DennisBeaverNovember 20, 2010 (Original publish date) • By Dennis Beaver

Last week we told you about Hanford veterinarian Dr. Lee Fausett and the flat tire he experienced with a car rented from Alamo at the Salt Lake city airport this past July. After accepting the Roadside Plus coverage at $5 a day – which included flat tire repair and replacement costs – he was billed for a flat encountered within minutes of driving off of Alamo’s lot.

The rental car had been driven 400 miles, yet PurCo, Alamo’s collection agency, wanted $135 to replace the tire, a day’s lost rental value and an administrative fee, or Dr. Fausett would face suit and damaged credit. A collector stated Alamo had dropped the Roadside Plus benefit “months earlier,” but sent Dr. Fausett rental contract forms which actually showed the coverage.

We phoned the CEO of Alamo/Enterprise, and in a matter of days, its lawyers looked into the situation, spoke to our reader and concluded he was indeed under the impression that flat tires were included with Roadside Plus. They dropped all further collection actions against him. That’s what I call doing the right thing.

I’m covered, right?

Regardless of why you’ve rented a car, if something happens to it – an auto accident, or it’s parked and someone plows into it – the rental company expects to be paid for repairs and, possibly, lost revenue for the vehicle being out of service. But who pays?

What about a tire that just goes flat – just like our Hanford reader – and has nothing to do with an auto accident, or driving the car over a curb accidentally?

If you are thinking, “I’m covered by my own auto insurance, and besides, my credit card has rental coverage, so I shouldn’t be out a cent,” sorry for the cold water we need to splash on you.

It is possible, even likely, to have all of that and still be out of pocket unless some very careful precautions are taken. So, let’s take a look at what each of these common sources of insurance coverage actually do provide for rentals in the U.S.

Credit cards aren’t all alike

Unless you have checked with your credit card company, never think all damages or your liability to others in a rental car are covered merely by booking the rental and paying for it with the card. While there are no doubt other very good cards, American Express has excellent basic coverage included with some of its cards, as well as reasonably priced premium rental coverage, which is an incredible bargain in terms of what it offers, in our opinion.

We were told by one of their claims agents that American Express will cover a flat tire, whether it is related to an auto accident or not. Basic Mastercard will only cover a flat or damaged tire as a result of an actual collision, one of their claims representatives stressed. That isn’t a small difference and should stand as a red flag about other Mastercard limitations. They aren’t alone.

Most card issuers require that the renter already have their own auto insurance, with comprehensive and collision coverage. Phone and have a rep explain rental insurance benefits and limitations. Are they acting as a primary or secondary insurer? When do they pay? Do you have to pay first? Politely insist upon a printout of rental benefits, and then read it.

Your own auto insurance

In general, most auto insurance policies will cover you driving a “substitute” vehicle, and that includes rental cars, for a limited period of time. Your deductible will also apply to the rental. But you are only going to have as much coverage when driving that nice, new $40,000 rental as you had on your own car.

So, let’s say you are insured by Farmers and need to rent a car, but all you have is public liability and property damage insurance, but no collision or comprehensive coverage on your 5-year-old car because you agent told you to save the money. That’s often a very bad idea, by the way, but makes agents look great as they appear to save their customers so much money.

Farmers will cover you as far as liability to others – if you are at fault – but will pay nothing for damage to the rental car, as you didn’t have that kind of coverage on your own vehicle.

Also, if you have a deductible on your car, it will carry right over to the rental, and you could be out of pocket that amount.

Rental company loss damage waiver

Finally, while it does add to the cost of a rental, buying the rental company’s own collision damage waiver can be the safest course to follow.

If today’s report has left you in doubt about what to do, then you get my point. There is no “one size fits all” answer.

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.