 | Renting a Car Online: Avoid Surprises
and Get the Best Dealby Monica Steinisch
Thanks to the Internet, many of us have become amateur travel agents, booking our own airline tickets, hotel rooms, and rental cars right from our desktops. More than 30 million U.S households, lured by lower prices offered on the Web, are expected to buy their travel online in 2004. Gone are the days of having to depend on a professional to get us where we need to go.
For the most part, this travel industry revolution has been a good thing for consumers. Travel-related companies have seen a huge reduction in the cost of delivering travel products and are passing those savings on to online shoppers. But there are some hidden dangers in do-it-yourself travel, too.
With the click of a mouse, online travel buyers not only enjoy potentially big discounts, they also take on the risk and responsibility of finding the best deals and making the correct booking. In some cases, inexperienced online consumers looking to rent a car can end up paying more than they have to or making a nonrefundable purchase for the wrong product.
More than 30 million households in the U.S. are expected to buy their travel online in 2004.
Fortunately, a few tips and some insight into how the leading travel sites operate can help online renters get the car they want at the right price and avoid unpleasant surprises.
Test-driving the car rental sites
Car rental sites typically fall into one of two general categories: those operated by a particular rental car company, such as Avis or Hertz, and those that present offers from a range of rental car companies competing against each other for your business. As you can imagine, your odds of finding the lowest rental car rate available are pretty slim if you visit just one company's site. On the other hand, shopping them all one by one would be a daunting task.
"Integrated" sites solve the problem. These one-stop-shops make it possible for renters to access offers from a number of companies without having to surf the Internet. Some integrated sites, such as Expedia, Orbitz, and Travelocity, are "transparent," meaning they tell you right up front what the product and the price is before you make your purchase.
Unlike transparent sites, "opaque" sites, such as Priceline and Hotwire, keep the identity of the rental car provider under wraps until after you make the nonrefundable reservation. They also typically charge booking fees ($5 per booking for Hotwire, and a variable fee based on the amount of purchase for Priceline), and they generally don't enable renters to use any benefits they may be entitled to as a member of an auto company's loyalty program. In other words, you're going to have to wait in line at the check-in counter even if you're a frequent customer.
And if you're using a site like Priceline, which requires you to bid for your rental car, the booking process may be more time-consuming and might require you to change some aspect of your travel arrangements, such as pick-up or drop-off date, location, or car type, to get you the price you want.
Considering the drawbacks of opaque sites--particularly those that require you to bid before you purchase--you may wonder why anyone would choose to use one over a transparent site. In a word: price.
There are some hidden dangers in do-it-yourself travel.
Last year, 3.7 million rental car days were booked on Priceline alone, evidence that, for many travelers, significantly lower prices are worth a certain amount of inconvenience.
How much is "significant"? In a study conducted by Consumer WebWatch, a grant-funded project of Consumers Union, the nonprofit publisher of Consumer Reports magazine, Priceline provided car rental rates up to 25% lower than the lowest non-opaque rates 53% of the time during 60 trials.
Coming in second in the rankings, however, was transparent Orbitz, which provided the lowest rates 38% of the time. That's good news for travelers who prefer to know exactly what they're getting before they commit.
More good news for online renters: Last year, Travelocity introduced "total pricing," and competitors Expedia and Orbitz followed soon after with similar functionality that includes mandatory taxes and fees in the bottom line. Prior to the enhancements, the total rental cost was available only after the booking process was under way. Renters often would see the low rate they thought they were getting increase by as much as 100% after an array of extra charges--from state sales tax and airport tax to transportation fees and "peak" surcharges--were tacked on. Finally, shoppers can make a true apples-to-apples comparison before making a reservation. Still, Consumer WebWatch cautions consumers to be "particularly vigilant about obtaining all of the taxes, fees, and surcharges that will be added to the base fare or rate."
Four tips for renting a car online
Whether you choose to use a transparent site or an opaque site to rent a car, these tips can help make your online car rental experience as pleasant and predictable as possible.
- Read the fine print. Make sure you understand the site's requirements, fees, and cancellation policies before you book a car. Opaque sites, in particular, tend to have more stringent policies. Also, get to know how the different sites work. For example, Expedia doesn't always list the lowest price on the first page of providers. You have to click "show more vendors" before you buy to make sure there's not a better price on the second page of listings.
- Compare prices. Check rates at a variety of rental sites--opaque sites, transparent sites, and rental-car company sites--before bidding on or booking a car reservation. With some rate knowledge in your back pocket you'll know what's a good deal and what's not. And don't forget to check sites, like Car Rental Express, that offer rates and availability for independent, locally owned car rental agencies.
For many travelers, significantly lower prices are worth a certain amount of inconvenience.
