New York Sues Rental Car Companies Over Age Limits : Consumers: Law guarantees drivers 21 and older the right to rent. Five firms say insurance is the problem.

The state of New York on Wednesday sued five car rental companies for refusing to rent vehicles to licensed New York drivers between ages 18 and 25.

The car rental companies say they cannot rent to the young drivers because no insurance is available--a claim the state disputes.

The lawsuit, filed in State Supreme Court in Manhattan, names Hertz, National Car Rental System, Budget Rent A Car, Alamo Rent-A-Car and Ameri-Car. The companies impose the age restrictions nationwide, but New York law requires that they rent to drivers 21 and older.

“Two weeks ago, in letters to these companies and four others, I warned that they were violating New York law by refusing to rent to young drivers. I demanded that they cease this practice or face lawsuits brought by my office,” Atty. Gen. G. Oliver Koppell said.

“These five companies, by their responses to my letters, made it clear that there was no choice but to sue. New York will not tolerate illegal age discrimination in the rental of automobiles,” he said.

New York contends that insurance is available to cover rentals under New York’s Assigned Risk Plan, an insurance pool. The state has said the companies could pass on the cost of the insurance to their customers.

In a statement, Hertz, Budget and Alamo said no insurance is available in the voluntary insurance market if they rent to younger drivers. They also said the Assigned Risk Plan would not adequately protect either drivers or rental companies and would not provide the type of insurance coverage that is needed.

Most car companies are self-insured. Those who do rent to drivers under 26 in New York pass the extra costs on to customers through a surcharge--a practice the state wants the defendant companies to adopt. The surcharge varies from $8 a day to $20 a day.

Four other companies have yet to take a position on the matter and are in talks with the state. They are Avis Rent A Car System, Enterprise Rent-A-Car, Thrifty Car Rental and Dollar Systems.