Fine Print: What You Actually Agree to When Renting a Car

Fine print is one of the many hazards in the world of personal finance, and nowadays it’s hard to get escape loopholes presented by this little-read portion of any agreement. On Monday’s Fine Print segment, Brian Moody from breaks down what you need to know about the fine print when renting a car.

GPS - Over the past few years, rental agencies have begun to install GPS devices in their vehicles. These units allow companies to track cars that are lost or stolen, in some cases. But the technology also lets them know when a renter has been speeding or has taken a car into another state, which may be construed as increasing wear and tear.

Not all companies use the technology to impose fines, but it can and does happen. American Car Rental, for example, was charging customers in Connecticut $150 each time they topped the speed limit for two minutes at a stretch, claiming it damaged their vehicles. Some states have laws protecting the renter from these fines but make sure you understand what you are agreeing to when you rent a car.

Insurance - Most companies make reserving and renting a car very easy - until it comes to the issue of insurance. That's where they offer a bewildering array of supplemental coverage, which can easily add $10 to $30 to your daily bill. What the overeager reps won't tell you is that you may already be covered, either partially or completely. You may be covered by your existing car insurance, or even through your credit card if used for the transaction, which may offer a level of insurance protection.

There are two major types of insurance you'll want: a collision/damage waiver and liability. The former covers repair and replacement costs to the car should anything happen to it; the latter protects you from lawsuits if you've injured anyone or damaged property when driving. If you have auto insurance, it usually extends to rental cars, providing both collision/damage and liability, as long as you're on a leisure trip. And many credit cards cover damages to the vehicle but don't offer liability.

Reservation is not a guarantee - The rental agreement is contingent on availability. In fact, you're not reserving a specific car model, but simply a class of car. (One exception: Hertz allows you to reserve high-end models in its "Prestige Collection.") What a reservation actually means is that the company is supposed to have some kind of vehicle on the premises for you to rent. So if you get a smaller car than what you reserved, be sure to ask for a rate adjustment. (Parker got Hertz to take 20% off his bill.)

If the lot is empty, the company is supposed to find you a car even if it means calling another agency and covering the difference. So if the clerk doesn't offer, remind him that the company is liable if you wind up paying more for a rental car elsewhere.