Ridiculous or not? A “false choice” at the car rental counter

By | October 19th, 2011

As a frequent car rental customer, Parker Mann has endured countless sales pitches for optional insurance. But recently, the hard sell efforts have crossed a line, he says.

“The latest gimmick is to give the customer a false choice with the question, ‘Do you want the full insurance or the basic?’ — the implication being that the insurance was required,” he says. “I’ve heard this line essentially word for word from three agents at two rental companies in the past year.”

Just in case you were wondering, insurance is an option on practically every car. Asking which policy a customer wants implies it’s mandatory.

Even when Parker pointed that out, he got some pushback.

“One agent in Phoenix wasted over 15 minutes of my time twisting my arm, citing unending exaggerated horror stories about what could happen to those who didn’t buy the insurance,” he says.

Related: In today’s edition of Is this a scam?, sound off on the toll transponder controversy.

I asked Bob Barton, president of the American Car Rental Association, if there was a standard for presenting information about insurance in the car rental industry. There isn’t.

How about the insurance, which is thought to be the most profitable part of the rental car transaction? That’s nonsense, he said.

“Think of it this way,” he told me. “If someone buys a loss-damage waiver and is involved in an accident and the car is totaled, it [costs] you less than $100. Without the [insurance] you lose a $25,000 car.”

Some states also limit how much a car rental company can charge for insurance. New York, for example, caps a collision-damage waiver policy at $9 a day, which is hardly enough to cover even a small ding in the rental, according to Barton.

“Car rental operators will tell you that the bottom line will show that the amount of insurance sales never equals the collision repairs expense,” he says. “No profit there.”

If insurance is hardly profitable, then why push it? Numerous car rental insiders have told me that they’re evaluated based on how many optional extras are sold with the car, so maybe insurance is just one part of the company’s overall strategy of earning so-called “ancillary” revenues from a car.

And since there are no industry standards, how they sell them is up to each agent.

I’ll never forget the intrepid car rental employee in Anchorage who, when I turned down the optional insurance, showed me large photographs of uninsured cars that had been damaged on the Alaskan roads.

“This could happen to you,” he warned.

I said I’ll take my chances.

Doing a little homework may be the best way to avoid falling for such aggressive pitches.

“It’s always helpful when a consumer knows before renting a car what his or her credit cards might cover or own insurance coverage is and if it transfers to the rental vehicle,” says Laura Bryant, a spokeswoman for Enterprise.

(Incidentally, she says Enterprise trains its agents to avoid offering false choices or using scare tactics. She even sent me an excerpt from the company’s training manual (PDF) as proof.)

It’s one thing to play word games or use scare tactics when trying to sell insurance, but quite another to lie. But that’s what Fran Hoshiko claims happened to her when she rented a car in Las Vegas recently.

“The attendant asked if we wanted the insurance,” she remembers. “We said ‘no,’ then signed on the mobile unit.”

When she got home, she realized she’d been charged for insurance. A closer look at the form she signed showed that she’d acknowledged the purchase by signing the handheld device.


“We should have checked our receipt before leaving the garage,” she says.

True. But we should also trust a car rental company to give us what we ordered. And to tell the truth.

(Photo: Bulldog o8/Flickr)

  • Carver

    Of course insurance is profitable.  Please consider this snipper from a 2010 Chicago tribune article

    John Healy, an analyst with Northcoast Research, said insurance generates profit margins of up to 80 percent for car rental companies. “It’s a very profitable transaction for them when they upsell you on a product like that,” Healy said.

    Is it possible that the statistic cited by Mr. Barton is correct. Perhaps.  But its completely meaning as he is comparing applies and oranges.  In a traditional insurance transaction, yes, collections must exceed payouts.  But, last time I checked, car rental companies don’t let you rent cars for free.
    What Mr.  Barton is failing to acknowledge is that built into the car rental fee is the cost of repairs for normal wear and tear.  Above that the customer is liable and we know how aggressive car rental companies are in collecting for damages to the car.
    So to detemine the profitability of insurance we must add 1) the portion of the rental fee that takes care of normal wear and tear PLUS 2) the money paid by customers for repairs PLUS 3) the insurance collections MINUS the total repair costs.
    The excess is the profit obtained by selling insurance which is quite substantial according to the Chicago tribune.
    Mr. Barton’s comments ignore #1 and #2.

