Losing it over car rental “loss of use”

After Ben Harris dropped off his Mazda 3 rental at the airport in Maui last December, a Hertz agent pointed to some scuffed paint on the underside of the front bumper. Although the employee asked Harris to fill out an incident report, he assured Harris that it was just a formality and that he wouldn’t get a bill for the damage.

But six months later, Harris received a repair bill for $570. Among the charges was a $62 fee for “loss of use” – a fee that Harris, a physician from Chicago, considers “unreasonable.”

Some drivers agree. Rental companies used to write off the time a car spent in a garage as an expense. But shrinking profits forced them to add a loss-of-use charge to their repair bills, which allows them to recover the revenue they would have collected if the vehicle had been rented.

“Car rental companies were leaving tens of millions of dollars on the table by not collecting loss-of-use charges,” says Neil Abrams, a car rental consultant. “I think there’s a recognition that there’s a legitimate responsibility of the renter that extends beyond the rental of the vehicle.”

Although these fees have been around in one form or another for years, they were routinely dismissed when customers challenged them in the past. Not anymore.

There’s a limited legal precedent for collecting loss-of-use charges.

The Colorado Supreme Court last year sided with PurCo Fleet Services in its seven-year battle to obtain loss-of-use fees from a customer who damaged her rental after colliding with a deer in Durango. The justices ruled that the company was “entitled to recover loss of use damages irrespective of its actual lost profits.” The ruling applies only to car rentals in Colorado.

But the issue is far from settled. At least three states – New York, California and Wisconsin – have laws that set limits on the amount that car rental companies can recover from loss of use on a damage claim.

Avoiding a claim is the best way to steer clear of a loss-of-use charge, of course. In Harris’s case, perhaps some damage was inevitable, because driving conditions on Maui are notoriously iffy. When you rent a car at the airport, you’re given a stern warning to avoid driving on the island’s unpaved roads. Car rental employees tend to be particularly vigilant about scratches and dings.

If your car is damaged, you’ll want to do what Harris did: He took snapshots of the scratches for his own records. You should also take pictures of your rental before you leave the lot to document the condition of your vehicle. If an employee assures you that you won’t have to pay for the damage, it also helps to get the name of the agent, if not also a written statement to that effect.

Even in the car rental industry, there’s no consensus as to how a loss-of-use charge is calculated. At Enterprise, the largest car rental company, loss of use is based on the total number of labor hours from the repair estimate, divided by four, which the company says is a conservative estimate of labor hours that can be incorporated into each work day, and then multiplied by the daily rental rate. PurCo Fleet Services, a risk management company specializing in car rental loss prevention, calculates loss of use based on the number of days needed for repair, times the daily rate on the contract.

One issue that the car rental companies seem to agree on is the documentation needed to substantiate a claim: It’s the actual number of days the vehicle was out of service or a good-faith estimate of the days needed for repair. Car rental companies believe that they aren’t obliged to show evidence that the car would have been rented during that time.

Appeals are difficult. While some rental companies have an informal review process, here’s what usually happens: A customer’s insurance company, insisting that it covers only actual damages, will reject part or all of the loss-of-use charge. The bill is then passed along to the customer, who may pay the fees or ask the company to reduce them.

“Settling a damage claim is nothing but a simple negotiation,” says David Purinton, president of PurCo Fleet Services. “Rules for good-faith negotiations that apply in any type of negotiation apply here. The problem here is that most insurance companies and customers believe that, to be successful for them, a negotiation means they pay zero. Offering to pay zero for loss of use is not a negotiation.”

Of all the car rental fees, loss of use may prove to be the most problematic of all. That’s because if the charges start to stick – if drivers accept that they should pay for a lost revenue opportunity – then it could open a Pandora’s box. Not a day seems to go by when I’m not asked why, for example, an airline can’t compensate a passenger for a missed vacation day following a flight delay. If courts begin to agree with the car rental industry that customers are liable for missed potential rental days on a vehicle, then what’s to stop a professional from billing a car rental company an hourly rate when there’s a protracted wait time for a rental car?

Harris never had a chance to get the answer to these questions. I contacted Hertz on his behalf, and separately he also asked Visa whether it would consider his claim, even though the deadline to file one had passed. Visa agreed to process his claim and paid $535, which covered part of Hertz’s loss of use. “It’s a happy resolution,” he says.

