Car hire firm insists fault with car means you pay twice!

I have used Interrent in Spain twice this year, and both times they have been very clear that if you don't pay for breakdown cover, and the car breaks down, not only will you pay for the call out, garage etc (which would be ok as I have annual insurance cover), but when you then need a car to replace the broken-down one, you have to pay in full for the car hire again! No refund for the one that broke.

So, you pay £300 to hire a car for a week, it breaks down on Day 1 and is delivered back to Interrent, who then charge you another £300 for a replacement car. Unless you take out their breakdown cover!

Is this legal? Surely it can't be right. I feel as though I have been 'project fear' blackmailed into taking out breakdown cover that I had not intended to.