The worst rentals don’t even own the cars. The operator may tell you that all you need is a driver’s license. Someone tells you that the deposit you paid will cover any damage. That someone doesn’t understand insurance, and you’d better start looking for someone who does. More dangerous still, he may urge you to not tell your auto insurer about the rental. These are the occasions you really want to cut the discussion short.
Often, these brokers set up an LLC and a website of stock photos of cars they think they can get. They’re renting out other people’s personal cars. The owner generally cannot insure a vehicle through his personal auto insurance policy if it is being rented out. If you rent a car from a broker, you may be responsible for paying for your medical bills, vehicle repairs, and the claims brought by third parties. There’s a whole spectrum, from unreliable guys who mean well to people trying to con you. One company straight-up rented stolen Mercedes with altered VINs.
Reporters posing as renters found an ad saying all you need is a license. One operator described a $10,000 deposit that he said worked as insurance. Another said that a driver without insurance could bring a friend who has insurance to the rental company and they’d use that friend’s insurance to cover any claim.
When you’re looking for a car, you might encounter a fly-by-night agency, charging $1,000 when everyone else wants $2,000. These types of companies do not last very long. They make it on to the market, start collecting deposits, and just get out.
Not every insurer will cover exotic rentals. Your personal auto insurance policy might be worthless on your “once-in-a-lifetime” trip. If you drive a Ford Focus, the rental coverage under your personal auto policy may not cover a rented Ferrari. The vast majority of credit cards only provide coverage for ”authorized rental vehicles” which usually doesn’t include Ferraris and Lamborghinis and other high-end rental cars. Call your insurer before you book your dream rental. Some insurers are no longer insuring exotics at all.
The Better Business Bureau has also warned that not all car rental companies are legitimate. One man said he paid a deposit for an exotic car in Miami through Cash App. He asked to cancel his reservation but never heard back. The FTC says scammers often insist on cryptocurrency, a wire through Western Union or MoneyGram, a payment app, or gift card numbers.
New York Law
Before you rent that Ferrari, you need to know how New York law protects you. New York law says that a rental company can’t refuse to rent to you if you don’t buy the damage waiver. That’s right. The waiver is optional. New York law also caps the daily damage waiver price on most rental cars. For a car with a sticker over $50,000, the daily price can reach whatever the market will bear.
In New York, the rental companies must base any damage claim on a physical inspection of the car when you return it. They can’t charge for loss of use. You have 72 hours after you get a damage notice to ask for a physical inspection to verify the damages on the original claim. And a rental company cannot collect the money for damage while the rental is underway, while there is a dispute pending, or before a court judgment.
The best rentals take a deposit of anywhere from $2,500 to $50,000 before you get behind the wheel. They may want a credit and background check, and you’ll have to prove you have the right insurance. They’ll confirm that you’re covered before you drive away. Those cars have GPS and tracking devices inside. If you think it sounds like a lot of work, that’s the point.
You’ll want to know whether the company you’re renting from actually owns the car, and whether it insures the car. A company that owns the car and insures it should have no problem showing you the fleet insurance policy and schedule showing that the car you want is covered. If you get anything less than that before you drive away, it’s best to walk away. Don’t trust a rental company that doesn’t register a car in its own name. If you were scammed or you spot one of these scams, please tell the FTC at ReportFraud.ftc.gov.
