Is mandatory car rental insurance a “bait and switch” scheme?

When Michael Kestan rented a car in Israel through Expedia, he went through all the steps necessary to ensure he was insured. That included buying travel insurance through Expedia, which, he was assured, would cover him.

It didn’t.

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“When I arrived in Israel I was advised that Hertz had a mandatory insurance,” he says. “The insurance was $29 per day — twice as much as the car rental. At no time did Expedia advise me of these charges and at no time was I given an opportunity to shop around.”

This isn’t the first complaint I’ve had about Expedia or its lax disclosure of mandatory car rental insurance. Here’s a case I mediated back in 2011.

Just for kicks, I went shopping for a rental car in Tel Aviv for next month. At the bottom of the rate sheet, in fine print, it says, “May not include mandatory insurance charges that are required for certain international rentals.”

Is that enough disclosure? Maybe.

But the fact that Expedia would sell a travel insurance policy that purports to cover Kestan — I find that problematic.

Of course, he had no choice but to pay the $29-a-day insurance, which significantly increased the cost of his rental. When he asked Expedia to cover the cost, it refused.

He adds,

They have only refunded the $72 for the insurance I bought through Expedia. At least that’s what they said on the phone — I have not seen evidence of this yet.

Expedia, as I understand, has known about this “bait and switch” and is simply refusing to live up to its responsibility to ensure that they deliver what they promise.

I do not understand how they can offer this insurance when they know it is not accepted. They need to live up to their commitment. I firmly believe that Expedia should reimburse me the mandatory insurance charge.”

I see his point. Why sell a product that won’t cover you? Why quote a rate when you know everyone renting a car from the United States will be forced to pay for the insurance?

Expedia is the largest, most successful, and arguably the most technologically sophisticated of the online travel agencies. If there’s a way to squeeze a profit out of something using technology, you can bet it’ll find it.

A few years ago, I might have given Expedia the benefit of the doubt. There were just so many products it offered on its site, and asking it to do something like Kestan wants seemed unrealistic. But I believe it has the technology to pull something like this off. I also think it has an obligation to make sure these “misunderstandings” — which only benefit Expedia — don’t happen.

“What is most upsetting is that Expedia is allowing customers to believe they are renting a car at a price of $14 per day and when they arrive in Israel the charge is more than three times the price,” he says.

I agree.

I contacted Expedia on his behalf. Here’s how it responded:

The customer service team has taken a closer look at Mr. Kestan’s case and has confirmed that a refund was processed for the insurance not honored by Hertz in the amount of $72. In addition, Expedia is offering the customer a $50 travel voucher for future travel.

A $50 travel voucher is nice, but I’m not sure it’s enough.

Is mandatory car rental insurance a "bait and switch" scheme?

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47 thoughts on “Is mandatory car rental insurance a “bait and switch” scheme?

  1. Mandatory by whom? The Israeli government? The rental company? Either way, Expedia should know about this and disclose it. They need to disclose the entire cost, including taxes and fees (and mandatory insurance, if indeed it is mandatory)–these are all known in advance.

    Expedia said the OP rented from Hertz–I just tried making a dummy reservation from Hertz for the Tel Aviv airport, and while they mention insurance, it is definitely optional…the rate included the car and a (substantial) tax for renting from an airport. I suggest the OP do the same, and take screen shots to send to Expedia (or was the Hertz agent in the wrong, insisting upon mandatory insurance?)

    1. I did the same, even going to the Israeli version of the site. It’s optional, in fact the site even mentions the credit card insurance coverge.

  2. I don’t book on Expedia to know, so is the insurance strictly for cars, or was it an insurance policy that covered for cancelation, trip interruption and car coverage was part of it?

    I had a similar experience with Hertz in SNN for clients. They don’t have a Master Card, which is the only card Ireland accepts for coverage outside of the car company’s, so I called Hertz and asked about Travel Guard’s rental car coverage that I could, at that time, get it for $19 total. Hertz said that TG coverage would work as long as they bring the policy, which the client’s did, but Hertz at SNN refused to accept it and made the take out their coverage. I refunded the $19.
    Many governments do require full coverage on car rentals from their country.

