The Daily Telegraph - Saturday - Money
PERSONAL ACCOUNT
Car hire insurance racket goes on: you can buy the same cover for 90pc less
Major car hire firms still refuse to publish clear information about costs of insurance ahead of booking, despite repeated efforts by authorities to improve competition.
It means drivers can pay anything up to 10 times more than necessary for insurance. In some cases it doubles the cost of the car hire.
As has always been the problem, drivers usually only learn of the price of cover at the rental desk or at the final stages of booking online. It’s then generally too late to shop around. Consumer groups reckon it’s a calculated strategy by the car hire industry to prevent customers from comparing all-in prices.
Europcar, for instance, quoted a three-day weekend car hire in Britain during this Easter holiday period of £100 (for the “compact” car category).
What you won’t find out on Europcar’s website until you’re well into the booking process – that’s once you’ve selected location, pick-up and drop-off times and vehicle types – is what the insurance will cost. In this case £69. That’s if you use Europcar’s own, exhorbitant cover.
You can buy similar or better cover from a standalone insurer for less than £9. That astonishing difference in price should, on its own, suggest that competition in this market isn’t working.
It’s an issue – and its readers – have been fuming about for years.
Normally when you hire a car there’s basic insurance against damage or theft, which pays out for everything besides the “excess” – the bit you’d then have to find from your own pocket. This is typically £1,000 or in Europe €1,000. When you buy the “excess waiver” policy you’re buying insurance against having to pay this first £1,000. Since the merest scrape can cost £1,000 in respray or panelwork, many people want the protection.
The simplest solution to this problem is never to buy it from the car hire firm. Say no.
Europcar’s insurance prices are possibly higher than some of its major rivals (Sixt’s cover came in at just under £20 per day for a similar hire, for instance), but not exceptional.
Specialist standalone insurers such as Questor and iCarhireinsurance charge £2.90 and £2.99 per day respectively for equivalent cover.
When we asked Europcar why it wouldn’t reveal the cost of its cover until customers were close to finalising their booking, Europcar said it “offers different waivers with different inclusions and exclusions” and that “these options are explained online and at the rental desks so that customers can choose what they feel is best”.
It said it was “committed to providing a clear and transparent service throughout”.
The Competition & Markets Authority has demanded that firms improve the “prominence and clarity” of information around the cost of add-ons including this Dutch-founded Triodos Bank is the latest provider to offer a current account, launched last Wednesday. So what? Just another bank account: cue the mushy adverts featuring horses galloping across beaches; cue the celebrity sports sponsors and the temptingly high in-credit interest rates (that inevitably get slashed soon after). Cue the useless add-ons like mobile phone insurance. Except no. Not this time. For once, this current account proposition is genuinely unique.
For starters, you’ll earn zero interest on balances. Zip. And you’ll pay a £3 monthly fee. Unappealing? Perhaps, but there’s one thing going for this account: it’s honest. Triodos bosses reckon this is roughly what it costs to provide banking. It wants to attract customers who are happy to pay a fair price in exchange for services from a bank with a transparent business model and an ethical stance on who it lends to.
Will people sign up? I have no idea, but being honest with customers about how they pay for the services they use will be a first in the banking world. Good luck to Triodos.