  • Raven_Altosk

    Of course it’s profitable, just as their “ding” scams are. Now, not all car rental agents are bad apples, but in my travels I’ve encountered a few. One obnoxious guy in San Diego wanted to know what my deductible was, claiming “it was part of the form he had to fill out.”

    I told him it was none of his damn business. He actually wanted to argue with me and eventually I answered, “Enough for me not to worry but too big for you to scam from me.”

    With that, he just gave me the keys, realizing I wasn’t going to fall for the “return ding that costs exactly as much as your deductible scam.”

  • sirwired

    I can guess that car rental customers are more accident prone than they would be at home, due to an unfamiliar city and an unfamiliar car.  But they aren’t $9 and up a DAY accident-prone.

    Mr. Barton is full of unmitigated B.S., if the insurance wasn’t profitable, they wouldn’t sell it.  Period.  I’ve never heard of a SINGLE operator saying the insurance isn’t a profit center; I’m sure if they thought they could spin it that way, they would.  Routinely.  Because they’ve been hassled about insurance costs by consumer organizations since the dawn of time.

    That said, my corporate contract (which has excellent rates and is also good for personal travel) includes the CDW/LDW, and it sure is nice to just be able to drive off and not care what damage the car has or hasn’t sustained from a previous renter.

  • emanon256

    The last few times I have had agents try to hard ball me into buying insurance, I simply ask for the manager. Not one of them has gotten the manager, but they did immediately stop playing hardball.

  • Tony A.

    I think it’s time for a UNIFORM CAR RENTAL CONTRACT law (and form). At least consumers will only need to learn it once.

  • MikeZ

    One would also assume that the company has some type of umbrella coverage on all it’s automobiles. So any collection of monies to offset that expense would be profit.

  • othermike27

    I fell for the “What’s your deductible?” line at an Enterprise location once. When I gave the amount, I was told that if the car was returned with damage, my credit card would be immediately charged the amount of the deductible, with the details to be sorted out later.  Whatever.  I returned the car with no problems, but I still wonder why anyone would feel the need to implement such a policy – I don’t see how it protects the company any more than the standard terms. Maybe it’s just the agent’s last argument for buying the insurance?

    In fairness to Enterprise, and despite the many complaints that appear here, I have never had a problem with them, beyond saying a few polite “No’s” to the up-sell pitch. In fact, most of the agents are very low-key and personable.

    However, I have also taken to traveling with a FlipVideo camera that I use to walk around the car, showing me pointing out every ding or questionable area.  The advantage of video is that you can also capture the agent telling you “Oh, that’s no problem.”

  • Psbgsa

    Car rental companies can be difficult. They know most of the time we just got off a plane and are in a hurry. What bothers me is renting in another country. I go to Panama often and have walked away from counters that share their name with the companies here. I refuse to pay for insurance when I even carry a letter from my AE Platinum Card that says I do not need to buy it. They push so hard and tell me they will not rent to me. Its amazing when I lean over to a competitor and ask out loud “do you have cars?” Things change and the hard sell goes away.

    Be stronger than they are!

  • Perhaps the best way to deal with the insurance silliness is to start buying insurance and damaging cars more often.  If the selling point is the elimination of financial responsibility for accidents and recklessness, maybe an increase in damage is appropriate.

    If forced into buying a service I don’t want, I guess I should use it…

    (The above was written sarcastically, however, in all humor there is an element of truth)

  • Familiesgo

    We rented a car in germany recently and returned it with 4-inch scratch on the passenger door. The rental company billed us $2,0000 for damages. I can’t imagine a fix is going to cost that much, so I feel like our damage had to be more profitable to them than than a $9 policy that would have prevented them from passing the cost off to us. We believe our car insurance or credit car will cover what they’re billing us for.  But I’d love t see a stroy that looks into what rental companies charge for minor damages…

    eileen at http://www.familiesgotravel.com

  • ArizonaRoadWarrior

    1.  Check with your auto insurance company to see that your policy covers rental car.  If not, then add a rider to your policy.  
    2.  Check with your credit card to see if there is direct or supplemental coverage for rentals.
    3.  Rent your car online where you can accept or decline the options (i.e. GPS, car seats, insurance, etc) so that when you arrive at the car rental desk, the paperwork is already filled outprinted (sometimes at franchise locations and/or small locations that may not be the case).
    4.  Join the Frequent Renter program of the rental car (it is free for most of the rental companies) and you will usually bypass the rental counter.
    5.  Check your receipt when it is given to you.