- Gauge your bid. If you're bidding on a rental car, be careful not to bid too low, which can require you to invest more time and work to reach an acceptable bid, or too high, which could mean spending more than you need to. Consumer WebWatch did well by starting the bidding at half their "benchmark" price. (Your benchmark would be based on the lowest rates you were able to find through other channels, which might include Internet sites, providers' toll-free reservations centers, or a travel agent.)
- Type carefully. Check and double-check the travel information--dates, locations, vehicle type--you input. Make a mistake, and you could end up paying for a rental car in Portland, Ore. when you wanted one in Portland, Maine.
| Should you say yes to rental car insurance? |
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You're just about to get behind the wheel of your rental car when the agency representative offers you one or more types of insurance to cover everything from the car itself to your personal belongings in the car.
- Should you sign on the dotted line?
For many drivers, there's no need to purchase the "collision damage waiver" (sometimes called the "loss damage waiver," this coverage relieves you of financial responsibility if your rental car is damaged or stolen) or any of the other types of coverage being sold. You probably have all the protection you need through your own auto insurance, health insurance, and homeowners or renters insurance (for theft of personal belongings in the car). Plus, you may have additional protection if you pay for your rental with certain charge cards.
- When does it make sense to buy?
Buy the liability and collision protection if you don't own a car and the credit card you're using doesn't provide adequate coverage. Even if you do own a car, you may want to buy the collision damage waiver if you've either dropped the collision coverage on your own older model car or you have collision coverage but your rental car is worth more than your car at home.
With some rate knowledge in your back pocket you�ll know what�s a good deal and what�s not.
Pete Moraga, communications specialist for the Insurance Information Network of California, based in Los Angeles, says renters also may want to consider buying rental car coverage if their personal auto insurance policy does not cover "loss of use" on a rental car that has to be repaired.
"Even if your own insurance will pay for the repairs on a rental car you damage, your policy may not cover the rental company's loss of income while the vehicle is being fixed," explains Moraga. "That means you could end up paying out of your pocket to reimburse the rental car company for the money they could have made had they been able to rent the car for the week or two--or longer--that it was sitting in the shop."
To avoid any unpleasant surprises, ask your agent if your policy includes "loss of use" coverage for rental cars.
- How can you know whether you need the rental car company's coverage or not?
According to the Insurance Information Institute, based in New York, if you were to accept all the coverage offered, the rental car company would tack on as much as $20 to $32 per day to your base price, so it's well worth your time to do a little research before you say yes to the charges. The best way to be sure of what coverage you have--or don't have--is to make a couple of calls before you leave home.
First, contact your auto insurance agent. Tell him or her where you're going, how long you'll be renting a car, the type of car you're renting, whether it's a business or pleasure trip, and who'll be driving. The details are crucial, since some policies decline coverage on RVs (recreational vehicles), international rentals, business travel, long-term rentals, and so on.
Then check with your credit card company to find out exactly what it offers in the way of additional protection. Policies vary greatly. Some cards will pick up the whole tab while others will pay only the loss that is not covered by your car insurance. Others won't cover expensive cars, off-road vehicles or pickups, rentals abroad, longer-term rentals, or claims that are not submitted within a certain time frame. Some cards cover "loss of use" for the lost rental fees while the car is being repaired, others do not. Many nonpremium cards don't offer any coverage at all. Diners Club offers more comprehensive car rental protection, so consider getting a card if you rent frequently. One caveat: Credit card protection doesn't include liability coverage, so if you don't own a car or have an umbrella policy, consider buying the liability coverage when you rent. Rental companies provide some liability coverage, but usually only at the low state minimums.
If you were to accept all the coverage offered, the rental car company would tack on as much as $20 to $32 per day to your base price.
The bottom line is, if you don't have adequate coverage from another source, you should say yes to the rental car insurance. Some renters buy the additional coverage even if they have their own policy just so they don't have to go through a claims process and involve their own auto insurance company if they get into an accident. You'll have to decide if that convenience--and perhaps avoiding a premium increase--is worth the price. |
| Online Resources |
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Consumer WebWatch
A grant-funded project of Consumers Union, the nonprofit publisher of Consumer Reports, Consumer WebWatch investigates and strives to improve the credibility of information on the Web.
- Expedia.com
Integrated, transparent travel site.
- Orbitz
Integrated, transparent travel site.
- Travelocity
Integrated, transparent travel site.
- Hotwire.com
Integrated, opaque travel site. (Keeps rental car company hidden until booking is complete; does not require bidding.)
- Priceline.com
Integrated, opaque travel site. (Keeps rental car company hidden until booking is complete; requires travelers to bid on arrangements.)
- Car Rental Express
Site that presents offers from independent car rental agencies.
- Insurance Information Network of California
The IINC, whose goal is to enhance consumers' understanding of insurance and safety issues, operates a toll-free hotline for consumer inquiries and brochure requests.
- Insurance Information Institute
The mission of the III is to improve public understanding of insurance--what it does and how it works.
- Diners Club International
Charge card offering extended rental car insurance benefits.
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