      1. It wasn’t honored, but when I had called Hertz they said it would be. Even within their own company they don’t know 🙁

  3. Hard to answer based on the question. In some coutries, mandatory insurance is required by law, not the car rental company. In fact, in a few countries, the gov’t IS the insurance company. That does not negate the need to fully disclose the price or requirement up front if purchasing or reserving through a US-based company, although the local agency may be independantly owned and operated. We can get laws changed in the US if enough.people put pressure on our representatives, like we have done with airline fees, however, we cannot dictate how other countries allow their companies to operate. Outside the US, it should be “buyer beware”. Scamming customers this way may be profitable in the short-term, but will really hurt the country, company, or industry in the long-term. I believe we will have full disclosure and standard renter rights in the US within a few years if the car rental industry does not police themselves.

  4. Is it mandatory to buy Hertz’ insurance…or is it mandatory to have proof of insurance and nothing the OP had was acceptable?

  5. If the Expedia insurance was for the car then they should have covered whatever extra he was out of pocket. I voted no because I am assuming that the insurance actually is mandatory at the rental car company and if he had rented through them he would have been aware of the requirements.

  6. One thing that has been pointed out in this blog in the past about the “mandatory” insurance is that it is only mandatory if the renter is from out of the country. I’m not sure if that was the reason the insurance became mandatory but when renting to someone from outside the country, I can understand it. The insurance the renter has may not be valid in a foreign country. From what I have seen, most US auto insurance is not valid in Mexico so if you were to go there, I wouldn’t blame the rental company for requiring insurance.

    Now in the case here, I think Expedia would be able to tell if this is the case. A booking for an Israeli rental being made from the US site? Also, it would be very easy for Expedia to pop up a window explaining about the insurance for the user to agree to before processing the request.

    Personally, I feel the OP is entitled to a reimbursement for the insurance if they can show Expedia said the insurance would be valid. Otherwise, a refund of the insurance purchase price is due. I wonder how much money Expedia makes by selling this insurance and having this type of incident happen but the renter doesn’t come back for a refund?

  7. It says that he purchased “travel insurance” from Expedia. Since when has travel insurance been the same as car insurance, or even rental car insurance? I don’t think it is “bait and switch,” but I do think mandatory taxes and fees should be disclosed by both the online agency AND the travel service provider. I am not sure that Hertz is any less responsible for this screw up than Expedia.

    1. Car insurance is an option on many travel insurance policies. On my last trip to Australia, I had sufficient collision coverage on my policy that I was able to avoid having to pay the costly CDW for my rentals (both with Hertz via Qantas).

    2. You are correct Steve, he bought travel insurance from Expedia.

      In Israel, Bituach Chova (or Liability) insurance is mandatory (compulsory). That said rental car companies will charge the renter for Liability insurance. The only question is whether Hertz or Expedia provided the necessary disclosures.

      Here is Hertz’s disclosure page:

      TPPD (Third party property damage)-the renter shall be required to pay a participatory fee (deductible) for third party property damage up to the amount stipulated in this regard herein. In addition, in this regard the renter shall pay to Hertz, immediately upon first demand, the full cost for all damages, losses and expenses incurred by Hertz as a result of the loss andor damage caused to Hertz, however caused.

    3. I found that Expedia does provide information that additional insurance may be required depending on the country of rental.

  8. Chris,

    Maybe I missed it, but did you contact Hertz Corporate to find out if the insurance at this particular location was mandatory or not? By a couple of the comments, the Hertz website makes the insurance to be voluntary and the “bait & switch” would more likely be on the shoulders of the local Hertz than on Expedia.