    I rented five cars in the past two weeks from three different rental companies (Alamo, Budget and Thrifty) and I didn’t receive any insurance pitch at all from nor did they ask about my insurance coverage and etc.  I made these reservations online where I declined the insurance.

    I think that it is all about being an informed consumer and how you conduct yourself at the rental car counter.

  • ArizonaRoadWarrior

    I think that Mr. Barton is full of BS.  Why would a company (i.e. rental car company) sell a product (i.e. insurance) that is not profitable?  Furthermore, the insurance is NOT underwritten by the rental car company but it is underwritten by an insurance company.  The rental car company is getting a commission from the insurance company to sell it.  Even if it is self-funded (i.e. the insurance company is assuming the risk), there is reinsurance as well as risk management was done to determine the premium.  For example, a person may pay $ 30 for rental car insurance but the claim rate is NOT 100%. He is full of it. 

  • Bobinflorida1

    In Ireland (where credit card companies exclude coverage), the agent for Avis pitched the insurance correctly, but when I said no, she continued, wrote down a figure for an Opel at 28,000 Euros, and said if you damage the car, we required that you buy it for this amount.  If that is acceptable, please initial here. We didn’t damage the car, but that is an interesting thing to say.  not if you “total”, but rather “if you damage”.

  • Tom Brollini

    I don’t think I have ever had to say “no” more than once or twice.  Just stare into their eyes & say, “I said no”.  Works fine.

    What I have started doing every time I rent a car is to take the front page of the days newspaper & take pics with my pocket digital camera of the car inside & out.  Do that when you pick it up & return it. 

    They won’t even try to mess with you.

  • Zedp3

    I find the “full or basic” question to be almost standard when I rent cars (maybe because I typically go to one of two companies). I cheerfully reply “Oh no thanks, I have insurance!” Typically the rental agents just go on to the next question but I have also witnessed bad behavior.

    One particular example was at the Dollar Car Rental at BOS, it was a rainy night and they were only running one shuttle to the terminal, so a lot of passengers (including myself) were steamed at being left in the rain for 45 minutes waiting, so perhaps the rental agent was under abnormal pressure. That said, the customer in front of me was at the counter and volunteered (in a perfectly normal tone of voice) “I don’t need insurance and I’ll bring back the car full of gas.” The rental agent responded “I didn’t ask you anything.” Awkward pause… The customer replied (in a nicer tone of voice than I would have used) “I was just saying that I won’t be needing insurance and I will refill the gas on the car.” And the Dollar agent said “If you DON’T want me to make MISTAKES, then DON’T TALK TO ME unless I ask you a QUESTION.”

    Needless to say, I think that behavior alone is enough to choose another company next time, even though I don’t believe Dollar trained or condoned his fresh tone. And I think no matter how understaffed they were that night, that was the cue for the manager to send this gentleman home.

  • Asiansm Dan

    It seems to me he encounters new employees paid by the commission rack up on insurance sales. Usually an experienced employee evaluate the profile of the renter before making a pitch sale because he don’t want to waste time. I have Diner Club Card (the best car-rent coverage Credit Card) and never paid a cent to Car-Rent companies and I never had a sale pitch and they already knew I don’t and never take any insurance. The frequent renter profiles stipulate that renter takes insurance or not and history of rental confirm that.
    Just his unlucky day.
    May be the car-rent policy is changing to oblige the agent make a sale pitch.

  • LordStanley

    I encountered the identical phrasing at a Kansas City rental counter recently. The counter rep mumbled and when I asked him to repeat himself twice he seemed embarrassed that he was “caught”. I’m convinced that there are monetary gains for the employees and not a case of “would you like fries with your order”. While I do not begrudge a company to increase their profits, I do fault them for doing it in an underhanded way.

  • The second these people start their pitch, I tell them I have full coverage with USAA and they usually stop.  Alternatively, I will launch into, “I don’t want anything more than what is currently in front of you via my online request.  I have full coverage on my personal vehicles.”

