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Low Credit Score May Hurt Car Insurance Rates, But Consumers Have Options

A low credit score can affect a consumer's ability to get a home or car loan but also impacts other less-obvious areas of life, such as insurance rates. The good news is that there are ways for consumers to improve credit, clean up credit ratings and find willing lenders. MortgageCreditProblems.com is a top mortgage site offering resources for borrowers looking to make critical financial decisions.

Los Angeles, CA (FV Newswire) - MortgageCreditProblems.com, a primary source of mortgage lending information and bad credit mortgage loans for people with poor credit, can help people who are hurt by a bad credit rating ( http://www.mortgagecreditproblems.com ) . Consumers are hurt by low credit scores in many ways--including, surprisingly, the cost of auto insurance -- so it's important to have the best credit rating possible.

According to the Federal Trade Commission, "Potential lenders use your credit score to help predict whether you are a good risk to repay a loan and make payments on time." People seeking a home or car loan who have a low credit score will have difficulty finding a lender. The reasoning seems logical -- although about half of all credit reports contain errors.

But a low credit score can unexpectedly affect other areas of life, too. The insurance industry has found a surprising -- but, it believes, solid -- statistical correlation between credit ratings and auto mishaps. Auto insurance companies use credit scores to determine whether to charge higher or lower rates for auto insurance. People with low credit scores pay more for auto insurance than people with higher scores because statistics suggest they may be bigger insurance risks.

Whether or not the sanctions against low credit scores are logical or fair, MortgageCreditProblems.com reminds consumers that they do have options.

* The Fair Credit Reporting Act gives consumers the right to learn their credit rating, find out how much the rating affects their insurance rates and then shop for the best loan and insurance deals.
* A number of top lenders are willing to give credit to borrowers with low credit scores.
* There are many ways for consumers to improve their credit and clean up credit scores. http://www.mortgagecreditproblems.com

10 tips: Avoid financial fender benders with auto work

Have you ever been involved in a seemingly minor car accident only toswoon when you received the repair estimate? Since auto body work can cost a small fortune, it's important to know how to proceed before an accident happens, no matter how minor.

1 Brace for impact. Make sure you're happy about where your deductible is set for collisions on your auto insurance policy. It's often set at $500, but you may have bumped it up to $1,000 - a tactic that can save money over time. Either way, be prepared to pay the full deductible out of pocket if the accident is your fault.

2 Understand the system. Your insurer may direct you to its list of approved repair shops, but be aware those shops might be tempted to take shortcuts with your vehicle to save money. That's because they will only receive pre-negotiated rates from the insurance company, and those rates might be stingy.

3 Get more than one estimate. Take good notes when the first place you visit tells you what repairs you need and the cost. Then call three or four other shops and ask how much they would charge for the exact same work.

4 Know what to expect when it comes to replacement parts. Many insurance companies want repair shops to use salvage or generic replacement parts, rather than original-equipment manufacturer OEM parts, which match your vehicle exactly and cost more. You may not have much of a choice if you're responsible for the accident, but if you're not at fault, instruct the shop to use OEM parts.

5 How does the repair shop rate? You can visit the Web site of Assured Performance Collision Care (www.assuredperformancecare.com) to locate shops in your area that meet key performance standards.

6 Check the shop's reputation and complaint history. Check to see how many consumers have complained about businesses by contacting the Better Business Bureau of West Florida (www.bbbwestflorida.org or toll-free 1-800-525-1447).

7 Clarify your rental car expenses. Repairs often drag on, meaning you could be stuck driving rented wheels for a long time at a potentially high cost to you. If you pay $1 to $2 a month for rental car insurance, you might be reimbursed only for the rental of a compact car. If such a small car wouldn't work for you, re-evaluate your coverage.

8 Have a European car? If so, the repair shop you use should have a special certification from the car manufacturer, along with specialized equipment to fix your vehicle. Your insurer's approved shops may not fit the bill for your vehicle, but your insurer still should pay for such specialized repairs.

9 Don't be swayed by your insurer's warranty. Insurance companies'warranties on replacement parts often aren't necessary because most shops guarantee their work and parts manufacturers guarantee their parts.