  9. As someone who works in Australia’s leading wholesale car hire company, dealing with agents booking worldwide car hire all day, every day it can be difficult to ensure every single fee is advised correctly and at time of reservation. Every supplier is different, for example one supplier in the Republic of Ireland charges a road tax fee of 2EUR + tax per day. This does not seem like a huge amount, but when a car is rented for 20 days it adds up. This is a unusual, but not uncommon charge with smaller local suppliers As a wholesaler we advise the agent of this and put it clearly on quotes/invoices and vouchers. Should a sales consultant not advise a fee, and the customer be charged our dedicated customer service team investigate and refund the client accordingly. Unlike most other tourism products such as airfares, accommodation which are generally fully pre-paid car hire is filled with numerous pay locally items such as one way fee’s, AP surcharges, border crossing surcharges paid directly to the supplier/government etc so one must check they are hiring a fully inclusive rate. Another large problem which is occurring so often lately is up-selling of insurance. 99% of the time a client will book a insurance inclusive rate (CDW, TP and Third Party), but upon arrival to collect the car they are forcibly sold additional not required insurance. Numerous cases indicate the client felt pressured into purchasing the insurance by the rental company. Some instances, a particular low cost US supplier advises clients that the hire does not include road side assistance, but it does and they use it as a option to sell more (not required) insurance. So in saying all this what should everyone due BEFORE booking there car hire and if they book again prior to collecting the vehicle? Check the T&C’s – 1) Is it fully inclusive of road taxes, fees, tolls? 2)Are there any supplier stipulated fees such as one way fees, airport surcharges, winterisation fees? 3) Is there legal requirements which need to be met, such as the disposable breathalyser in France and the requirement to have winter tires in Germany, Austria and Switzerland by law in certain months. 4) Is the 3 basic insurance factors included – Collision Damage Waiver, Theft Protection and Third Party Liability 5) Will the company take a security bond/credit card imprint. All this information means you are prepared for anything should it happen. In this case Expedia should refund the money for the mandatory insurance that was not advised and in the future they need to make it more clearer of the inclusions and exclusions.

    1. The breathalyser in France is no longer a problem, as it was finally decided that no fines can be given for not having one.

  10. Rental car insurance is a scam that’s been going on for years, they keep changing the details to confuse people when they pickup/return the cars. There are certain countries where you need all the insurance coverage you can get – I remember being grateful that insurance was mandatory in Ireland when we returned the car completely covered in scratches from the bushes along all the very narrow roads. I had done my research and knew that Ireland was an “insurance problem” so I was ready for the extra charge. I wouldn’t dream of not buying full coverage in Italy for example. It’s kind of sad that today the consumer has to assume someone will try to cheat him and be ultra-prepared for it. AutoEurope has always been completely candid with all the charges before the reservation is made.

    1. In this instance, the OP was not in or going to Europe or Ireland. And it’s not unreasonable to expect one’s travel agent (in this case, Expedia) to disclose all information necessary to make an informed decision. If a country like Israel requires extra insurance and/or the travel vendor won’t honor what the agent is selling, the agent has a duty to disclose that to the customer. That didn’t happen here, leaving the OP to believe that the product the agent sold him would be honored over there. And before you bring up “doing your homework,” that’s what many people hire travel agents for-because the agents have the professional contacts and access that makes that their day job. Most travelers don’t have that sophistication. The travel agent had the duty to only sell products that would be actually honored at face value and not leave their customer open to “surprise charges.”

  11. The problem here is, without more information, it’s difficult to say whether this was an issue with Expedia selling worthless insurance or a scam on the part of the rental company. I don’t know the rules in Israel, but it is possible that certain insurance is mandatory for international customers there. Foreign rules are all over the place, and this isn’t the easiest thing to figure out, either; you sometimes have to do some serious digging through the T&Cs. If Israel requires insurance for rentals to foreigners, and Expedia sold a policy that doesn’t meet the requirements, then shame on them for doing so. TAs, whether online or brick-and-mortar, should ensure that the products they sill will actually work as intended, and should stand behind them in the event of a problem.

    OTOH, it’s possible this was a scam perpetrated on the renter by the Hertz location in Tel Aviv. There have been several cases where unscrupulous counter agents attempt to foist unnecessary insurance on tourists by claiming it’s “mandatory”, when in fact it isn’t. While it’s easy to say you should just argue with the agent until they drop the matter, that’s often easier said than done when you need to get on your way, and not everyone is savvy enough to recognize that the insurance is a scam. In that scenario, I don’t know what Expedia could have done, other than refund the money for the insurance they sold, and perhaps help the customer get a refund from Hertz on the bogus insurance.

