Car rental insurance is a must. If you don’t have it with your own insurance, buy it from the rental car company.
Vanamali Tay got into a car rental accident when she visited San Francisco recently. She’d rented a car through Alamo and thought she had third-party liability protection. But she didn’t, and now she wants help with a $15,000 repair bill.
Fortunately, the accident didn’t injure Tay. Unfortunately, Alamo is being rather insistent about her paying for the damage.
Quick sidebar: While we are consumer advocates here at Elliott Advocacy, my team and I strongly believe that if you damage a rental car, you should pay for it. And, in fact, a vast majority of car rental customers who are in an accident do the right thing. It’s how we get to that point — the point of doing the right thing — that’s in dispute.
Tay says Alamo misled her. She thought the company provided her with insurance coverage. Alamo says they didn’t mislead her at all.
Anyone who rents a car should read this case. It underscores the importance of reading and understanding a contract carefully. It’s also a reminder to think about car rental insurance before you rent any vehicle.
A car rental accident with no insurance — and a lot of uncertainty
Tay, who is from California but has been living in France for the last two years while she pursues an advanced degree, reserved the Alamo car for a recent visit back to the States.
“The reservation confirmation said I had third-party liability protection included. It also included a collision damage waiver,” she says. “The Alamo agent didn’t orally advise anything. He had me sign a premarked place and handed me the contract after taking my California license and credit information.”
Alamo says she declined the third-party liability protection.
Tay doesn’t think that’s fair.
“I want Alamo to pay for the damages (to the other party), as they carry state-mandated third-party liability insurance,” she says. “I also want Alamo to admit that it didn’t follow California state-mandated due diligence to orally inform [the renter of] all the insurance and fees upon renting a car. My transaction took two minutes with no oral interactions at all.”
Tay says there’s video proof of the transaction and that the Alamo agent didn’t inquire about her car insurance status to offer insurance accordingly to mitigate future financial burdens.
What Alamo has to say
Let’s have a look at Tay’s reservation. Under “key facts” we find the following warning:
Note – Unless you purchase a waiver or protection product or one is included in your reservation as specified below, to the extent permitted by the law applicable to your rental agreement, you are responsible to the Rental Company for theft or any damage to the vehicle during the full period of your vehicle hire.
For rentals in most countries, you will be liable even if the accident was not your fault. If you are liable, your liability includes loss of revenue if the vehicle cannot be rented because it is damaged or stolen, a reasonable claims administration fee, diminishment of value, and any towing, storage or impound fees of the vehicle.
Third-party liability protection is included in your reservation unless you have booked utilising an Account Number and third-party liability protection is specifically excluded via the associated Corporate Account agreement.
Digging deeper into the coverage options, our advocacy team discovered that the kind of liability protection she had, mandated by the state of California, was not what she probably thought.
California: minimum liability coverage
California requires minimum liability coverage for every rental, but only provides the following:
- $15,000 for injury or death to one person (another driver, passenger, pedestrian, etc.) in an accident you cause
- $30,000 for injury or death to more than one person in an accident you cause
- $5,000 for damage to property in an accident you cause.
The gold-plated coverage she needed for this accident is called Extended Protection.
The purchase of Extended Protection (EP) is optional and not required in order to rent a vehicle.
Optional EP provides you with minimum financial responsibility limits (at no charge to you) as outlined in the applicable motor vehicle financial responsibility laws of the state where the vehicle is operated AND excess insurance provided by the insurance policy. This supplies you and any authorized drivers with third-party liability protection with a combined single limit per accident equal to the difference between the minimum financial responsibility limits referenced above and $1,000,000 Combined Single Limit per accident.
(Emphasis mine. I also edited the clause for brevity.)
So did she have insurance or not?
Alamo contends that it rented Tay a vehicle without Extended Protection. A look at her confirmation suggests that it is correct. She would have had to agree to buy additional coverage at the San Francisco airport. Alamo didn’t offer Tay extra insurance.
Tay says she was led to believe she had adequate third-party liability. Indeed, California and European law require third-party liability insurance (she booked the car from Paris before she left for the States).
My advocates and I contacted Alamo’s parent company, Enterprise, several times. Finally, Tay received her final answer:
I am the Area Manager for Alamo Rent A Car for San Francisco Airport. I have looked into the claim that you stated that the third party liability was never offered to you.
Unfortunately, as I can not verify the conversation between you and the agent at the time of the rental, I can only go off of the signed contract and your reservation that was for Alamo.
After looking into the contract [you had] no Third Party Liability signed for at the time of the rental.
Based on the research and signed contract declining liability coverage you are going to be responsible for any third party damages. Attached is your signed copy of the rental agreement.
So there’s the final answer. Alamo didn’t insure Tay.
There’s a small chance she could still be covered by her credit card travel insurance, or car insurance. But it’s unlikely.
What to remember about getting into a car rental accident with no insurance
It’s lesson number one in journalism school: Assume nothing. Tay connected one dot too many with her liability coverage, then relied on a flimsy state law to take care of her after her accident. I can’t blame her for trying.
Alamo bears some of the blame for this. Its agent should have carefully explained what the company covered and what it did not cover on her rental. That should have happened before she drove the car off into the sunset. It could have more clearly and quickly answered her questions instead of presenting her with a bill and letting her figure it out for herself.
So what does that mean for your next rental? Make sure you have coverage. I repeat: Make sure you have coverage.
Whether you buy a full travel insurance policy or go with a one-off from a company like InsureMyRentalCar.com, please, please make sure you have something. Otherwise, you could end up in an accident — and $15,000 poorer.
Christopher Elliott is the founder of Elliott Advocacy, a 501(c)(3) nonprofit organization that empowers consumers to solve their problems and helps those who can’t. He’s the author of numerous books on consumer advocacy and writes weekly columns for King Features Syndicate, USA Today, and the Washington Post. If you have a consumer problem you can’t solve, contact him directly through his advocacy website. You can also follow him on Twitter, Facebook, and LinkedIn, or sign up for his daily newsletter. Read more of Christopher’s articles here.