10 Make your sign-off a requirement. Especially when you're on the hook for the repair costs, politely clarify with the shop that no work should happen until you've authorized it first. If you spot anything on your bill you didn't authorize, speak up about it.

-- Laura T. Coffey

 

Find The Right Car Insurance Company To Safeguard Your Dream Car

Car insurance company compensates you for the loss or damage to your car in case of theft, accident etc. It’s crucial to choose the company carefully and cautiously.

Finding the right kind of car insurance company to provide coverage to your car is as important, if not more, as is locating the appropriate finance company to obtain car loans. Unfortunately, most of us tend to ignore this important aspect and face undue inconvenience and losses at the time of filing claims.

How To Choose?

As is with car loans, the best place to look for a car insurance company is Internet. You do not necessarily have to go for online car insurance. Though obtaining online car insurance is as convenient as getting online new car loans or easy online car loan, but you may opt to visit the offices of insurance companies personally for first hand information. However, before you waste time and effort in such visits, you should browse the information available about different companies on Internet. This will ensure that your visits are fruitful and lead you toward finding the right sort of car insurance company.

A Few Tips

There are a number of factors that could guide your choice of a car insurance company. Some salient ones are listed below: -

# If you have purchased homeowner’s insurance, enquire from the company as to whether they also deal in car insurance or not. If they do, it’s always better to obtain car insurance from the same company. The primary reason is that most insurance companies offer discounts in such cases. Moreover, with this you are aware about the company’s terms. In case, you do not have homeowner’s insurance, you should attempt to locate a company that deals in different kinds of insurance and not just one.

# Go for a company that offers flexible payment options i.e. monthly, quarterly, half-yearly, or lump sum. This way you could choose the payment terms that suit your current fiscal status.

# Discounts are major attraction while deciding on the purchase of any kind of product and insurance is no exception. Usually car insurance companies offer a number of discounts to their customers. You can make use of Internet or browse the advertisements in local papers to find the company that offers the maximum discounts.

Caution

Whatever you do, remember not to take your car insurance lightly. Go through the terms and conditions given in fine print thoroughly. This is important as it concerns the actual terms of your contract. It will certainly take some effort on your part, but it’s definitely worth it. Don’t get casual about it otherwise; you may have a lot to regret when you need to file a claim.

Check the various options for the insurance for your new car, after finalizing the car loan. There are lots of options available with discounts, so select the best deal from the car insurance company. You can find them easily on internet or via advertisements in local media. Do not forget to check the deals offered by auto loan financing companies with the easy online car loan.

Check the various options for the insurance for your new car, after finalizing the car loan. There are lots of options available with discounts, so select the best deal from the car insurance company. You can find them easily on internet or via advertisements in local media. Do not forget to check the deals offered by auto loan financing companies with the easy online car loan.

Choose auto insurance that covers more than collision

The number of vehicle losses due to hurricanes, floods, tornadoes, large hailstorms, firestorms and other severe storms nearly doubled in the five years between 2001 and 2005, according to ISO’s Property Claim Services unit, the recognized authority on insured property losses from catastrophes in the United States, Puerto Rico and the U.S. Virgin Islands.

According to the Insurance Information Institute, a non-profit organization, comprehensive coverage will reimburse policyholders for loss due to damage caused by something other than a collision with another car or object, such as fire, falling objects, catastrophic storms, vandalism, or contact with animals such as birds or deer. Flooding also is covered by auto insurance, as long as the policy includes comprehensive.

“Drivers spend a lot of money on auto insurance and it is important for them to be as familiar as possible with what their coverage includes when they’re making their purchase decision,” said Ron Berry, senior vice president at the Council of Better Business Bureaus. “But too often, people shopping only for the lowest rates don’t notice their lack of certain types of coverage until they try to make a claim.”

The best advice is to be prepared to know what your auto insurance covers and what you should do if your car is damaged in a storm by following these tips:

# Report damage as soon as possible. If your car is not drivable, your agent or claims center may be able to save you time and money by having the car towed directly to the repair facility instead of to a temporary storage facility. In addition, arrangements may be made immediately to provide you with a replacement rental car, if your policy includes this coverage.