Unfortunately, too many of these cases end with a car rental company threatening to haul customers into court, report them to a credit agency, add them to a “do not rent” list – or all three.

Are "loss of use" charges fair to car rental customers?

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Christopher Elliott

Christopher Elliott is an author, journalist and consumer advocate. You can read more about him on his personal website or contact him at chris@elliott.org. Got a question or comment? You can post it on the new forum.

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  • Carver Clark Farrow

    This is a truly unfortunately result. The car rental company can now make money from cars that would not be rented during the relevant time period. At least the holding is based on an interpretation of Colorado law and has no force elsewhere.

  • rn74

    One little mistake in this one:

    “because driving conditions on Maui are notoriously iffy. Driving conditions on Maui are notoriously iffy.”

  • sirwired

    I don’t see anything inherently wrong with Loss of Use charges. It’s no different from charging the other guy for a rental car for me to drive if somebody hits me in an accident.

    That said, like the rest of the Car Rental Hornets Nest ‘o Villainy, such a fee can be misused, just like the damage charges themselves are often misused.

  • http://elliott.org Christopher Elliott

    Thank you. All fixed.

  • Cybrsk8r

    I don’t have as much of an issue with “loss of use” as I do with this little gem: “scuffed paint on the underside of the front bumper”. Seriously!?! How scammy is that? This rental agency must be issuing kneepads to its agents. What next? A “urine fee” if a dog mistakes the car’s tire for a tree.

    I’m spending two weeks in HI in March. I’ll be island hopping, and Maui is on the itinerary. I’ll be changing my car reservation to avoid Hertz on Maui.

  • TonyA_says

    They learned from the airlines :)

  • Raven_Altosk

    I love how all of these car rental claims are usually just about the same as a standard deductible of $500 or $1000.


  • RetiredNavyphotog

    I have a Mazda 3 and I know about the underside of the front bumper. The ground clearance is very low on the front of the car and it is very easy to scrape this area.
    I had to get down on the ground to check my car when I pulled up too close to a parking space.
    But how does Hertz know who actually caused the damage?

  • Travelnut

    But how can the car company prove how many times that particular car would have been rented out during the time period where the car was being repaired? Not knowing how the loss of use fee is calculated, my cynical thought is that they assume full rental every day. Maybe it would have been a slow week and they would have rented that car out half of the time. Also, why would the car company even care about the underside of the bumper, which you can only see if you are lying on the ground? I have a Lexus RX350, and I scrape my bumper all the time on curbs. It’s pretty much unavoidable.

  • Alan Gore

    The problem with loss-of-use fees is that there is no objective way for the customer to verify how much actual loss of use there was.

    Car rental companies went to war with their customers when people began substituting their own auto insurance or credit card coverage for the pricey coverage we once automatically opted for from the rental agency. The industry struck back by “finding” those tiny instances of damage after the fact, and we retaliated with before-and-after cellphone pictures.

    So now they have fished a new fee out of that remarkably fertile thin air in the boardroom. We as consumers have no recourse on this one, but our designated insurance companies certainly will. Let the battle of Godzilla vs. Mothra be joined!

  • Trudi

    I just went round with an Avis counter rep over purchasing insurance that would cover the ‘loss of use’ issue. I was with a friend who was on her way to see her dying sister; the counter ‘lady’ (I use this term loosel) said, “I’ve included daily rental insurance which will give you peace of mind.” My friend say no thank you; the agent said, “You’ll need this” and went on with the purchase order. “No, I really don’t need it; my insurance will cover the car.” The woman blatantly ignored her saying, “It’s only $49 a day.” Now my friend is tired, stressed because her sister is dying, and she hurt her foot and it trying to walk through a strange airport on a hurt foot. So, in her defense, I popped in with my big mouth and said, “What part of no didn’t you understand; she doesn’t want your insurance.” The lady said, “I wasn’t talking to you.” To my friend she said, “This will add less than $150 to your bill, and it’s very important to have it as it covers lost keys, flat tires, scratches to the car’s finish, and other hazards of driving.” “No, thank you, but I need to add my partner as a driver.” “I’ll need her ID and a credit card.” I asked my friend if she’d rented through AAA as they have spousal privlege, the counter lady said, “We don’t have anything to do with AAA. We don’t accept them.” I said, Doesn’t Avis have spousal privledge?” to which my friend said, “Don’t worry we deal with this all the time.” (They are legally married.) Then I said, “You know what, Lady, Look around here. There’s a line at Budget, a line at Alamo, a huge line at Hertz, and no one at Avis. Does that tell you anything? Maybe hiring people with personalities like yours is part of their problem.” I went to wait elsewhere. Avis upgraded her rental to compensate for my tirade.
    So, the answer to the original question is this: I understand the charge for “out of use” cars; rental agencies don’t make any money when they have to repair a car. However, I think it’s important to go over the car thoroughly BEFORE you accept it, and photograph any existing damage. I believe the rental agencies WILL fleese people and feel no guilt at all for charging anything at all. They make a great deal of money off their insurance, and this kind of horror story is just another way to sell it. Check your own car insurance to see if they cover ‘our of use’ time; apparently some do.
    Sorry for the book. This question was timely and I’m still ticked off at Avis for their general rudeness.

