Recently, we put out a blog post about Personal Accident Insurance (PAI), an over-priced product offered by the rental car companies that provides very limited coverage to a renter who is in an accident (hence Personal Accident Insurance). We linked to the policies of each company and stressed that the payments of $10 per day or so (plus taxes and fees) come out to more than $5,000 annually but PAI coverage routinely tops out at $2,500 in claims. It's a high-cost coverage plan for a low-likelihood event, and a severe accident would far exceed the "coverage" provided. Yet we received an e-mail from an AutoSlash user (or seller of PAI, hard to tell) who stressed that PAI is critically important for foreign travelers to the U.S., mistaking the limited $2,500 in coverage for an accident as resembling broader health insurance coverage. PAI is not health insurance and the rental car company is never going to sell health insurance. However, many firms are willing to offer an additional toothless coverage called Emergency Sickness Protection (ESP) to U.S. visitors with foreign passports. And like any other insurance product offered by a rental car company, one doesn't need ESP to recognize that the rental car company's ESP is a horrendously poor value!
What is Emergency Sickness Protection?
Emergency Sickness Protection (ESP) is a product offered by some rental car companies that theoretically provides sickness protections for international visitors to the United States. Like other insurance products, it's actually offered by another company (such as Auto Rentals and Sales Protection or Health Special Risk, Inc.). And as the website of ARS states, the cost of the service to a rental car company is 75 cents per rental day and the rental car company is recommended to sell the product at $3 (or more) per day. The insurer (in this case, ARS) makes money selling the product to rental car companies for 75 cents per day because there's almost no chance the company will have to pay a claim.
And the rental car company who sells the coverage pockets every penny over 75 cents per day! It's fantastic for commissions if the agent at the counter can sell that product consistently!
How Can a Sickness-Related Product be Profitable on Less than $1 Per Day?
Very easy -- simply loading up the Terms and Conditions with exclusions such that almost every possible claim can be denied because it's not health insurance. Think we're kidding? Sister companies Dollar and Thrifty provide the most detail about the Emergency Sickness Protection option in their general rental terms.
5. Emergency Sickness Protection ("ESP"): ESP is available at select locations to renters who are non-U.S. citizens including Canadians who possess valid non-U.S. passports at the time of rental. ESP provides certain medical benefits for some sicknesses that may occur during rental periods of thirty days or less. ESP also covers individuals possessing valid non-U.S. passports at the time of rental traveling with the renter. Benefits include up to $10,000 per person for reasonable and customary cost of necessary medical care for covered sickness, including (A) medical or surgical treatment; (B) hospital services, supplies, x-rays and laboratory fees; (C) local ambulance and (D) visits to a physician’s office, and are subject to a $100 deductible per person per sickness. ESP does not provide coverage for any sickness for which symptoms began or treatment received during the twelve months prior to the beginning of the rental period; expenses incurred outside of the U.S.; expenses for eyeglasses, contact lenses or hearing aids; losses incurred while participating in racing, professional club, intercollegiate or interscholastic sports; losses from an accident, cardiovascular disease, cancers tumors, tuberculosis, organ transplant, congenital conditions, deviated septum, cosmetic surgery, dental care, sexually transmitted diseases, birth control, fertility/infertility treatment, pregnancy, miscarriage, abortion, and emotional or mental disorders of any kind; and losses while traveling against the advice of a physician or while traveling for the purpose of receiving medical treatment. ESP does not apply in Mexico.
Let's break this down for those not keeping score at home:
- In order to use ESP, you have to be live outside the U.S., rent in the U.S. and have a short-term rental.
- The exclusions include:
- Any illness that starts before or after the rental,
- Any pre-existing condition,
- Vision, dental, or hearing coverage,
- Any form of accident,
- Participation in organized sports,
- Cardiovascular diseases (which include heart attacks and strokes).
- Cancer or tumors,
- Any congenital conditions,
- Anything related to pregnancy,
- Travel against physician orders,
- Travel to seek medical care.
Most causes of double vision (diplopia) would be excluded.
What's actually covered? We came up with "influenza" and "strep throat". Take a moment to think of other forms of sicknesses that aren't pre-existing, aren't congenital, and not excluded. Even on something that's potentially going to be covered, the renter paying the daily fee to the rental car company for ESP would still have to pay for the first $100 as a deductible to seek treatment. And the coverage ends when the rental contract ends (hope the traveler is feeling better by then)! The product is in no way, shape, or form any substitute for real travel medical coverage, even when combined with "Personal Accident Insurance (PAI)". Any renter who is paying for PAI and ESP through a rental car company still faces the prospect of paying for all (or substantively all) medical care that might be necessary, as the spending caps, deductibles, and the exclusion of effectively all major medical possibilities means that insurance premium is lining the pockets of the salesperson at the rental counter, the rental company, and the company actually offering the "insurance".
In the United States, we're fortunate -- many of us have medical coverage that specifically provides the same level of coverage when we travel abroad and have protections from credit cards/other policies that pay for us to be evacuated from a remote area if necessary to seek medical care. Many travelers from regions where the government provides healthcare do not have that fallback when traveling abroad (for instance, my cousin in the UK has no coverage from the National Health Service when she comes to the U.S.). We're not insurance salespersons and we're not authorized to provide advice on health insurance coverage but when traveling abroad, it's much better to think of true travel medical and medical evacuation coverage before travel commences. Those policies will still have limitations and exclusions but may have more flexibility than the "coverage" offered by rental car companies at exorbitant rates! The U.S. Department of State maintains a listing (but no recommendation) of domestic travel insurance firms, international travel insurance firms, and medical evacuation services.
Companies Offering Emergency Sickness Protection