As I have rented cars often in my life and since I carry full insurance on the cars I own, I have always declined all coverages when renting a car. Both of the young men who processed the paperwork for my rentals this summer, however, indicated that because of their state laws, this might or (would not) be enough if I was involved in a wreck.
I still declined. Both still pressed the issue. I still declined. Their good humor then declined, as did mine!
But this got me to thinking about WHY they would continue to strongly encourage me to purchase additional coverage (in one instance the extra insurance was going to cost almost as much as the cost of the one day rental!). I also began reflecting on other purchases in which I have been offered extended warranties on the items purchased.
You have experienced the same when you purchased items such as automobiles, computers, refrigerators, smartphones, and the like. Many people take advantage of extended warranties—it gives them peace of mind to know that the product will be covered in the event the product has a problem after the initial (included in the regular price) warranty has ended.
I certainly understand, from the business standpoint, why car rental insurance coverage and extended warranties are offered. These “add ons” are generally very positive for the bottom line.
As a consumer, however, it’s generally not good for MY bottom line!
About 20 years ago my husband and I were purchasing a refrigerator from a major department store. The salesperson did an excellent job explaining the features and benefits of the various options to us and we ultimately decided on a particular model. We then began the paperwork process.
The very nice salesperson asked if we wanted to purchase the extended warranty. I declined. He asked again, telling me that this would give me coverage for X months after the regular warranty ended. I declined again. He pressed a bit more.
I finally asked, “What percentage of the people who purchase extended warranties ever have to use them?” He looked dumbfounded. I asked him again as he did not respond. He said that he didn’t know the answer to my question. I asked him to guess. Was it five percent? Ten percent? He said he thought it was probably less than ten percent. So I told him I would take my chances as it sounded that at least 90 percent did NOT have any problems with the item I was purchasing.
By all means, if you are worried about your personal cash flow in case something happens to a big ticket item and you are not sure you will have the cash in hand to have the item repaired or replaced, purchase the extended warranty. But most people do not have any problems in the first couple of years of purchase (which is when the warranties cover).
For those of you who offer extended warranties or insurance coverage—please continue to do so. It’s a good option for some people. And when your organization does offer these options, could you please do me one favor? When you train your employees to sell these items, would you encourage them to continue to exhibit the same happy, positive demeanor AFTER I decline the extended warranty as they did before I declined?
It will leave me a much more satisfied customer than I have been after two car rentals this summer!