Skip to main content

NEW YORK (MainStreet) – If you’re a driver with decent credit, your mailbox will regularly contain car insurance offers promising to beat the other guy. It does pay to shop around though, as the firm that offered the best deal last year may not offer the best now. It also pays to look at some of the lower-profile policy features, like whether the bargain policy will cover a rental car.

That’s one of the key insights to emerge from an insider glimpse into the rental car business from industry research firm The “Confessions of a Rental Car Agent”, describes the author’s experiences selling customers add-ons, like collision coverage, that most of them didn't need.

The goal, of course, was to boost the rental firm’s revenue and income. The add-ons, it turns out, provided the real profits, with the car rental itself was little more than a loss leader used to draw customers in.

As a rental agent, the writer, editor Philip Reed, made just $12 an hour. To get ahead, he was under tremendous pressure to sell extras. Most customers already had policies that covered rental cars, so they didn’t need the extra add-on that cost $26 a day.

“I’d say that about 60% of the people buy the insurance,” Reed writes. “That’s pretty outrageous because only about 10% of them needed it....One day, 30 people came into the rental office where I worked and we sold all 30 people insurance.” Afterward, the agents went out for beers to celebrate, he says.

The strategy, he writes, was to induce fear of what could happen if one didn't have the coverage, which was sold in four tiers to making the deal more confusing and encourage people to add layer upon layer of coverage.

Scroll to Continue

TheStreet Recommends

“We had week-long training sessions about how to sell these products and how to add value to them,” he writes.

You don’t have to be a math whiz to realize that $26 a day is $182 a week. People who rent a number of times during the year and buy full coverage each time might spend as much on unnecessary rental insurance as they do on their regular car policies.

If you are a frequent renter, shop carefully for a car insurance policy that will cover rentals, and keep in mind that rules vary by state. Also note that if you use your own car insurance policy to cover your rentals, you’ll probably have to pay deductibles. If you damage a rental, you won’t have the option of declining to repair a routine dent, so your choice of deductibles is important. A larger deductible will reduce your premium but leave you exposed to more out-of-pocket expenses of you damage a rental car.

Of course, whenever you rent it’s important to carefully check the vehicle before you take it, so you’re not charged for damage done by a previous customer.

Finally, be aware that many credit cards automatically provide collision and theft coverage for rental cars, so check your policies before deciding which card to use for a rental. Note that there may be some restrictions. You may not be covered, for example, if you rent a pickup truck or keep the rental longer than 30 days. Also, card coverage may not pay all the fees involved in dealing with a claim on a rental.

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at