Car Rental Loss Damage Waiver: Are You Covered?

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Driving a car in Houston, Texas can be a little intimidating. Kevin Messmer learned it also can be very expensive. Kevin, who's from Colorado Springs was on a business trip and thought he was protected by paying an extra $27 a day for the loss damage waiver.

But when he had an accident in a Cadillac CTS from Budget Rent A Car he learned the loss damage waiver was just $81 he had thrown away. "I had no idea. I thought I was fully protected," said Kevin Messmer.

Kevin says he was told the loss damage waiver was voided because the accident was his fault and he was ticketed for making an illegal turn. His credit card was no help because he had purchased Budget's loss damage waiver. He was told that cancelled the insurance he would've had through Visa. Thankfully, his last cushion his personal auto insurance policy kicked in paying most of the bill.

"It was scary. I mean it was $9,500 you know, and I don't have $9,500 to pay for damage and I thought that was why I bought insurance," said Kevin.

Kevin says budget also charged him close to $1,000 for a "loss of use charge." That's because the car was out of commission and couldn't be rented while it was being repaired.

So when will Budget's loss damage waiver cover you? I tried to find out, but ran into a brick wall.

I emailed and called Budget's media relations office for answers, but only got back rules written in fine print legalese. I received no help calling the general customer service line. A representative repeatedly told me, "Even if it's actually your fault and the budget car is damaged... you won't pay for it if you purchased the loss damage waiver."

That's not what Kevin found out.

A local Allstate Insurance agent with more than 15 years experience also was surprised. "This is intriguing to me and I'm in the industry. I mean you've brought to me, you know...details about specifics I was unaware of," said Cally O'Donnell.

O'Donnell says her clients ask her all the time about the need to buy loss damage waivers. She says she often tells them it's not necessary because their own auto policy covers them. "Now I feel like I'm not even educated well enough to say yes or no because what you've brought to my attention," O'Donnell adds.

I did get some answers from the head of media relations for Hertz. Paula Rivera told me the loss damage waiver will cover you if the car's stolen, vandalized, or if you hit an animal. But you must report the incident to authorities and fill out a police report.

However, if you're in an accident and cops say you were speeding, not wearing a seat belt, or were cited for any other infraction, you've violated the contract and the loss damage waiver is totally worthless.

I can't guarantee the rules are the same for all rental car companies, but bottom line before you approach that car rental counter do your homework.

The folks behind the counter are sales people. Their job is to get you signed up for as many extras as possible. They're not the claims agents who will deny coverage based on this or that exclusion.

Also talk to your insurance agent. No sense duplicating coverage and throwing your money away.

We also talked to Senator Mark Udall's office about this issue and his staff is interested in Kevin Messmer's case. Udall co-sponsored the Credit Card Bill of Rights and wants to explore whether consumers need added protection when it comes to dealing with rental car companies.