# Know what your deductible is and any other additional charges before authorizing work. Expect your insurance adjuster, claims representative or repair facility appraiser to review the damage with you and explain the repair process, including the use of original or generic auto parts. Before authorizing repairs, know what your deductible is, as well as any additional charges you will be expected to pay once repairs are complete.

# Ask about warranties on repairs. Ask whether your insurer has a repair facility referral program that offers a written limited or lifetime repair warranty backed both by the repairer and insurer for as long as you own your vehicle.

# Do business only with a reputable company. Obtain insurance from companies, independent brokers or direct marketers that have a proven track record of handling auto insurance claims effectively. Get a referral or contact the local Better Business Bureau or State Department of Insurance.

Comprehensive insurance is usually sold with a $100 to $300 deductible, though you may want to opt for a higher deductible as a way of lowering your premium. Comprehensive insurance will also reimburse you if your windshield is cracked or shattered. States do not require that you purchase comprehensive coverage, but if you have a car loan, your lender may insist you carry it until your loan is paid off.

“But, even if you have comprehensive coverage, it is not always guaranteed to meet your individual needs,” says Carolyn Gorman, vice president of the I.I.I. “For example, you may be surprised to discover that after a storm your auto insurance does not automatically cover the cost of a replacement rental car while your car is in the repair shop or you wait for authorization for a new car from your insurance company.”

She added that an individual could end up paying as much as $1,000 to rent a replacement car. “But rental reimbursement coverage, which is only a couple of dollars a month, covers the cost of a rental car while your car is being repaired or you are waiting for authorization for a new car. This means that renting a car for one day can cost more than one full-year’s coverage for rental reimbursement,” Gorman said.

Wiser Drivers Wise Up

As part of a nationwide consumer education program, entitled Wiser Drivers Wise Up, the Council of Better Business Bureaus and the Insurance Information Institute have teamed up to inform and educate drivers to review their auto insurance policy annually to make sure they have adequate coverage for various types of incidents, including severe storms. The “Wiser Drivers Wise Up” program includes a detailed Web site at www.wiserdrivers.com

The Council of Better Business Bureaus says that some of the least expensive options may not be mentioned to those shopping for the lowest premiums. In addition, since many people purchase automobile insurance several years prior to making a claim, they may forget what their coverage includes. If they don’t have the coverage or don’t know to ask if the cost is covered when they make a claim, they can end up paying more than they anticipated.

Understanding the differences in insurance coverage can be confusing. “Many of us think that we have adequate coverage, but most of us don’t find out until after we contact the insurance company what is not covered,” says Berry.

Both the Insurance Information Institute and the Council of Better Business Bureaus advise drivers to take a few minutes to read their policy or talk to their insurance agent once a year to make sure they have the coverage they want and need. The best advice is not to assume anything when it comes to insurance. If a specific coverage is not listed and explained in the policy, the loss probably won’t be covered.

For more details, go to http://www.iii.org/individuals/auto/a/basic/

AUTO INSURANCE (Q&As)

Q: Do I really need auto insurance?

A:
A lot of people ask me: “Do I really need auto insurance? My car is too old and I don’t care if it gets totalled.” While some cars may not be worth much, fact remains that accidents do happen. And when accidents happen and you injure another driver or cause damage to another driver’s car, you will be glad that you have auto insurance. Remember with auto insurance, you are not only protecting yourself but other drivers on the road also. In some states, for example Georgia, it is mandatory to carry at least liability insurance if you own a car. Also if you have a loan on a vehicle, the lein-holding company will require you to have full coverage on your vehicle.

Q: How long do tickets and accidents affect my insurance rates?

A: Traffic violations, tickets, and accidents may affect your insurance rates for three to five years. This time period really depends on the insurance company and what they have in place. During the three to five years, your insurance payments are likely to rise. How much of a raise depends on the severity of the violation. For example, a speeding ticket would not raise your insurance payments as high as a ticket for driving under the influence of alcohol (DUI) will.

Q: What do the three numbers on my auto insurance mean?

