Alamo offers 3 levels of collision protection

CAR-RENTAL PRICING

January 14, 1991|By Tom Belden | Tom Belden,Knight-Ridder News Service

After nine months of test marketing, Alamo Rent-a-Car is going nationwide with three price levels for travelers who want to buy collision-damage coverage for rental vehicles.

Under the Alamo pricing structure, a renter who wants to buy the optional collision-damage coverage can pay a daily fee of $3, $6 or $9. Most other rental companies offer only one price -- about $12 a day -- for the complete coverage that Alamo offers for $9 a day. So far, one other car-rental company, General, has matched Alamo's three prices.

Alamo's expansion of the new pricing, which it tested in Florida, Hawaii and several cities, is the latest twist in the tortured history of the collision-damage waiver, or CDW, which most travelers think of as insurance for a rental car.

When you buy a CDW, a rental company waives its right to collect from you for damage to or the theft of its vehicle. Although most rental companies charge about $12 or $13 a day for complete protection, in many cases it costs a company only $3 or $4 a day for coverage.

Under Alamo's new "Waiver Saver" prices, a renter gets complete protection for $9 a day. For $6 a day, the renter would be free of responsibility for up to $3,000 worth of damage to a car. For $3 a day, the renter buys coverage for up to $500 worth of damage.

A storm has raged over CDWs the last three years because of allegations that it was too expensive and that it was being sold by high-pressure tactics to consumers who didn't need it.

Indeed, most personal auto insurance policies provide some coverage for rental vehicles. For many business travelers, the corporate rates their employer negotiates provide insurance for any damage to a rental car that's more than $3,000. Employers usually take care of any damage under that amount.

Some insurance coverage also is provided on rental cars when a traveler uses various credit cards.

Advertising by Alamo and others of low rental rates -- with the optional CDW charges and other fees in tiny type at the bottom of the ad -- was among the industry practices investigated in 1988 by the National Association of Attorneys General.

Their examination resulted in guidelines that require advertising to make clearer the cost of CDW and other fees.

Hertz, the largest car-rental company, has been virtually alone in calling for complete elimination of the CDW.

Hertz has contended that the CDW is an "overpriced and sometimes unnecessary product . . . offered to support artificially low advertised rates."

A few states have attempted to regulate the pricing or advertising of CDWs, but the movement to ward state laws has slowed as a result of adoption of the NAAG guidelines.

Alamo once sold CDWs to about half of its customers, but that is down to about 25 percent because the company rents to far more business travelers than it did only four years ago, spokeswoman Liz Clark said.

Alamo designed the three price levels of CDWs to meet three distinct markets, Clark said.

The $9-a-day "Maxi Waiver Saver" rate is aimed at vacationers or anyone who prefers not to depend on their own auto insurance or other coverage.

The "Waiver Saver 3000" rate is aimed at business travelers whose corporate contract rates with Alamo cover damage over $3,000. For $6 a day, the renter is protected from all damage liability up to $3,000.

Finally, the $3-a-day "Mini Waiver Saver" rate is designed to complement a renter's personal auto insurance policy. It covers damage up to $500 because that is the deductible on most consumers' personal auto insurance.

*

Saddam Hussein has been named by Business Travel News magazine as one of the 25 most influential executives in the business travel industry of 1990 because of his influence on air travel costs and airline finances.

The Iraqi dictator's invasion of Kuwait sent jet fuel prices soaring, well beyond even those of gasoline.

The losses have battered airlines' financial results and accelerated a consolidation trend that many observers believe will result in an industry with only a half-dozen healthy U.S. carriers.

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