Enterprise Rent-A-Car will pay $2 million in restitution to tens of thousands of consumers who purchased unnecessary liability insurance.
Enterprise consented to a court order resolving three years of litigation in a lawsuit bought by New York Attorney General Eliot Spitzer. During the case, the courts confirmed Spitzer's contention that Enterprise has an obligation to provide minimum liability coverage to its renters and to defend them when they are sued by third parties.
"This litigation resulted in a significant change in the practices of this rental car company that benefits consumers," Spitzer said. "The court order compensates consumers who were deceived into purchasing liability insurance through Enterprise even after the states highest court held that rental car companies are required by law to provide coverage for their renters."
In May 2000, the Attorney General sued Enterprise, alleging that it was failing to provide its renters with the minimum liability coverage required by state law. The minimum amount of personal liability coverage is $25,000 - $50,000 for bodily injury, $50,000 - $100,000 for death, plus $10,000 for property damage. Instead of providing the insurance mandated by law, Enterprise would sue its renters to recover any liability incurred by Enterprise while the renter was driving it.
In addition to not providing insurance, Enterprise profited from the sale of supplemental insurance. By telling its customers that it provided no insurance, according to the lawsuit, Enterprise induced consumers into purchasing liability insurance, known as Supplemental Liability Protection, or SLP, at an extra cost of $6.95 to $7.95 per day of rental. The supplemental liability insurance provides consumers with $1 million in coverage.
In fact, most customers are covered by their own auto insurance policies and do not need the supplemental coverage.
Under the terms of the consent order, each of the more than 105,000 consumers who purchased SLP from Enterprise in New York between April and August 2001 will receive a check from Enterprise within approximately 60 days. The checks will range from a minimum of $5 for someone who purchased SLP for only one day, to a hundred dollars or more for consumers who purchased more than 40 days worth of SLP during the five month period.
In addition, Enterprise will pay $200,000 in costs to the state.