  • Carchar

    I believe that in New York, in order to collect for loss of use, the rental car company has to prove that there were no cars available for rent during the time the vehicle was being repaired.

  • MarkKelling

    I rented from Dollar on Kauai a few years ago where I saw something that made me swear to never rent from them again. A lady turned in her car and all seemed well. After she got on the shuttle, one of the lot people got in her car to drive it around back. He hooked the rear bumper on a post and ripped it off the car! One check in agent said to the other “Looks like the car was damaged before it was returned, we have to charge her for that since she didn’t pay our insurance.”

  • MarkKelling

    It is different. You do not have use of your one and only vehicle you need to get around. The rental there provides you a way to continue your normal daily activities. When it is a rental company charging you for loss of use, it is potential use not actual use. Many rental cars sit on the lots unrented every day at many rental locations and many go in for routine maintenance and are not rented. Unless all vehicles at that location of that type are rented out and someone does not get a vehicle and causes the rental company to loose rental income because the vehicle you damaged is out of service, it is not actual loss of use.

  • Fishplate

    Simple. Everyone who rents that particular vehicle caused it.

  • Bill___A

    There are some things that you just have to let go. If the repair facility is backed up, this could result in days of “loss of use” fees. If the car is a write off and there is a three month wait for a new one, is that three months’ loss of use?
    Do we get paid by the car rental company if they have too many customers/not enough staff and have to wait for service? No. Do we get to charge a fee when their bus driver doesn’t see us and we have to wait for the next bus?
    If you charge a fee for each and every thing that can possibly cost money, it creates a huge mess.

  • MarkKelling

    I would not have an issue with the loss of use fee if the vehicle you are paying this fee on was actually out of service and being repaired. I know for a fact that many vehicles that are considered damaged and the renters get charged repair fees on are never repaired. Because of this, I am opposed to loss of use fees.

    How do I know the car rental companies don’t repair their vehicles? I rented a car at a small airport and the car had a few scratches and dents on it, but nothing preventing the vehicle from being driven without issues. I filled out the damage report before accepting the car even though I got the loss damage waiver this time because I would be taking the car onto a gravel road and didn’t want to deal with the return hassle. On return the agent demanded I provide information so that I could be charged so the damage would be repaired. I pointed out I had their insurance coverage. The agent claimed the damage he saw was “deliberate” and not covered by their insurance and was so extensive that the car would never be rented out until repaired. So I showed the damage report form which detailed all of the damage that was on the vehicle. He seemed extremely angry. I never got charged for the damage I didn’t do. A couple months later, I visited the same airport and received the exact same car with the exact same damage for which I filled out the damage report again. On return, the same things were claimed and the agent (a different one) also seemed angry that I had the report.

  • MarkKelling

    And everyone gets charged the full repair charge, over and over again. Unless they purchase the rental company’s insurance.

  • Cybrsk8r

    I don’t know what you did after witnessing that, but I probably would have called the police. If they really did try to stick her with that, it’s called insurance fraud and it’s a felony.

  • JenniferFinger

    How exactly would “scuffed paint” cause “loss-of-use” of a car? While the car would need to be repainted at some point, how frequently do auto rental companies repaint and repair their cars to look like new? Do they do that every time a customer returns the car? That’s a lot more often than most car owners ever do.