A: You may have seen some numbers, usually in a set of three on you auto insurance. These numbers would be 25/50/25 or 50/100/50 or 100/300/100 or even higher. So what do these numbers mean? The first two numbers in this series, 25 and 50, are the amounts of $25,000 and $50,000, and these are the amounts of coverage for bodily injury. So if you are in an accident and you cause bodily injury to a single person in another car, your insurance would pay up to $25,000 for one person who is injured. If you are in an accident and cause injuries to more than one person, your insurance would pay no more than $50,000 collective total for all the people injured.

The last 25 means $25,000 to cover against property damage. So if you were in an accident and damaged another person’s vehicle, your insurance would pay upto $25,000 for property damage.

Q: Does my auto insurance cover for a rental car?

A: So you’ve been in accident. A lot of things are probably going through your mind, but a major issue would be how to get around assuming your car will be in the mechanic’s shop for awhile. No big deal, just call your insurance agent and ask him or her to set you up with a rental car. So you call your agent and he or she tells you that according to your policy you do not have rental coverage.

Perhaps you opted not to have rental coverage to save a few dollars a month, so now you have to pay out of pocket for a rental car. Depending on how long you need the rental car, you could end up paying several hundreds or even thousands of dollars for the rental car. To have this added to your policy, you need to call your agent. For those of you who haven’t had the pleasure of being notified that your policy doesn’t cover rental do yourselves a favor and take a look at your policy.

Q: DUI auto insurance rates and SR22 forms

A: I will not lecture you about drinking and driving, but if you find yourself in jail due to driving under the influence, you should probably know what would happen to your auto insurance.

If convicted of a DUI the court will order you to file and SR22 form. An SR22 form is a high-risk form that shows proof of auto insurance to the Department of Motor Vehicles (DMV). Basically you will be considered a high-risk driver. Your insurance rates will definitely go up and if you are unable to keep up with the insurance payments, your driver’s license will be suspended. A DUI will affect your insurance payments for the next five years.

To contact the author you can email her at: Virginiagitau@allstate.com This e-mail address is being protected from spam bots, you need JavaScript enabled to view it , or call 770-590-8515

Insurance Surprises: MetLife Auto & Home Survey Finds Many Americans Dramatically Overestimate the Level of Insurance Protection They Have

WARWICK, R.I.--(BUSINESS WIRE)--Although most Americans are actually willing to pay more for auto and home insurance to achieve greater peace of mind, the overwhelming majority mistakenly believe that their insurance covers them for risks against which many policies do not protect, leaving millions financially vulnerable.

These are the findings of a new survey on public perceptions of auto and home insurance, conducted by Zogby International for MetLife Auto & Home. When asked whether their current auto and home policy would provide coverage under various situations, many Americans incorrectly assumed that their insurance would take care of the loss, a potentially costly error that could result in significant out-of-pocket expenses.

Among the survey findings:

* Most Americans seriously underestimate how much they might owe if their vehicles were “totaled.” Only 40% of those polled knew that it was possible to owe more on a vehicle than it’s actually worth at the time of accident. Furthermore, 47% responded that if a new vehicle were totaled only a few weeks after being purchased, the insurance would pay for the full cost to replace the vehicle—when in fact, most insurance companies will deduct for depreciation, which could leave consumers owing thousands of dollars on a car loan.
* Although more than half (55%) of Americans don’t purchase insurance for rental vehicles from a rental agency, correctly assuming that their auto insurer would provide coverage, a large majority misunderstood—or didn’t know—what expenses their auto provider would actually cover. Fully three quarters weren’t aware that most insurance policies do not reimburse the rental company for loss in rental income while the car is out of service, nearly half (49%) incorrectly assumed that their carrier would pay for a decrease in the market value of the rental vehicle, and 42% thought that the cost for towing and storage of the vehicle while it was being repaired would be covered. Even though most rental companies will request reimbursement for these charges if there is an accident, the truth is, most insurance policies leave the burden of payment to consumers.
* Almost half of Americans (46%) say that their auto insurance company would pay for the full cost of items such as batteries, tires and shocks, if damaged in an accident. In fact, most standard auto policies deduct for depreciation, paying you today’s value for those used parts. This is especially of concern to owners of hybrid vehicles, since the batteries in their cars cost thousands of dollars, and this coverage gap could leave “green” car owners with a hefty price tag in the event of a loss.
* More than seven out of ten (71%) Americans with home insurance said that their insurance carrier would pay for the full cost to rebuild from a natural disaster or fire, while 72% percent said they would be reimbursed for the full cost to replace personal belongings. However, nearly all insurance companies “cap” the amount they will pay for a total loss, unless additional coverage is purchased, and most policies take depreciation into account when assessing damage to personal belongings.
* Almost seven out of ten (69%) Americans expected that their home insurance would pay, in the event of a loss, for upgrades to the property necessitated by building code ordinances, such as upgraded wiring. In fact, the standard insurance policy does not cover these upgrades, possibly leaving many homeowners in a financial bind that must be resolved before the repair work can begin.
* More than six out of ten (64%) thought that their home insurance would provide coverage for water damage resulting from the back-up of water from sewer, sump pump, or drains. In fact, most standard homeowners policies exclude this type of damage, although sewer back up coverage can be purchased through a separate endorsement.
* The survey also revealed that many Americans don’t clearly understand what the standard auto or home policy actually does cover. For example, more than one-third of those questioned didn’t know that their home policy covered them from lightning damage, although it’s covered by almost all policies.

