OFT warns excess car rental insurance may be mis-sold

Excess car rental insurance has become the latest ancillary product to come under scrutiny from the regulators. A report by the Office of Fair Trading (OFT) focused in on car rental contracts and insurance.

The report concentrates on optional excess car insurance. This protects the customer from paying out large costs for vehicle damage not caused by a third party.

A number of concerns were flagged up. When insurance is sold at the rental desk, there is often not the information available for the customer to draw comparisons, and the staff selling it may not understand the product well. Customers also frequently allow their credit cards to be pre-authorised for damage, yet most of them claim not to know that this allows the rental company to charge their card without further permission.

Head of legal services for the industry trade body the British Vehicle Renting and Leasing Association (BVRLA), Jay Palmer stressed that the OFT report was generally supportive of car rental contracts. But better information online would go a long way to solving its concerns. He said: “Making the terms and conditions available online is something that is being embraced by BVLRA members, so people do not have to read complex terms and conditions at point of rent.”

Part of a new wave of insurers selling excess away from the desk, Halo Insurance Services and iCarhireinsurance.com chief executive Ernesto Suarez said: “This is the OFT telling the car rental industry to spend time reviewing the products they supply and to form a proper communication programme around them.”

Pass notes: Ancillary products

Why is there such a concern about these products?

The FSA is determined to flush out the next payment protection insurance scandal before it becomes a pandemic and hits the headlines. Mobile phone insurance and warranty are just two products on the FSA’s radar.

What’s so bad about car rental insurance excess?

The Office of Fair Trading is concerned that customers don’t really know what they’re buying when they’re tired and stressed following a long journey, and explanations from the kiosk frequently aren’t up to scratch.