THE FUNDAMENTAL PROBLEM

In recent years, car-hire prices have been manipulated in a similar way to airfares. To make the headline cost look low, many rental companies and brokers – the agents and websites acting as intermediaries – strip out as many costs as they can. The result is an unrealistically low price – sometimes just a couple of pounds a day – which is used to market the rental. Additional fees are then added, either during the booking process or on collection, so that the final price paid is far higher than what the customer was expecting.

Some of these extras are reasonable – charges for young drivers, additional drivers, car seats, upgrades, and so on. But others – especially insurance premiums – are not, and you may not know how much they are until you pick up the car. Here’s an example of how it works. I made a random search on the internet for car hire in Malaga this week. It came up with a Fiat 500 for £20 for a peak-season week through a Spain-based website. Clicking to book, I was told there was also a “fuel service charge” payable locally. This doubled the price, but it still worked out at only about £6 a day. Clearly, this is an unrealistically low price to rent out and insure a hire car. What will almost certainly happen when the customer turns up to claim their bargain is that much more money will be extracted through an aggressive sales pitch at the airport. Telegraph Travel Collective on June 16 incorrectly said there is no reciprocal health agreement (RHA) between Jersey and the UK. In fact Jersey does have an RHA with the UK for visitors staying less than three months. We are happy to clarify.

The main focus will be on selling a policy to reduce the excess on the Collision Damage Waiver (CDW) insurance, which is included as part of the initial cost of the hire. These excesses, usually at least £800 and often over £1,000, are far higher than the standard excesses set on domestic motor insurance policies. They are apparently designed to instil anxiety in the customer, who is on holiday and doesn’t want to worry about a huge bill for a dented hire car. Playing on this, the policies sold to reduce them to zero – or reimburse any charges made – are extremely expensive: £30 a day is typical. Suddenly, your bargain hire car is more than £200 a week more expensive than you thought. Under pressure at the airport, desperately needing the car and worried about the risk, you feel obliged to cough up.

It’s easy to understand why car-hire companies are concerned about damage to their vehicles. If one of their cars is put out of action, they don’t just face the cost of the repair but will also lose out on potential income because the car will have to be taken off the road while the repair is done.

But usually the car is not put out of action. Minor damage is simply marked down on the rental check sheet for the next customer. Any repairs can then be done all together at the end of the season, or ignored and treated as a write-down when the car is sold. Sure, the company suffers a loss, but it is likely to be much less than what it has earned from its customers’ waiver fees.

The potential for abuse by unscrupulous operators is also clear. Over the years, we have had many complaints from readers who didn’t waive the excess and have returned their vehicle, only to have minor scratches mysteriously discovered by the inspector on obscure parts of the car and to have been charged heavily as a result. The company then holds all the cards – it already has access to the credit-card deposit, while the holidaymaker has little chance of redress in a foreign country.

Recently, the better-known brands have been brought into line following an investigation into the practices of major international companies by the EU and the CMA. This has led to more transparency about what is included in advertised headline prices. The big players now commit to including all compulsory costs and show the amounts of any deposits and insurance excesses. But this doesn’t prevent you from being charged a high price for waiving that excess. Nor will it mean you won’t be treated like a sales target rather than a valued customer.

Many readers now buy their own much cheaper independent policy to cover the insurance excess. But when they try to refuse to pay a waiver fee at the pick-up desk, they face an aggressive – or even underhand – response (see Gill Charlton, opposite, for one example).