    This was tested when I was on assignment in Ohio and my rental car was broken into via a passenger window.  I called the police and USAA immediately and while the report was being filled out USAA put the claim together and w/n minutes told me to just take it back to the rental agency with the phone and claim numbers she was about to give me.  I never heard another word and the rental company felt so bad for me they even upgraded me for free.

  • Clare

    And this is WHY credit card companies–Visa, at least–won’t cover damage to rental cars in Ireland–both in the Republic AND in Northern Ireland.  I learned this the hard way a few years back, because I had wrongly assumed that my Visa covered ALL rental cars everywhere, period.  I know, shoulda double-checked in advance…  I was scammed in Limerick by Hertz, almost exactly 600 Euros (the deductible on Mastercard’s coverage) because the plastic front bumper had some paint on it.  It was the sort of “damage” that some rubbing-compound on a rag could “fix.”  While they were unable to help, the Visa people were very sympathetic; one of them read to me from their official doc’s somewhere, where it explained that due to repeated fraudulent claims from companies in Ireland, where the employees would subsequently refuse to cooperate with Visa when it questioned the claims, Visa had decided that it simply couldn’t cover any rental cars in Ireland at all.  They’re virtually running their own little Irish mafia-ring over there, in the rental-car industry…

  • Carver

    Of course Mr. Barton is full of it.  The car rental insurance is much like extended warranties.  Pure Profit.  That’s why they sell it so hard.  I remember being at Best Buy and purchasing my Tivo.  The salesman was a little younger and not skilled at reading people.  He insisted despite repeated protests.

    So finally, I told him, one more word on the subject and I was leaving without the Tivo. That convinced him stop pestering me.      

  • othermike27

    We could send the “mayhem like me” guy up to the rental counters…

  • I can’t speak for Panama, but I’ve seen a lot of stories on this blog about Mexican car rentals, and no American credit card carries insurance that’s acceptable to the Mexican government. (It has to be issued by a Mexican insurance company located in Mexico, and has to be specific to the car in question, which means no giant umbrella policies covering, say, all American Express cardholders anywhere in Mexico.)

    So when I hear people at the rental counter at the airport in Tijuana insisting that their card will cover it, I intervene—because what happens in Mexico when you have an accident big enough to attract attention is that the police put the parties in prison until the fault is worked out and restitution paid, including paying for any damage to the roadway or other public installations… which is why the first call on your roaming-abroad cell phone is to your insurance company’s local contracted adjuster, who will show up on scene as quickly as he can and authorise payment on your behalf, thus keeping you out of the lockup.

    Not all foreign places are like this, of course—for example, the road tax in Québec pays for insurance for all who drive on it—but Mexico’s a popular destination for American tourists.

  • $16635417

    A famous Seinfeld exchange:

    Agent: Alright. We have a blue Ford Escort for you Mr. Seinfeld. Would you like insurance? Jerry: Yeah, you better give me the insurance, because I am gonna beat the hell out of this car.

  • emanon256

    This happened to me in Mexico a few years ago with a well-known rental car company. I verified that my carrier would in fact cover me in Mexico; I even had my agent write a letter to that effect. They told me that if I waive it I must let them swipe an impression of my card on a blank credit slip which will be returned to me after I return the car un-damaged. They never had me sign it and I went along with it. I returned the car a few days later, and they did a walk around and gave me back the top portion of the credit slip. I asked for the other 2 copies, and they said they have shredded them.

    A few days after my return, I was billed for somewhere around $500 USD equivalent in addition to the car rental. I contacted the company and was first told it was the exchange rate fee, when I explained that would make the exchange rate fee more than the car rental itself they said it was for gas. When I explained I still had a receipt for gas, they said it was a fee for an upgrade. When I explained I rented the exact car I pre-paid for when I made my reservation, they refused to talk to me anymore. I disputed it with my credit card, and they fought back and submitted a copy of the credit slip and wrote “Upgrade Fees” and “Insurance Fees” on the slip, with a hack attempt at my signature on the form.

    I wrote back to the credit card company and sent a copy of the blank credit slip with a letter explaining they took a swipe of my card and returned the top portion to me and stated the shredded the rest. I also stated that as I have a blank copy of the same slip with the same receipt number this is clearly a forged signature and these charges were falsified and done after I left with the original credit card slip. After that, I won the dispute.

