Rental car coverage often iffy

By Don Oldenberg
Washington Post

While Yuri and Irina Khidekel were relaxing on a Maui beach in March 2003, a thief drove off in their rental car. Inside were their IDs, cell phones, cash and clothing — all seemingly more troubling losses than the car, which was insured under their credit card's car-rental policy.

So the Khidekels went home to the Bay Area and didn't give the stolen car another thought. Not until April 2004, anyway, when they got a bill from Alamo for $5,062.

"When I pointed out that they promised to get money from the person who stole the car, they said that they could not because he does not have any assets," says Yuri Khidekel, who is a technology company executive.

Knowing that their auto insurance didn't cover stolen rental cars, they filed a claim with the insurance policy from their Visa card, but according to Irina Khidekel, who is a pediatrician, it was declined because the filing deadline had passed.

The Khidekels asked Alamo to stand behind the manager's promise. They argued that by taking a year to notify them, Alamo negated their credit-card coverage. They've tried to negotiate a settlement.

Because Alamo is threatening to take the Khidekels to court, the company refuses to discuss the case.

The standard car-rental agreement puts the onus on the customer when all else fails. "When you rent a car, you are obligated to bring it back in the same condition as you rented it. If your own car is stolen and you don't have insurance, you are out of a car. Same with Alamo and every other rental company," says Michael LaPlaca, an attorney in Rockville, Md., who specializes in rental car issues.

When the customer is at fault — leaving the keys in the ignition, not locking the doors, etc. — the customer pays, he says.

Otherwise, the comprehensive and collision provisions of the customer's personal auto insurance's typically covers stolen or damaged rental cars.

But Jeanne Salvatore, spokeswoman for the Insurance Information Institute, a nonprofit industry-sponsored organization, cautions that because "comp and collision aren't required to drive legally, a lot of people don't purchase it."

She recalls a case in which an elderly couple's rental car was stolen. Their own car was old and they didn't drive often, so they didn't buy comprehensive and collision coverage. They ended up owing the rental car firm nearly $20,000.

Salvatore also warns against relying blindly on a credit card's rental-car insurance policy. Some cards fully provide primary rental-car insurance, she says, and others provide secondary coverage that pays the deductible or "next to nothing."

Consumers should "call the 800 number on the back of their (credit) card," she says, "and ask, 'If I rent a car, what kind of coverage do I get?' "

Had the Khidekels purchased the collision damage waiver when renting the car, all damage would probably have been covered, says LaPlaca. Even at a cost of $15 a day or more, it can be a good deal for anyone who otherwise isn't covered.

"It says, 'We will waive your responsibility for damage to our car — even if it's your fault,' " says LaPlaca, who always buys the waiver even though his personal policy covers stolen and damaged rental cars.