WASHINGTON–The National Conference of Insurance Legislators has adopted a model law that states can use to require rental car companies to make certain disclosures to consumers prior to offering collision insurance for a rental vehicle.

Adopted Friday by the property-casualty insurance component of NCOIL, the model statute mirrors current Michigan law and is being supported by the primary property-casualty industry trade groups: the American Insurance Association, the Property Casualty Insurers Association of America, and the National Association of Mutual Insurance Companies.

In adopting the Michigan measure as the model, NCOIL rejected several other approaches which had insurers' opposition such as mandating coverage for rental vehicles in automobile policies.

The insurance industry contended that these other proposals would provide little in the way of clarification for consumers and would likely increase the cost of coverage.

Under the NCOIL model, car rental companies would be banned from offering optional coverage for damage or theft–known as a collision damage waiver or loss damage waiver–without certain language in their rental agreement.

Such agreements would have to state:

o The purchase of a damage waiver is optional.

o The purchase of a damage waiver is not required to rent a motor vehicle.

o The renter may wish to contact his or her insurance representative or credit card company to obtain some or all of the following information: His or her coverage or protection for damage to or theft of a rented motor vehicle; the amount of his or her insurance deductible or out-of-pocket risk for filing a claim for damage to or theft of a rented motor vehicle.

The Michigan law also requires car rental companies to conspicuously display a notice defining “damage waiver,” “motor vehicle,” “rental agreement” and “rental vehicle company.”

The issue has been on the NCOIL agenda since last fall.

The model law that was passed was introduced by NCOIL's president, Michigan State Sen. Alan Sanborn, R-Richmond.