  • Joe Farrell

    My MIL got into a minor accident in a parking lot this summer. She was sent a bill from a leasing company for almost $1000 to repaint a scratch on a bumper – it included a fee for 169.00 for ‘loss of use,’ plus processing fee of $69 plus another junk fee for ‘claims administration’ of $99. Mind you -the car company SHE rented from did not want a dime – there was a scuff mark on the black bumper which they chalked up to normal wear and tear. . . .

    Being the annoying person that I am I asked them for proof of loss of use. I asked them to prove to me that the vehicle was out of service, that there was a cost associated with the out of service and what that cost was. Alternatively, they can accept my counter offer of $534, which was the actual damage claimed.

    They actually tried to convince me that they had a loss of use. So, since there was a customer name and phone number on the bill they ultimately sent me, I called their customer and asked them if they were going to have the car fixed. . . . they said no, it was a scratch and not her problem.

    So I sent the lessee a letter to that effect and said if I was wrong to get back to me. A week later I told the leasing company that their customer was not going to have the scratch fixed- so where was the loss of use being claimed. The response was to immediately accept my offer of $534. They dropped all other claims for fees.

    In order for a car rental company to prove ‘loss of use’ they have to establish that with normal planning they could a) have rented that vehicle for the time its being fixed and b) had no other source of vehicles [such as a local pool] to obtain replacements.

    I dare say that the proof of a + b will be virtually impossible. Loss of Use is a nice theoretical claim but rarely can be proven to a preponderance of the evidence. I told this company that they needed to prove to the lowest legal standard the loss of use . . . they were in the process of allegedly gathering that information when I called with my contacting their customer – who put lie to their loss of use claim.

    The rest of the fees are junk fees designed to be negotiated away making the other party feel like they got something in return.

    You have to pay only what they would receive in a court trial – and what they would get is: actual damages, court costs and loss of use if they can prove it. That’s what I offered – minus costs since there was no trial – and thats what we paid. . . .

  • Joe Farrell

    its only insurance fraud if insurance is involved . . . it is definitely garden variety fraud, but its not insurance fraud – and the ‘police’ are not going to do anything about it . . . or the better business bureau or any of the other organizations you pretend actually exist to serve consumers –

  • Joe Farrell

    David Purinton, president of PurCo Fleet Services. “Rules for good-faith
    negotiations that apply in any type of negotiation apply here. . . Offering to pay zero for loss of use is not a negotiation.”

    Sure it is – since you actually have to have a loss of use in order for there to be damage.

    David let me ask you a question [through Chris Elliott]

    David owns a Mercedes sedan and an old beat up Jeep. He drives the Mercedes to work. He gets hit in a parking lot and it will take 3 days to fix his car. Does he have a loss of use claim for the Mercedes? He has another vehicle to drive – it works and drives fine – but its not a Mercedes . . .

    Courts in every state that have considered this claim have said no – he does not have a loss of use claim because the quality of the ride is not relevant to the use – the use of a motor vehicle is transport from place A to place B. If you possess the means to go from point A to point B in another vehicle – there is no loss of use.

    The only possible related claim is interest on a bank loan for the car for the period of loss of use –

    Insurance companies will not pay for loss of use if you have another vehicle to use – and will not pay for loss of use of the quality of a vehicle – so if you drive that E-class sedan they will not pay for you to rent an E-Class sedan – you will get the Enterprise Corolla or Chevy Cruze . . . in that case – I’d rather drive the Jeep too.

  • Annie M

    Scuffed paint can be fixed with by a good car detailing. Two hours at the most. Ridiculous request by the car rental company.

  • Raven_Altosk

    There’s your first problem. You should probably tweet/facebook/etc this story. Maybe it will make it’s way to the woman who was likely scammed by these creeps.

  • Thoroughlyamused

    If I hit your car and it’s my fault, I have to provide you with a replacement vehicle while yours is in the shop. It doesn’t matter if you live next to a subway station, train station, or if you have 17 different cars. No, you don’t have to take said car, but you are entitled to it assuming I was at fault in the accident.

    As to the second part of your argument, this is a state by state issue. Many states, Virginia being one example, requires the guilty party (by extension, their insurance co.) to provide a like vehicle to the one involved in the accident. This is to prevent insurance adjusters from trying to cheap out and pay for a Toyota Corolla when the car involved was a Honda Odyssey.