Avoiding Insurance Surprises is Surprisingly Easy

Despite this lack of understanding, consumers can avoid insurance gaps for many common losses; often for a premium that is equal to, or less than, the one they are currently paying. The key is to review their policies and then talk to their insurance agents or representatives about any coverage gaps that they identify.

“Consumers don’t necessarily need—or want—to know every fine detail of their insurance policy, but they should feel confident that they’re actually receiving the coverage they deserve. It always makes sense to ask questions and to shop around for the best value,” said Bill Moore, president of MetLife Auto & Home. “Shopping on price alone can be ‘penny wise, pound foolish,’ because while you may save money up-front, you can end up paying more in the end. The simplest solution—and the best value for your money—is to have the coverage you need automatically built into your policy. There’s a lot of competition in the marketplace, and you can find a product that's right for you, with a little homework.”

For more information about auto and home insurance, visit www.metlife.com

The Zogby/MetLife Auto & Home insurance survey sample consisted of 1,204 adults who own auto insurance, and 1,203 adults who own homeowners or renters insurance, and living in a household with a telephone. The interviewing was conducted February 19-28, 2007.

Zogby International is a public opinion, research, and business solutions firm with experience working in 65 countries around the globe. Founded and led by John Zogby since 1984, Zogby International ranks as one of the industry's leaders thanks to its reputation for superior accuracy and reliability. Zogby specializes in telephone, Internet, and face-to-face survey research and analysis for political, corporate, non-profit, and governmental clients. The firm is headquartered in Utica, New York, with offices in Washington D.C. and Dubai, United Arab Emirates.

MetLife Auto & Home is one of the nation’s leading personal lines property and casualty insurance companies. MetLife Auto & Home has developed a reputation for innovation in product design, being the first insurer to introduce product enhancements that provide greater value to consumers, including Identity Theft resolution services to both its auto and home insurance customers, offered at no additional charge. Identity theft resolution services are not available in all states, such as Massachusetts (available homeowners only) and North Carolina. MetLife Auto & Home is a subsidiary of MetLife, Inc. (NYSE: MET), a leading provider of insurance and financial services with operations throughout the U.S. and the Latin America, Europe and Asia Pacific regions. For more information, please visit www.metlife.com .

Free Auto Insurance Quotes Could Equal Big Savings

Did you know that most people are not getting the best price for their auto insurance? Perhaps it's easier to stay with the agent you've always known, or you don't want to spend the time calling each agent individually. Whatever the excuse, procrastinating could be costing you hundreds of dollars.

The truth is auto insurance companies are competing for your business, meaning you could easily be offered a better price than what you pay now. Finding what's available for you is easier than you think. Insurance.com specializes in making the process of researching auto insurance quick and easy. And their customers save an average of $451 on their auto insurance contract. Want to know where you stand? Here's how it works:

According to the Independent Insurance Agents & Brokers of America, Insurance.com is the nation's largest online auto insurance agency. The company partners with more than a dozen of the nation's leading auto insurance companies to provide instant and accurate rates to its users. Rates come directly from each insurance company, so it's not just an estimate, it's what you really would pay if you had a contract with that particular company.

