Rental car companies' insurance excess an unfair burden

The bunny has vanished for another year and I'm back in grumpy old woman mode.  

Nothing gets me more incensed than the magic of drip-pricing.  The advertised price of goods isn't what you end up paying due to add-ons.  

Sue Chetwin, the chief executive of Consumer NZ, took a flight to Nelson at Easter and reminded us in her recent column how far we've come with the "ditch-the-tricks" campaign for airlines.  That's when the extras are optional, but the software nitwit pre-selects them for you on the orders of the marketing department.  You need to be wide-awake and remember to opt-out.  

The Commerce Commission has finally squashed the practice.  

On a morning run around Rabbit Island in Nelson, I could see those Jetstar flights coming in to land and smiled at the success in driving out these practices.  

But the joy in the sky was short-lived.  My running partner soon caught grumpy old woman syndrome and our blood began to boil with other pricing tactics that ride the line.  They might be legal, but they could be fairer or clearer.  

The $3000 insurance problem

For me, the rental car industry causes the blood to boil.  Namely, the size of those dratted insurance excesses.  The daily price includes insurance and makes things look fair.  Until you realise you'll be paying the first $3000 in any accident with the big four (Avis, Budget, Hertz and Thrifty).  

Do I want to drive around with a $3000 liability on my head?  No, because it's ten times larger than the excess on my own vehicle.  

Easter Saturday we returned a rental the in-laws had been tootling about in.  The $35 daily cost from Apex was very reasonable because the car was older.  Yet at $12 a day for the insurance waiver, the price went up 34 per cent.  

The big hire firms charge almost $30 a day in additional fees to squash their whopping excess down to $300.  Maybe they think it's not their job to advertise the price for sooks who can't stomach the $3000.  I disagree.  They should align the pricing of their excess with the normal car insurance market ($300 to $500 for over-25-year-olds) and give discounts to those silly saps that are happy with balloon-sized risk. 

The irony is we've fought to stop airlines automatically adding on insurance and now I'm berating hire companies for not including enough.  

But the scenarios are different with consumers behind the wheel and the risks not reflecting normal industry standards.  

If you multiply out the daily cost of the waiver charged by the big four, it's the equivalent of paying over $10,000 a year for insuring the first $3000 of an accident.  While there will be some valid actuarial risk-based reasons for this sum, it doesn't sit well with me.  Note to insurance actuaries; I'd love to hear from you.  

An alternative way of getting rid of this excess is to buy domestic travel insurance, as it's included.  A survey by Consumer in 2014 put the average cost of eight different policies at $48 a week.   That wipes out the problem for $6.90 a day and makes me question why the hire firms charge us more than three times that.  

From rentals to reading

For my running partner, grumpy old woman syndrome set in when she subscribed to the Nelson Mail.  Yes, it's owned by Fairfax and let's hope the editor doesn't push the delete button, as it's an amusing story.  

New subscribers were being offered a deal over the phone and she signed up.  The delivery address contained "RD1" but this didn't raise a comment.  When the bill arrived an additional fee appeared for rural delivery.  Incensed, she promptly cancelled, because she hadn't been told.

The next telemarketer caught her husband and he realised it was a good offer and signed up.  Once again, he wasn't told about the delivery fee.  What happened?  He kept the subscription because he likes the crossword.  In the paper's defence, the website states a rural delivery fee will apply and they gave our subscriber a free magazine to make up for the mistake.

It's a lesson for all of us in how we run our businesses.  Consumers like full transparency with pricing.  Whether your marketing is online, by phone, print or blaring from the TV set, being clear about add-ons engenders trust.  

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Source: stuff.co.nz