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Beware of hidden car rental fees

by , SmarterTravel Staff - August 5, 2004

  • Additional drivers fee: Usually a flat fee charged for extra drivers other than the renter. Some rental agencies, such as Avis, allow the spouse of the renter, or in the case of business travel, an associate of the renter, to be added as a driver for no additional fee. Additional drivers fees vary wildly by location and company, and range from no fee to upwards of $25 per driver.

  • Young drivers fee: For drivers under age 25. Rates can run from $10 to $80 or more per day, depending on agency and location. Read the tip on renting cars if you're under 25 for more advice on working with and around these fees.


  • Out-of-state fee: Fee charged for driving the vehicle outside of the state where you rented it. Check before you rent, as some companies restrict which neighboring states you can drive in, or have mileage allowances for out-of-state driving. There is no standard for out-of-state fees, so it is best to call and check with the company before booking.

  • Equipment rental fee: Extra charges for items such as car seats, ski racks, cellular phones, and GPS devices. Examples of fees for such items include $8 per day for child safety seats from Avis, and $6 per day for a cell phone and 10 minutes of use from Budget.

    Insurance fees

    Car rental companies often pressure you to buy their coverage, which can cost upwards of $40 per day. However, doing so could cost you money you don't need to spend because you may already be covered. Check with your car insurance carrier and your credit card company to see which types of insurance they cover on rental cars, and in what locations.

    Often, as long as you charge the car rental to your credit card, you can use the card as secondary coverage in addition to the insurance that you have through your regular car insurance. Also, your credit card may be able to pick up the slack if you choose to buy the rental agency's collision damage waiver (see below).

    The main types of insurance offered by rental agencies are:

    • CDW (Collision damage waiver), also referred to as as LDW (Loss damage waiver): CDW covers damage to the rental car. It is usually an optional feature. Your regular auto insurance may already provide coverage on cars you rent, thus making the purchase of CDW unnecessary. Also keep in mind that many Gold and Platinum credit cards provide some CDW coverage (call to confirm what type), and that Diners Club actually offers primary CDW coverage. Some larger cars may come with the CDW already built into the price. In some cases, renting the larger car might be more economical than renting a smaller car without CDW coverage. The actual CDW policy will vary among agencies and states, so be sure to read the terms carefully.
    • ALI (Additional liability insurance): ALI is optional insurance that protects the renter against claims made by third parties in the event of an accident. Rental companies are required by law to provide the minimum level of liability insurance, which varies from state to state. Personal auto insurance may provide this type of coverage as well. If you don't own a car but rent often, it may be more cost-effective to purchase an annual non-owner liability policy and forgo the agency's extra liability coverage on each individual rental.
    • PAI (Personal accident insurance): PAI is optional insurance that provides payment in the event of the injury or death of the renter or an accompanying passenger from a car accident. This type of insurance is generally covered by personal auto or health insurance.
    • PEC (Personal effects coverage): PEC is optional insurance that provides protection against theft or loss of personal belongings from the rental car. This type of insurance may be covered by personal auto, travel, renters, or homeowners insurance.

    As part of's commitment to providing consumers with the information they need to make sound purchasing decisions, we pledge to include a link to this page anywhere we list car rentals on our site. If you see anywhere we've forgotten to do this, please e-mail

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