The Dirty Little Secret of Car Rentals

NEW YORK (MainStreet) – If you’re a driver with decent credit, your mailbox will regularly contain car insurance offers promising to beat the other guy. It does pay to shop around though, as the firm that offered the best deal last year may not offer the best now. It also pays to look at some of the lower-profile policy features, like whether the bargain policy will cover a rental car.

That’s one of the key insights to emerge from an insider glimpse into the rental car business from industry research firm Edmunds.com. The “Confessions of a Rental Car Agent”, describes the author’s experiences selling customers add-ons, like collision coverage, that most of them didn't need.

The goal, of course, was to boost the rental firm’s revenue and income. The add-ons, it turns out, provided the real profits, with the car rental itself was little more than a loss leader used to draw customers in.

As a rental agent, the writer, Edmunds.com editor Philip Reed, made just $12 an hour. To get ahead, he was under tremendous pressure to sell extras. Most customers already had policies that covered rental cars, so they didn’t need the extra add-on that cost $26 a day.

“I’d say that about 60% of the people buy the insurance,” Reed writes. “That’s pretty outrageous because only about 10% of them needed it....One day, 30 people came into the rental office where I worked and we sold all 30 people insurance.” Afterward, the agents went out for beers to celebrate, he says.

The strategy, he writes, was to induce fear of what could happen if one didn't have the coverage, which was sold in four tiers to making the deal more confusing and encourage people to add layer upon layer of coverage.

“We had week-long training sessions about how to sell these products and how to add value to them,” he writes.

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