  12. I’m confused, Chris. Your piece says “travel” insurance. What does that have to do with car insurance. And why would a traveler think “travel” insurance would cover a car rental?

      1. I just went over to Expeida’s website and made a reservation for picking up a car in Tel Aviv. Here is what comes up regarding the extra cost for coverage. Note that it advises that extra coverage may be required in certain countries. It doesn’t provide a list,just uses Mexico as an example, but at that point the person making the reservation should do more checking based on the added information.

        Car rental insurance

        By selecting this product I acknowledge I have read and agree to the terms of
        the Description of

        This robust plan provides coverage for collision,
        theft, vandalism, and much more, regardless of destination and includes a $250
        deductible. This insurance is underwritten by Stonebridge Casualty insurance
        company, and is administered by BerkelyCare, a division of Affinity Insurance
        Services, Inc.
        View more information:Car Rental Insurance Plan

        Please note that in some
        rental destinations, such as Mexico, car rental companies may have
        additional insurance requirements such as a mandatory purchase of liability

      2. Car rental insurance Show Details Hide Details

        $242.00 each car

        By selecting this product I acknowledge I have read and agree to the terms of
        the Description of

        This robust plan provides coverage for collision,
        theft, vandalism, and much more, regardless of destination and includes a $250
        deductible. This insurance is underwritten by Stonebridge Casualty insurance
        company, and is administered by BerkelyCare, a division of Affinity Insurance
        Services, Inc.
        View more information:Car Rental Insurance Plan

        Please note that in some
        rental destinations, such as Mexico, car rental companies may have
        additional insurance requirements such as a mandatory purchase of liability

      3. What the heck is going on. I have posted twice with information from Expedia’s site that they state that some countries will have additional insurance requirements over the purchased coverage, but both are gone.

        1. Disqus seems to be having issues lately. I have had problems getting responses to post the last few days. End up having to post multiple times before they show up. I had it requesting verification I wasn’t a bot but didn’t see it because the popup blocker was hiding it. They have changed the email message format (the new one really sucks) so I’m guessing they are mucking around with it a lot lately.

  13. Here is the problem: There are some countries that nearly all insurance policies exclude. Israel is often on that list. From the American Express premium car rental insurance: Coverage is worldwide except for vehicles rented in Australia, Ireland, Israel, Italy, Jamaica, and New Zealand. I often see Mexico on these lists as well. If you are renting in Israel, it is likely that whatever car insurance you have does not cover the vehicles there and Hertz would know that. It is possible that the Expedia policy would be acceptable as insurance, but you would have to prove to Hertz that it does cover Israel. Expedia may have sold a perfectly valid insurance policy and Hertz is just not accepting it because they do not trust that it is valid in Israel.

  14. If Expedia failed to provide the paid-for promised insurance, then Expedia’s responsibility is to cover the cost of whatever was reasonably necessary for the consumer to buy substitute insurance. A mere refund is insufficient (assuming that substitute insurance were more costly) because that would deprive the consumer of the bargain he contracted for.

    1. When you book a rental car from Expedia, they will offer you some kind of Car Rental Insurance. [Note: this is not the same as the Travel Insurance mentioned in the article.]

      But that “insurance” is for Damage Protection and NOT LIABILITY.

      Unfortunately, in ISRAEL, can rental companies charge for Liability Insurance.

      The rate offered to him by Expedia did not include Hertz’s (Liability Insurance) THIRD PARTY PROPERTY DAMAGE (TPPD). It also did not include CDW. TPPD is mandatory unless a customer purchases CDW from Hertz.

      In my opinion, the OP did not FULLY understand what he was getting into when renting a car in Israel.