    The next time I went to Mexico I used a different well known rental company, and also provided proof of insurance. No swipe of my card was taken. The car actually broke down within an hour and I called the rental company and someone came out to meet me with a new “upgraded” car and they towed away the old one. I was never charged for the upgrade and they treated me very well. I was very happy.

  • This makes me glad that my company has an insurance policy for domestic car rentals. We are required to decline all coverage. I carry the proof of insurance with me in the event of an accident.

    For domestic rentals for personal use, I never buy the car rental insurance, as my credit card covers me.

    For international rentals, I always buy the insurance, whether it is a business or personal rental.

  • Brooklyn

    People just need to learn how to say ‘no’. Of course they are going to be tricky with you with fine print and the like, but they just rely on people saying “sure, whatever” or not reading the terms and conditions, assuming that they will get charged only for whatever seems obvious.

  • $16635417

    I try to avoid the agents and stick to the kiosks, or Hertz. I had a particularly bad night late at a Florida city at Christmastime one year. One agent at the counter after midnight, one busload of people, kiosks “broken”. I had to listen to the upsell for insurance and gas to everyone in front of me, all vacationers who had to discuss the options with the spouse. (First on the bus, last off, end of the line.)

    When it was my turn, I pointed out that I was not happy about no kiosk and my club information saved all my preferences. I also asked for the name and phone of the location manager. She processed my reservation in record time with no upsell.

    I called the location manager the next day, asked about the kiosks being shut down and he seemed surprised. I asked if it was possible the agent disabled them in order to sell insurance and he would not deny it, but did say it was not policy.

  • Francis

    I guess ‘false choice’ is better than no choice, as I learned at Munich (Germany) air port where I charged my rental on my platinum Mastercard.  Even though Dollar’s web site states that LDW is “optional”, they demand a written statement from Mastercard that the card indeed covers LDW in Germany.  Since this was not spelled out beforehand, I of course had no such thing.  So, the ‘optional’ became ‘mandatory’, about doubling the cost.

  • “the bottom line will show that the amount of insurance sales never
    equals the collision repairs expense,” he says. “No profit there.”

    Uh…I think I’ld have to see some corroborating evidence there folks!

  •  Actually…*DON’T* purchase a rider on your auto insurance…that can get expensive…in fact, just get liability insurance!
    Then get a platinum credit card that covers LDW/CDW! And if you have AMEX, you can purchase car rental coverage for $19 for all cars you would possibly rent for an entire year. A bargain in my book! Just make sure you use that AMEX when you rent a car!

  • Kinda makes me *WANT* to purchase the rental insurance and then do everything in my power to trash the car in any way I possibly can! Can you imagine how fun that would be? You could totally “Thelma and Louise” a car and you wouldn’t be out a penny! That would be one fun day!

  • JoJo

    I was asked the full or basic line word for word by a Alamo agent in Tampa in September. When I refused I also heard about the dire consequences of what would happen if I was in a accident & that my credit card would be charged my deductible if there was damage to the car. I still refused but made sure I took before & after photos.

    This is the second time I received this treatment at Alamo. The first time I walked away & went to Dollar since I also had a reservation with them. This time I went through Priceline so I did not have that option. I was put off by this experience to the point that I will not use Alamo again.

    I normally use Dollar or National & while they all push their insurance only Alamo has insinuated it’s mandatory & only Alamo has given me a hard time when I refuse.

  • Charles B

    Very much agree. The only time I’ve been hard-pressured was when I rented from a company that didn’t have me on their frequent renter program. Every other time I just pick up my keys, sign the same contract I already negotiated online, and go. The one bad experience was with Dollar. I’m a Thrifty frequent renter and they never give me grief. Dollar is the same company, just different account numbers. Usually the exact same staff at the airport. The loyalty card makes all the difference. It’s nothing special either: free signup, use it or don’t as you wish.

  • Chris in NC

    6. Identify in advance whether the location is franchise or corporate. Try and avoid franchise locations and stick to corporate locations. There is less mess!

