Insurance Companies Tend to Recommend One — New State Law Would Change That

BROOKLYN — Bang! Your car suffered a collision. You file a claim with your insurance company. And when you want to rent a car in the meantime, the company refers you to one and only one car rental firm, which you must use for a successful claim. Then you discover that the car rental firm has higher prices than others do. You’re stuck.
State lawmakers here call this an unfair practice and offer new legislation to provide more choices after getting several constituent complaints about the problem.
State Senator John Sampson (19th Senate District), representing Brownsville, Canarsie, New Lots and Starrett City, is introducing a companion bill to one introduced by Queens Assembly Member Audrey Pheffer (23rd Assembly Senate District). She represents Howard Beach, Ozone Park and Rockaway Beach, bordering Sampson’s district, and is the chair of the Assembly Consumer Affairs and Protection Committee.
“Insurance companies steer all customers to one car rental company depriving them of choice,” said Gil Cygler, vice president and general manager of All Car Rent A Car based in Brooklyn. “This issue affects consumers throughout the NYC market area as well as other car rental companies. That’s all of us.”
It’s important, he emphasized. “While this issue is not on everyone’s radar, it affects anyone needing to rent a car resulting from a collision claim. In Brooklyn alone several hundred rentals take place each week in such situations. It is interesting that all insurance companies refer only one car rental company.”
There are similar examples of companies in different consumer areas, such as big chain pharmacy stores, college student loan applicants and health care providers.
Although the companies have connections with several collision repair shops, they have a relationship with just one car rental company. While it may be easier for them to deal with one rental company, consumers suffer by paying higher prices due to lack of competition, said drivers in such situations.
Consumers’ Complaint: ‘Give Us A Choice!’
The problem is widespread in the metropolitan area. With a captive audience, the insurance company’s preferred car rental business can upgrade and sell added coverage to unsuspecting customers, according to drivers and body shop owners.
Donovan Maye, a Brooklyn collision shop owner on Atlantic Avenue, wrote about the problem and called for providing consumers with fair and affordable choices. While his customers are told to rent from a higher priced car rental business, they must pay more out of pocket expenses, making it hard to meet their deductible requirements.
Maye cited one incident as an example of a customer who had to purchase more insurance from a car rental business referred to him by his insurer. “The customer service agents never explained to him that additional insurance was optional since he had coverage in New York State,” he said.
“I cannot understand why my customers are not given a choice when renting a replacement vehicle,” Maye said in a letter to the Eagle. “Especially in these difficult economic times, I feel it is extremely unfair to the consumer.”
George Rivera, a driver involved in a recent collision, wrote the Eagle that his insurance company referred him to a high-priced rental business, but a Red Hook body shop suggested renting from a local company with lower rates.
Rivera chose the lower-rate company, saving him money, and his insurer billed it. “It is unfair that customers are frightened by their insurance companies,” said Rivera. “We should have a choice. After all we pay for the insurance companies.”
Several more complaints came into the offices of other Brooklyn elected officials, such as state Senator Marty Golden, and from outside Brooklyn to this newspaper.
“Insurance companies should permit open competition and create a level playing field,” said Cygler of All Car Rent A Car, a city business with offices in Bay Ridge, Gravesend, Carroll Gardens, Flatbush, Kensington, Queens and Staten Island.
Car rental experts advise drivers who have a collision to shop around for a rental company first because there are places that are less expensive than what insurance companies recommend. Then, they said, the driver could tell their insurer that they already have an affordable rental car company.
There may be no need to buy additional insurance coverage, Cygler said, who advises checking with the insurer or broker since a driver may already have adequate coverage. “That could be a big savings on a car rental,” he said.

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