  • Thoroughlyamused

    Yes, because the dealings at ONE airport at ONE car rental company can be safely assumed to represent the thousands of rental transactions daily. Loving the logic!

  • Charlie Funk

    Given the relatively difficult access to inspect the underside of either front or rear fascia, I am puzzled about the frequency with which such “damage” pops up. Are ALL car rental companies REALLY that diligent on EVERY rental. I am probably guilty of being the cynic some of my friends say I am, but I wonder how many times “Scratches on the underside of the fascia” gets charged to successive renters before it actually is repaired. Would ALL rental companies engage in such nefarious conduct? Probably not. Are there some that would do business like this? I am absolutely certain of it.

  • MarkKelling

    My dealings were at one location and of the hundreds of rentals I have done this is the only one where I saw this occur. However there are hundreds if not thousands of similar stories you can find on the internet. Does every rental company location do things like this? No, of course not. But I am willing to bet this is not the only location doing this and it is tolerated by the parent companies.

  • MarkKelling

    I found her at the airport, told her what happened, and provided my contact info. Never heard anything.

  • Cybrsk8r

    But I bet a cop showing up and asking questions about it would rattle their cage enough they probably wouldn’t risk making the claim.

  • Nigel Appleby

    About 15 years ago I rented an Explorer in the May and collected a stone through a fog light. It was covered under my insurance subject to a $100 deductible (those were the days!). In September I finally got a copy of an invoice for approx. $95.00 which was charged to my credit card on the same date. I have always wondered how many other people paid $95.00 dollars for a broken fog light in that 4 to 5 month period. It was a national company but that location is no longer in business. So it’s not a new problem, or was it just that the Explorer was rented out with the lens on the fog light broken and declared to all renters until it wasn’t required and they could get it fixed.

  • Carver Clark Farrow

    The police aren’t showing up for that.

  • Carver Clark Farrow

    That would be consistent with general contract principles except apparently in Colorado.

  • Carver Clark Farrow

    Just one small point. The car rental is not required to actually make the repair to charge you for it. Having said that, it cannot (legally) double dip and charge twice for the same damage.

    This rental agency seems particular fraudulent. I’m not sure how you can tell if damage is deliberate. Perhaps the agent was psychic and could read your mind? Plus, as both agents seemed angry, I am surmising that they were trying to bully you per their SOP. I don’t believe that this level of fraud and bullying is normative, and certainly not consistent with my experiences in renting all of the US for the past 25 years, and being a frequent renter the past 15 years.

  • Carver Clark Farrow

    2 days ago I would have been 110% in agreement with that very correct legal analysis. But…It appears that Colorado Supreme Court is has given the middle finger to otherwise well established law.

  • Carver Clark Farrow

    Well, you’re not entitled to a car, but rather the value of a replacement vehicle during the reasonable repair period.

  • Carver Clark Farrow

    What I would really like to know, is there a particular type of car rental agency that is more or less likely to engage in duplicitous behavior? Is there are correlation between airport location, off airport location, rental agency, car rental type, etc. and damage charges?

    Here’s my rental profile:

    I’ve rented from all the major rental agencies, even Payless once (hint:just say no). 99% of time I rent from major airport locations. I’ve rented cars in 15-20 states. I’ve been renting for 25 years. For the first ten years I wasn’t part of the frequent renter program. Only once did I ever get a damage claim, I wrote them back a piss off letter and never heard back. Have I just been really lucky, or is there a way to avoid sketchy car rental agencies?

  • MarkKelling

    I was thinking the angry agents were trying to meet their quota of “damages” found and were upset because I was a smart enough renter to have filled out the damage form pre-rental and I really did not do any more damage to the vehicle.

    And i have also rented for many years, multiple times per month for many of those years, and this was the first time I ran into something like this. Luckily I will not have to visit that particular airport any time soon again.

  • emanon256

    I am really pissed at Colorado about this.

  • emanon256

    Ive only been renting for 10 years (Frequently), I rented now and the before that. I often rented 4 cars a month.

    I too would avoid Payless at all costs. They have never tried to charge me, but they, were often out of what I reserved, and wanted to charge me extra for an upgrade to the point they would refuse to rent to me unless I paid extra.