Sounds interesting, but how much time does it take? Each customer only needs to answer one set of questions to get up to four real quotes. This process takes about 15 minutes, depending how much coverage you need and your vehicle history.

After you receive your quotes, compare it to your current coverage and what you are spending. If you are getting a great deal now, there's no need to change and you can rest assured that you are making a good choice. If like many, you find yourself surprised by the quotes you received and the potential savings, you can buy your new insurance policy online or over the phone through an unbiased knowledgeable licensed agent.

If you've had a recent life event -- got married, child got their permit and needs coverage, or moved -- insurance prices could change. Make sure you are getting the best possible price.

You can't control the price of gas or the cost of car repair, but you can save money on your auto insurance. Stop wondering and find out today with a free quote from www.Insurance.com.

Poor credit rating ups cost of auto insurance

JIM FLYNN
June 27, 2007 - 11:03PM

Decisions of the U.S. Supreme Court rarely make it to this column. That’s because they tend to deal with matters outside the column’s scope (import duties on polar bear fur, conjugal rights of convicted ax murderers, etc.).

Earlier this month, however, the court handed down an opinion dealing with when, under the Fair Credit Reporting Act, auto insurers are required to notify people that their insurance premiums have been adversely affected by their credit reports. The decision arose out of two pending class action lawsuits — one against Geico and one against Safeco.

The court didn’t weigh in on the question whether insurance companies can use credit reports in making decisions. That’s for state legislatures to decide. (And a hotly debated topic it is, since insurance companies are convinced poor credit predicts a higher incidence of claims, whereas skeptics ask how being late on a payment can possibly relate to how one drives an automobile.) Colorado permits insurance companies to use credit information, but they must give notice they are doing so.

Instead, the court focused on what auto insurers must do to comply with a provision of the Fair Credit Reporting Act that says a written notice has to be given any time an insurance company takes “adverse action” based on a credit report. For an insurance company, “adverse action” includes a rate increase.

The problem the court struggled with had to do with the fact that, based on information in a credit report, new applicants for insurance would be assigned an initial rate that was not the insurer’s lowest rate. So, is that rate assignment due to a credit score an event of adverse action requiring notice?

Safeco came to the conclusion that the assignment of an initial rate couldn’t possibly be adverse action because there was no increase from a prior rate. Relying on that analysis, Safeco never gave an adverse-action notice to any new applicant who was offered coverage.

Geico, on the other hand, took a more cautious approach. It asked itself if the initial rate assigned to an applicant that was less than its lowest rate would be the same if no credit information at all was used in the rate determination. If the answer was yes, no notice of adverse action was sent. If the answer was no — that is, the applicant's credit report was what pushed the applicant into a higher rate category — then a notice of adverse action was given. Geico did not, however, give a notice of adverse action to new applicants who, with a better credit report, would have qualified for its lowest rate. Therefore, these applicants were never told that an improvement in their credit score could save them money on car insurance.

After speculating a good bit about what Congress thought it was doing when it enacted the Fair Credit Reporting Act, a majority of the justices decided Geico’s approach was acceptable.

Safeco, however, didn’t get it right. Adverse action could occur, said the court, when a new applicant for insurance was offered coverage at other than the company’s lowest rate if the factor that pushed the applicant into the higher rate category was a less-than-stellar credit report (as opposed to, say, 15 speeding tickets).

The court nonetheless threw Safeco a bone by ruling that its violation of the law was not intentional or reckless. This spared Safeco from having to pay big bucks in damages in the class action lawsuit brought against it.

Contact Jim Flynn c/o The Gazette, P.O. Box 1779, Colorado Springs 80901; fax 578-8836 or e-mail jtflynn325@hotmail.com. Not all questions can be answered.

Should you say yes to rental car insurance?

Enlarge By Jim Stem for USA TODAY

John Wade of Houston declines car rental insurance at a Thrifty kiosk at Tampa International Airport.

 Frequent business traveler James Smith says he's saved "tons of money" during the past 30 years declining car rental companies' optional insurance coverage. But, he acknowledges, it could have come in handy at times. Smith, an economist in Asheville, N.C., has paid $1,100 for damages to three rental cars in the past five years. Last year, a valet damaged his rental car in Maui, and his parked rental car was scraped in Buford, Ga. In 2002, he backed a car into a rock in Ireland.

