INSURANCE: The Rental Car Insurance Catch
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Consumers are not aware that they can arrange far more affordable rental car cover through their existing insurer who knows their risk profile than insuring through a car rental company.
“The claims history of a hire fleet is generally worse than for individually and privately insured motor portfolios because there is no discrimination against poor or bad drivers” says Gari Dombo, Managing Director, Alexander Forbes Insurance.
To cover these costs rental car insurance is inevitably more expensive while rental terms are loaded against the consumer.
Drivers of hire cars are usually not as careful as they would be with their own cars, they drive cars that they are not familiar with, and generally drive in places that they do not know very well.
Furthermore, says Dombo, “given the nature of the vehicle rental business, rental insurance is offered to anyone with a license who can pay to hire a vehicle, regardless of their driving history or level of proficiency.”
Since rental fleet cars have to be new or kept nearly new, vehicles with very little damage are often written off. These vehicles are also more likely to have damaged body parts replaced with expensive new parts rather than being repaired.
Not only is car rental insurance more expensive but car hire companies seldom share the insurance policy terms with customers. This leaves consumers in the dark about what they are covered for or what responsibilities they are taking on.
“And even if consumers are shown the policy terms, nobody really has the time to read all the rental contract conditions while rushing to a business meeting or going on holiday” says Dombo.
“Consumers should also be aware that the excess they will have to pay on a car rental insurance contract is generally much higher than that on their own policy” adds Dombo.
“If you plan to hire a car find out from your broker or insurer if they cover hired cars and ask for a quote. Your insurer’s cover, premium and excess should be much cheaper than what the car hire company is offering” advises Dombo.
Once you have insured the rental vehicle, make sure that it is in good working order before driving off with it. Check whether the seatbelts are working properly, all the lights come on, doors can lock properly, whether the alarm is working, that there are no leaks underneath the vehicle, if the air conditioner is working properly and whether there are any visible scratches or dents on the vehicle.
“Once you have taken possession of the vehicle you will be responsible for returning it in the same condition, whether you caused the damages or not and regardless of who you insured it with” warns Dombo.
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