's riskier - it's an unfamiliar vehicle, and let's say the renter picks it up at a big city airport - you're adding in unfamiliar roads and that big city traffic, and meanwhile they are looking around for radio controls, climate controls, windshield wipers, what-have-you as they're driving and trying to figure out where to turn... Now I don't think that should amount to 5-15x higher risk, but maybe 2-3x I could understand...
Profits is what it's about. Also consider who actually buys the insurance......hint it isn't the business executive that has the platinum AMEX card and the million dollar umbrella policy.
As noted, it is a profit center, but it's also more because they have to insure without underwriting. They aren't considering individual risk factors like your personal insurance does, they have to insure everyone. Also, I suspect people don't treat the rental cars as well as they treat their own personal cars in many cases.
So yes more money for them, but also more (or at least less well known) risk.
Your own insurance should cover it. In addition, some credit cards also have a rental car insurance component (AMEX does, or did. I don't know about now. I always use my regular car insurance for coverage).
It's a business. They look at any way to bring in extra money. Plain and simple. CC's should cover it. So should your insurance.
Some pay it because they don't want to have to deal with their insurance company if something happens. Kind of doesn't make sense to me as they'll have to deal with their own if the get in a wreck in their car. But perhaps, as someone else mentioned, they feel they'll have more of chance in wrecking with an unfamiliar car in an unfamiliar area. That and the salesman was good at convincing them how much they needed it.
I used to rent cars a bunch because of all the traveling and boat deliveries I did. I remember one time I splurged, years ago, and got the insurance as I was unclear whether I was covered or not. Hit a deer on the eastern Shore of VA while driving to Miami. Deer destroyed right side of front. Pulled into a Shore Stop to see if I could continue my drive and I missed the brake peddle and hit one of those concrete posts that stop idiots like me from plowing into the store. Yep, destroyed the other drivers side. Rental company sent a flatbed with another car on it and we did a swap. Never heard from them about it as all was good.
That clerk behind the counter had more of a "deer in the headlight look" as I was heading towards the door then Bambi did. And as seems to be usual, that devil animal just bounded away!
As noted, it is a profit center, but it's also more because they have to insure without underwriting. They aren't considering individual risk factors like your personal insurance does, they have to insure everyone. Also, I suspect people don't treat the rental cars as well as they treat their own personal cars in many cases.
So yes more money for them, but also more (or at least less well known) risk.
This. They have to plan to cover some jetlagged tourist from Slovakia who doesn't read English fluently and who's never driven here as well as the 10-year local who only needs to rent a car because theirs is in the shop.
I used to have a friend who worked at a car-rental place once upon a time. The way he put it was, "You can use your own insurance if you have an accident, but your insurance will go up, and will that cost you more than buying the rental-car company's insurance would have?"
Quote:
Originally Posted by OutdoorLover
I can definitely understand that it's riskier - it's an unfamiliar vehicle, and let's say the renter picks it up at a big city airport - you're adding in unfamiliar roads and that big city traffic, and meanwhile they are looking around for radio controls, climate controls, windshield wipers, what-have-you as they're driving and trying to figure out where to turn... Now I don't think that should amount to 5-15x higher risk, but maybe 2-3x I could understand...
And, anything bought in smaller quantities than in bulk is going to cost more. Buy a tiny can of something at the grocery store rather than the big container? More expensive. Buy a couple days' worth of car insurance? More expensive than having a long-term policy. Some is likely the administrative costs of having to do the work to sign people up just for a few days vs. doing it once and it's good for years.
I normally use my personal insurance, but with repair cost escalating and the ability to get parts becoming a lengthy wait, if you wreck a rental and it's out of service for 3 or 4 weeks, maybe more, the insurance claim costs for making the company "whole" again can be astronomical. The rental company will be missing the income on that car while it's in the body shop....... someone has to make up that cost.
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