Smith was unaware that his personal auto insurance policy would have covered most of the damages in Ireland, so he didn't make a claim. In the other two incidents, he had to pay deductibles.

Like Smith, many travelers are unsure about their coverage when they approach a car rental counter. The National Association of Insurance Commissioners (NAIC) surveyed 632 consumers in September, and 42% were "either thoroughly confused or had only a rough idea about insurance."

The association of top state insurance officials says 34% of consumers surveyed by telephone bought a rental car company's insurance just to make sure they were covered.

"When renting a car, many consumers purchase unnecessary insurance and end up wasting money," says Walter Bell, Alabama insurance commissioner and NAIC president.

Renters should check whether their personal auto insurance policy and a credit card used for the rental provide sufficient coverage without buying additional insurance, NAIC says. Many credit cards include some collision and theft protection, but the benefits are usually secondary to personal auto insurance or the coverage sold by a car rental company.

But, as Smith learned, protection provided by credit card companies can be tricky.

He says he used a Visa card, which provides secondary insurance coverage, to pay for the rentals in Ireland and Georgia, but he wasn't reimbursed because he didn't notify the credit card company within 45 days of each incident.

And personal auto policies that provide coverage for renters often include conditions. For example, they may not cover rentals on business trips and may limit coverage for long-term rentals. Personal policies also may not cover rentals in foreign countries.

'Important profit center'

Sales of insurance or damage waivers that absolve renters involved in an accident are an "important profit center" for a car rental company, says auto rental consultant Neil Abrams.

Avis, for example, sells five kinds of coverage: a loss damage waiver, supplemental liability insurance, two types of personal accident insurance and personal effects protection.

About 30% of renters at Enterprise Rent-A-Car buy some type of insurance coverage, spokeswoman Christine Conrad says.

Travelers appear divided on the value of optional coverage.

Smith says buying insurance coverage from a car rental company would have covered his $1,100 in payments and spared him the hassles of dealing with the rental company, his insurance company and his credit card company. Nonetheless, he continues to decline rental coverage, which he believes is too expensive.

Frequent flier Richard Leck of Bedford, N.H., agrees, calling the insurance products offered by car rental companies "a rip-off." "I can't imagine anyone other than an inexperienced traveler, or someone without any other insurance, taking out coverage," says Leck, president of a management consulting firm.

Nashville antitrust lawyer Alan Marx says auto rental companies are charging too much for insurance coverage. "It reminds me of the old insurance policies that were sold in airports to cover you on a single trip," he says. "Pure gravy for the seller but a lousy deal for the buyer."

But some renters think it makes sense to buy coverage from the car rental companies.

"I learned my lesson the hard way, so when traveling overseas, I always get the insurance coverage," says Michelle Trombetta of Minnetonka, Minn.

Trombetta, a manager in the health care industry, says it's a hassle dealing with a rental car company and others involved in an incident abroad.

She says a hotel valet in Dublin scratched her rental car.

The rental company charged her the equivalent of $865 until the damage could be fully assessed. The car rental company then billed the hotel, but the hotel disputed the amount for months. Trombetta says it took four months for the hotel to reimburse her.

Van Potts, the owner of a company in the beverage industry, says he buys collision coverage mainly for peace of mind.

He pays only $24.95 per car rental for collision coverage, a special rate because he has an American Express Platinum card. A resident of East Greenwich, R.I., Potts returned three cars with damage in the past 10 years. "The car rental company pressures you to pay upfront (for damage), and it's a pain to file to recover the money from insurance companies. You have to pay an insurance policy deductible, and the price of your insurance goes up."

Fred Fleischner, spokesman for two rental companies, Dollar and Thrifty, says optional coverage can be a good idea even for travelers with coverage under their auto policies. "We recommend it to customers who have full coverage at home so they can keep their good standing with their insurance company" even after a wreck, he says.

Enterprise's Conrad says consumers should take the time to understand what their insurance company and credit card issuer will cover. "Being underinsured or uninsured when involved in an accident can have devastating consequences," says Conrad.

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