HCS HB 1285 -- CAR RENTAL INSURANCE

SPONSOR:  Luetkemeyer (Engler)

COMMITTEE ACTION:  Voted "do pass" by the Committee on Financial
Services by a vote of 18 to 1.

This substitute makes several changes in the laws regarding car
rental contracts.  The substitute:

(1)  Changes the definition of "authorized driver" as it applies
to car rental contracts to exclude employers, parking valets, and
family members other than a spouse;

(2)  Revises the written notice that must appear on every car
rental contract regarding the purchase of optional insurance
coverage;

(3)  Requires car rental companies to post a clear and
conspicuous sign on the premises that informs the consumer about
collision damage waiver, any other optional car rental insurance,
and how the consumer's own auto insurance policy or credit card
might already offer that protection; and

(4)  Makes a car rental company subject to a $50 fine for each
violation, up to $10,000 in any calendar year.

FISCAL NOTE:  No impact on state funds in FY 2005, FY 2006, and
FY 2007.

PROPONENTS:  Supporters say that the bill will provide better
customer disclosure and notification regarding the risks and
liabilities customers must assume with a car rental contract.  It
establishes protections for car rental companies by removing
potential liabilities allowing them to be more cost efficient.
For example, the current definition of "authorized driver" is too
broad.  There is a need to know specifically who will be driving
the car.

Testifying for the bill were Representative Engler; and
Enterprise Rent-a-Car Company.

OPPONENTS:  Those who oppose the bill say that it will create
confusion at the checkout counter.  The sales clerks at car
rental agencies are not trained insurance agents and should not
be advising customers on their insurance needs.  The bill fails
to address the fact that many renters choose their car over the
Internet and never see a sales clerk.  A private cause of action
against the rental company is not spelled out and will increase
the number of lawsuits regarding insurance coverage.  The bill is
being promoted solely by Enterprise Rent-a-Car, which has a
different business model than other rental companies, so it works
only for them.  When you have one member of a highly competitive
industry asking for more regulation and all the other companies
are against it, that should send up a red flag.  No other state
in the country has such a law.

Testifying against the bill were Avis Rent-a-Car; Budget
Rent-a-Car; Hertz Corporation; Alamo Rent-a-Car; and National Car
Rental.

Richard Smreker, Senior Legislative Analyst

Missouri House of Representatives
92nd General Assembly, 2nd Regular Session
Last Updated September 23, 2004 at 11:15 am