  15. I checked a few other international car rentals and Tel Aviv compact cars average $50-60 per day. So if the OP got it for $14, that would’ve been a red flag. I’m hoping he checked more than Expedia before booking because that would’ve turned up: Why is Expedia 1/3 the price of everyone else? If it’s a nationwide surcharge (ie. not specific to any one rental company), then Expedia should prominently inform. Otherwise, a disclaimer that additional fees may apply is sufficient. Then it’s up to the renter to look up the specific info for that particular rental company / location, I think…

    1. The $14 is a BASE rate for an Economy 4 Door. The TOTAL rate is $42.

      In addition there are 2 other charges to worry about:

      (1) Airport Pickup/Drop Off Charge $27


      (2) Liability Insurance. If you get CDW ($17/day) then it is covered.
      Otherwise, you will pay $12/day for TPPD.

      In other words, the true rental cost is about $60++ a day (for a short term).

      *** UPDATE: please read my latest post “I think I figured it out”.
      It has the correct rates and fees.

  16. It appears to me that he purchased Expedia normal cancellation insurance. Then he had to purchase Hertz mandatory insurance. What a lack of research on his part. Europa, Kemwell, and a dozen others offer the rentals with “all’ INSURANCES AND TAXES.

  17. I went to Expedia and tried to rent a car from Hertz in TLV airport.

    The price had a disclosure.
    * Includes estimated taxes and fees. May not include mandatory insurance charges that are required for certain international rentals. Car charges are billed at time of rental.

    Displaying the Detailed Car Rental Information:

    TO USD1035.00

    Okay, so what is the OP complaining about? Maybe he should read the details further.
    He bought Travel Insurance which had nothing to do with Auto Rental Liability Insurance.

  18. I think I got this figured out.

    I went to my GDS and did some car searches for Hertz Israel, TLV airport.

    The BASE daily rate for an economy car (EDMR) is only $14 a day.

    There is NO TAX for a non-Israel resident and passport holder.

    There is an (TLV) airport LOCATION SERVICE CHARGE: PER RENTAL of $28 (one time charge).

    So for one day you will pay $14 + $28 or $42.

    You will pay an additional $14 more per day rental. So 2 days is $56 total.

    Now here is the problem. Unless you buy CDW from Hertz ($17 per day), you will be forced to pay the THIRD PARTY PROPERTY DAMAGE – TPPD fee of $12 per day. In other words, the CDW costs more than the daily rental rate!

    The problem with Expedia’s website for rental cars is that they offer an insurance which covers damage, theft, vandalism, etc. EXCEPT LIABILITY for $11 a day. Also, there is no guarantee Hertz (or other car rental companies) will recognize it. Unless you are alert (or sophisticated), you will think it will do. But in reality it is quite useless. You are better off spending that $11 and adding $6 to get Hertz’s CDW (for $17 a day).

    So shame on Expedia for selling a pretty useless product (it’s car insurance) when renting a car in Israel.

  19. It is not a bait and switch because it is not both done by the same company. It is just a stupid thing where Expedia does not keep up with where the companies charge mandatory insurance. Why are there always misleading questions on these surveys?
    86% of people vote it is bait and switch. It is wrong, but it is a lack of programming the site completely enough.

  20. My employer carries a special rider on their insurance policy to fully cover employees’ rental cars, and specifically instructs us not to purchase insurance when renting cars when traveling on business. “Mandatory insurance” would force us to pay twice!

  21. If they had done their research they would know that theft protection is mandatory in Israel. I know because it irritated me the first time, but it’s a fact. It’s not bait and switch. It’s there for anyone to see if they go to the web sites of the rental car companies in Israel.

  22. This happened to me in Puerto Rico last year. I booked through a third party site and and the possibility of mandatory insurance was not disclosed at all. I picked up the car at 1AM and tried fighting them on it. It ended up costing me about $100 extra and I decided after the fact that it wasn’t worth my time to fight to get $100 back. When picking battles with travel providers, I always struggle between fighting based on principal or making a decision to drop it because the value of my time doesn’t warrant the amount of time needed to try to recover the amount lost. Mandatory car insurance definitely needs to be disclosed clearly and at the time of the initial reservation!

  23. i work with Expedia’s off shore call center.
    Yes, the car rental insurance only covers for own damage, and not much.
    Yes guys, beware when you buy this so-called car insurance from Expedia.

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