    I’ve had issues with Hertz all over the country, again, never a damage charge, they always try to charge me for gas after the fact (I always keep my receipt), and have on more than one occasion given me a car with mechanical issues. Hertz in Hawaii was the worst.

    Avis has generally been good except in DC, NY, and Madison, WI. However they were great in MKE. BOS, SFO, and OGG are the best Avis’s in my opinion. Also the smaller airport locations have all been fabulous except for MSN.

    Enterprise has always been vary wonderful at city locations, but not typically at airport locations except LGA where they are fabulous.

  • Andrew F

    I think that car rental companies should have 2 types of cars for rent — “shiny” and “dented”. Business people often have to show up in an impeccably looking ride; vacationers, on the other hand, couldn’t care less about a scratch here and a dent there. I rented a car at St. Lucia in August. It was a 2009 Subaru Forrester. Yeah, we are in 2013, so the car was 4 (or likely 5) years old. The car was scratched all over. The front bumper had a hole around the fog light. So what? Driving on St. Lucia’s roads, you are bound to add more scratches. Who cares?

    However, I think that some people might care — so there should be an option to get a newer car, with more restrictive usage rules and stiff penalties for damaging the exterior.

  • pauletteb

    Every time I read “PurCo,” I felt I needed to take a hot shower with VERY strong soap.

  • Mel65

    Arghhhh I constantly scrape my underside bumper on parking curbs with in my Mazda 3, too! I’m glad it isn’t just me! But even after having done it at least a dozen times, there isn’t enough damage to warrant a repair bill … I can’t imagine that the OP was the first person to scrape the bumber if it was that bad…

  • RetiredNavyphotog

    It’s so bad that I now park too far away from the parking curbs much to everyone’s dismay.
    But seriously, you really have to be on the ground to even see the damage. If it’s not visible, there is no reason to have the bumper repaired.

  • Chris Johnson

    How does the rental company know the car would have been rented during that time and how much they could have rented it for anyway? If the car happened to come from a location that is closed on a Sunday (as is the case with some city-based locations) does that get counted too?

  • Thoroughlyamused

    I have worked for a car rental company and have friends that work for all the majors at corporately owned locations and NONE of them have a “damage quota” to meet. When I was a location manager, I did discipline employees who missed damage, since that came directly out of the branch’s profits and since a large part of my pay package was commission, directly affected my take home pay.

  • Thoroughlyamused

    Really? No cars at all? So if you reserve a minivan for your family vacation and one is returned with the bumper hanging off and all the rental location has left is a compact car, you are just going to make do?

    Of course not. The customer is going to make a huge stink about it, go to the next rental car company, pay walk up rates, then demand that the first rental company refunds them the difference. So not only did rental company A lose out on renting the minivan, they now have to pay the difference between the rates.

    And as for people saying, “Oh, they can get cars from other locations…”, sometimes, but not always. Car rental companies deliberately plan their fleets so that they sit at around 90% occupancy. When I was a location manager at both a city and airport location, I would aim, and often achieve, about 90% occupancy. This idea that people have in their heADS that rental companies have in their heads that companies have lots and lots of cars stockpiled not being rented is bogus. Car rental companies aim for 90% occupancy because having cars sitting on the lot not being rented just means that the company pays depreciation costs while the car brings in no revenue. Also, in my personal experiences, customers are not always willing to wait around for an indefinite period of time while we searched for vehicles at other locations.

  • Thoroughlyamused

    Splitting hairs much? Joe made a statement that “they will not pay for loss of use for the quality of the vehicle.” I provided facts which prove that statement to be false. In Virginia, and other states, the guilty party, and by extension their insurance co., has to provide a like vehicle to the one involved in the accident. So if you hit my Suburban, you gotta provide me with a like size vehicle, not some Cruze.

    And by your own admission, I am entitled to the value of a replacement vehicle, correct? So why would a car rental company not be entitled to the same? Particularly when you signed a legal document agreeing to compensate them for such costs?

  • Carver Clark Farrow

    Its the difference between specific performance and damages. Specific performance means I have to actually get the car to you. Damages means I write a check and you deal with it however you can. A non-trivial legal distinction.

    As far as the rest of it goes, I made no statement disputing anything else.

  • Thoroughlyamused

    OK, I get that. However, I was mainly disputing Joe’s point. He implies that if you have another vehicle, there is no loss of use, which is 100% incorrect; in an accident, the guilty party always pays for the replacement vehicle, regardless of the claimant’s personal circumstances (mass transit access, multiple cars, etc.)

