Car Rental Insurance Waivering In Face Of Change
<B> Car Rental Insurance Waivering In Face Of Change</B>
By Frank Rosci
To the delight of car rental companies and the dismay of consumer advocates, New York State's law governing car rental insurance may be on the verge of change. The current law, which caps a driver's liability for damage to a rental car at $100 and prohibits the sale of collision damage waivers, is regarded as the most restrictive in the country by car rental companies claiming the law is too expensive for them, artificially raises rates and drives hundreds of smaller car rental companies out of business.
Representatives of car rental companies said the current law forces them to purchase more insurance to cover the cost of damage to their vehicles. As a consequence, New York car rental rates, already among the highest in the nation, go up even more. However, as for the scores of small, local companies going under in the past 10 years, there is no conclusive proof that the law was in some way responsible.
Consumer advocates maintain the law protects consumers from added insurance that is an unnecessary and unfair dip into their pockets. But representatives of car rental companies reject that argument as unfounded and an unrealistic business practice that prohibits them from fully protecting their investment. They and their lobbyists have kept unrelenting pressure on the New York legislature for the past two years to change the law. A vote by lawmakers to either amend the law or repeal it entirely may be scheduled for sometime in October.
At this time, the outcome of the vote seems promising for the rental companies, industry observers said. A bill before legislators sponsored by assemblyman Stephen Kaufman (D-N.Y.) and Sen. Thomas Libous (R-N.Y.) would eliminate the cap on a driver's liability for damage to a car and once again permit the sale of collision damage waivers. The bill would allow rental companies to charge up to $9 a day for the collision damage waiver for most cars and up to $12 a day for luxury models. However, no one renting a car would be required or forced to purchase the coverage.
The bill's sponsors contend that allowing the companies to increase the cap and write collision damage waivers will reduce vehicle damage by making customers more careful and more responsible.
"Thrifty Car Rental is in favor of changing the law based on the realities of the industry, such as putting a $20,000 vehicle in the hands of someone without having the fullest measure of insurance protection," said a company spokesman.
Insurance firms, though, are opposed to repealing the law because they fear companies eventually would pay for any change that would make customers liable.
Complaints by customers and particularly New York City residents, many of whom don't own a car, led to enactment of the law in 1988. They said car rental companies often forced them to buy the collision damage waiver because they had little or no car insurance. When the legislature outlawed the sale of collision damage waivers, New York became the first state in the nation to do so. Illinois, the only other state that caps a rental customer's liability, has a significantly higher limit of $7,500. To date, efforts to amend the New York bill have resulted only in proposals to increase the limit of liability to $300.
In another ground transportation development, business travelers now can ride a bit more at ease thanks to the Taxi and Limousine Commission of the City of New York, which has voted to prohibit cab drivers from using cellular phones while driving.
The decision follows numerous complaints by passengers about unsafe driving. Special interests against the new law--including cellular phone company Bell Atlantic Mobile--said they would fight to at least soften the law to permit the use of hands-free phones and voice-activated dialing.
New York is one of the first U.S. cities to enact such legislation, which covers the city's 90,000 taxi, car service and limousine drivers.