Even if you assume all the financial liability, the direct costs don't come close to covering the hassle, loss of use of a car, etc., etc., that happen when one of their rentals is involved in an accident. You can't cover those, but the statistics for under-25 drivers apply to them too. Your willingness to cover the visible part of their potential liability addresses some of the issue, but far from all of it. You can't blame the rental company for wanting some protection against the part you can't see.