  • Geoff

    Having worked for Avis, I got a huge amount of money each paycheck based upon, insurance (3 different types available), gas pre-sales, and upgrades. I avaeraged 200.00 per week in bonuses. That is why you have the hard sell. I do agree that the insurance can be a bit of a letdown for the car owner, but the upsell and the pre gas add up to huge profits that far out weight the insurance.

  • Sershev

    Next time
    a rental agent tells you horror stories about people who didn’t get insurance
    and had car damaged, tell them an example from Scienfield when he got the
    coverage and it didn’t pay for the damage. There is always fine print and there
    is no time at the rental counter to get familiar with all the exclusions.
    Agents don’t tell upfront what is not covered.

    On one
    occasion, I tried to rent from Dollar and they wouldn’t give me a car unless I
    buy the protection. The cost of protection was more compare to rental amount
    and it had $500 deductible. I refused and rented from another agency.

    I had
    several claims in the past for rental car damages, and between my policy and
    credit card coverage it was all taken care of.

  • Sershev

    Also, when I rented in Europe in the past, the rental amount already included a coverage with a deductible, the only option I had to pay more to make a deductible smaller.

  • Marvin

    Here’s something for tlhis Website to do.  Advertise on Craig’s List or Angie’s List for former employees of car rental companies to contact you to ask a few questions.  i.e. In the company for which you worked, were you given any financial incentives to sell insurance?  What were you instructed to say in order to present (sell) the options available?

    Then I’d start to name names of the companies that have dishonest practices.  You will become the “Consumer Reports” of the travel industry.

  • Gerry

    All Car Rental Companies are cousins to Used Car Dealers. Anything more required to be said?
    If your Credit Card covers you, you are covered.

  • Guest

    It seems Parker Mann would find the hard sell anywhere.  Has he ever been to a restaurant where the server asked “Have you decided on appetizers?” or perhaps “Do you want to start with a soup or salad?”

  • Crissy

    Are they really trying to make me feel bad and think that they’re not making money off insurance?

    No, $9 a day doesn’t cover a ding, but when you get 100 people to pay that and 1 has a ding that they probably don’t bother to get repaired, then yes they did make money off of it!

  • Asiansm Dan

    I had 2 accidents while renting with DINERS CLUB. Everything was taken care by Diners Club very smoothly because Diners Club provide the PRIMARY Coverage, it didn’t even touch your personal car insurance. No paper work, Diners Club deal directly with the Car Renters.

  • This is just how it is. You have to realize that as the case with every insurance, someone is getting the commission for the sell – in this case rental agents. And trust me, their hourly is not that great that’s why they are really trying to push for the upsells. One thing you can do to avoid it is to sign up with a rental company’s “frequent renter” programs – most of the agencies have them and you can usually sign up online as well. The thing about it is that you can preselect the insurance options in your profile – for instance waive everything, and more often than not you won’t be bothered with additional questions when you are actually at the counter. 

  • Ajaynejr

    (quote) On oneoccasion, I tried to rent from Dollar and they wouldn’t give me a car unless Ibuy the protection. The cost of protection was more compare to rental amountand it had $500 deductible. I refused and rented from another agency (end)

    Does the rental company have written policies (rules) saying that they can refuse to rent to you for such and such a reason? If not then they can’t refuse to give you a car.

    What if you called the rental company (here, Dollar) corporate headquarters complaining that they would not honor your reservation?

  • KarenFLA

    I like to rent from National as they do not charge you for a scratch, just dents and dings.

  • LDMartin1959

    ” “The attendant asked if we wanted the insurance,” she remembers. “We said ‘no,’ then signed on the mobile unit.” When she got home, she realized she’d been charged for insurance. A closer look at the form she signed showed that she’d acknowledged the purchase by signing the handheld device.”

    This sort of behaviour should be considered fraud and misrepresentation and both the individual agent and the company should be held responsible. After all, by submitting to the form to the customer to sign (regardless of the format) after the customer has specifically refused an “ancillary” product the implication is that the decline of the service is accepted and that the form complies with that refusal.

  • John

    It is actually $19 per rental, not $19 for the entire year with that AmEx coverage!

  • john

    “full coverage or basic” can sound like if you say “basic” you won’t be charged anything additional (“basic” could be included in the BASE price). I have been asked that in the past. I just say, “I want no optional coverages and I will fill the tank with gas before returning the car.”