  • Carchar

    Yes, no cars at all. The insurance companies require proof that there were no cars available for rent before they pay for loss of use. At least, that was the case seven years ago and prior.

  • Carver Clark Farrow

    That may all be true, but it’s also not relevant. If a rental car is out for service it’s not part of the available inventory. Accordingly, we have no idea whether someone would have rented that vehicle or not. If a rental company only have five vans, 4 rented and I damage the fifth, we don’t know if that fifth van would have been rented. We could require the car rental company to provide evidence that it turned away someone who wanted to rent a van, but that would be messy. So we turn to the statistics.

    If all the cars are rented, then the 5th van that I damaged would probably be rented as well. Conversely, if the rental agency has 1000 cars on the lot, it’s a much harder sell. And since the rental agency is the one asserting the claim, the burden of proof and production falls on them.

    This is known a loss volume.

  • Bignevermo

    If they could prove that they did miss revenue it would not be..but it states they dont have to so it is nothing more than profit taking!

  • Justin

    Only in America does the tide flow unidirectional. Airline or Car Rental ruins your trip – uphill battle receiving compensation. Accident happens and prepare for a long perilous fight that burdens the pocketbook.

  • Freehiker

    I hate car rental companies with a passion, but I have to disagree with the statement “The car rental company can now make money from cars that would not be rented during the relevant time period.”

    It’s impossible to determine if it would have been rented in that time period or not. I do know however that it is impossible to rent a car when it’s sitting in a garage though.

    My biggest complaint with these companies is that they overcharge you for the damage and then pocket the money and don’t do the repairs in many cases.

  • Carver Clark Farrow

    Of course you can. Simplified example for illustration. If a car company 100 identical cars. The car I rent is out for a week. During that week they rent out exactly 75 cars, during a given day. My car being out of service didn’t impact them. They rented the same 75 cars daily regardless of my car being in the shop. If they collect loss of use, that’s extra money, ie a windfall, as that’s money that they would have made, as it effectively means they get revenue from 76 cars instead of the 75. The economic principle is known as loss volume.

  • MIchael Zinke

    I believe this loss of use charge should be swallowed by the company as part of the cost of operations. They are damaging their reputation by trying to stick the customer with this charge. On a similar note, what if there is a mechanical issue with the car? Alamo once attempted to charge me for towing and repair of a car because a radiator hose had burst. This was an older vehicle and it was obvious that the hose was defective. Why should I have to pay for a pre-existing problem?

  • Joe Farrell

    If I have 17 different cars where is my loss of use? I cannot drive the car but I have other transportation. Since I cannot receive as legal damages replacement of the exact type of vehicle [unless it is a work truck or something specific like that] that was damaged [think Ferrari here] you are going to have a hard time proving loss of use. . .

  • Joe Farrell

    Ok – Virginia law requires like / type of vehicle to be replaced. . . Ferrari? Corvette? Mercedes? or are we talking Sedan, SUV etc.

  • Joe Farrell

    Well, We are ‘safe’ in California – and several other states with statutes directly relevant . ..

  • Thoroughlyamused

    It’s two separate issues. If, in the scenario above, you have 17 different cars, you’re still entitled to a replacement vehicle for the car that was involved in the accident. You can choose not to take it, or you can opt to get reimbursed directly from the insurance company.

    For example, when I worked for a rental company and my personal car was hit by one of Geico’s insureds, my employee discount rates were actually lower than the pre-negotiated rates with Geico. I instructed the Geico adjuster to cut me a check for what they would have paid, made my own rental arrangements, then pocketed the difference. Perfectly legal.

    “Like vehicle” is subject to interpretation. Also, keep in mind that just because the law says that is what you can get, does not mean the insurance co. won’t try to pay for something cheaper. Keep in mind that insurance adjusters are largely graded on keeping claim costs down, including rental costs. So if I hit your E-Class sedan, VA law says me (or my ins. company) should provide you with a similar luxury vehicle, but that doesn’t mean the seemingly friendly adjuster on the phone won’t say something like, “Oh, and we’ll cover a fullsize car, something like an Impala, is that all right?” If you don’t know your rights you may not get what you are legally entitled to.