Estimated read time: 4-5 minutes
OREM — Many people dodge the extra rental car coverage that agents offer at the rental counter, thinking they are covered.
But that may leave you with a sizeable coverage gap — as an Orem woman recently discovered.
Debbie Sanich's expensive discovery came last year when she got into a fender bender while driving an Avis rental on Hawaii's Big Island.
"He pulled right out in front of us, and we hit his car," Sanich said of the collision.
She wasn't too concerned. Her full coverage auto policy covers rentals, so she didn't feel the need to buy Avis' collision damage waiver, or CDW.
"I don't take their insurance because my insurance's supposed to cover all rentals," said Sanich.
Plus, she said the other driver's insurance paid for the damage. So, she thought all was well until she got a surprise bill from Avis showing a sizeable gap in coverage.
Surprise bill
"Administrative fee, loss of use and diminished value," said Sanich of the additional fees she has been hit with.
Avis is charging her $300 in administrative fees just for handling the claim. Then $564 for loss-of-use. That's money Avis claims it lost out on while the car was getting fixed. And another $392 for what's called diminished value. That's how much less Avis thinks its car is now worth because of the crash. Altogether, Sanich owes Avis $1,256.
"This was a fender bender," she said. "What if somebody wiped out the whole side of the car? This could be $5,000, $6,000, $7,000, and then what?"
Sanich protested the surprise bill, but when Avis refused to budge, she decided to Get Gephardt. And the KSL Investigators reached out to Avis to ask why she's on the hook for those other charges.
A spokesperson wrote, "If our rentals are in an accident without proper coverage, our policy requires those involved to cover the costs. In this instance, rental vehicle coverage was not purchased when the vehicle was reserved."
What insurance won't cover
We took Sanich's case to Brent Thurman of Keystone Insurance.
"There's still going to be some items that you're responsible for," Thurman said.
When it comes to loss-of-use, very few auto policies cover it. He says that is akin to asking your insurance to cover your car payment while your car is in the shop, something that insurers won't do.
"A rented vehicle works the same way," he said. "We'll cover the liability, but it doesn't mean we're going to necessarily pick up your obligation for the daily rental fee."
A rental company will hold you to that obligation, even if you're not at fault. The same goes for those administrative fees and diminished value.
"The tough thing about putting a value, a number on it, is that it's nothing that's actual. It's a perceived value drop," said Thurman of diminished value. "And with insurance companies, they can't pay based on hypotheticals."
Are there options?
So, where does that leave renters? Well, check your credit card agreement. It might cover some or all those fees, so long as you use it to pay for your rental.
There is another option: Buy the collision damage waiver or CDW sold at the rental counter.
"Many people don't take it because it's a fair amount of money per day," Thurman said.
We're talking $30 to $45 daily, which could add hundreds of dollars to your final tab.
On the other hand, buying a rental company's CDW frees you from all those surprise fee woes, provided you didn't damage the car by doing anything that broke the rental agreement.
Plus, since your insurance is not involved, you won't have to worry about paying a deductible or seeing your premium go up.
But are CDWs always the right answer?
"I don't know," said Sanich. "It's a hard call."
In the end, she paid Avis the $1,256 bill. But she said with all her rentals over the years without incident, skipping the waiver has still saved her a ton of money.
"I don't want to pay the extra fee for the rentals. I mean, that's a lot," she said.
Checking your coverage
Rental car companies do make big money off those collision damage waivers. So, you can expect a hard sell at the rental counter.
Thurman said renters should go over their car insurance or call their agent so they can be sure what is covered if misfortune befalls their rental car.
Renters should also look through their credit card agreements to see what fees it will cover that insurance might not. Coverage from most credit cards kicks in after your car insurance pays.
