Car hire beware. Prices have dropped but insurance has rocketed.

A snowHead

@Roguevfr, ok..stating the obvious without any substance to the central question. Whatever.

A snowHead

Usual zoo at GVA tonight, people in Hertz queue who didn't know which firm they booked with etc.

I had booked a Golf sized manual. They didn't have one. Held out for a manual got a Mazda CX-5 AWD. Declined the insurance and recovery service. Bought an insurance4carhire worldwide for £60 less 25% from topcashback.

Checked the car and had a word with the guy in the booth in P51 who scribbled and initialled my copy of the schematic. He didn't take a copy so I can add whatever else I choose!

I'll do my best not to damage it but am covered if I do.

I suspect that the insurer doesn't pay the amount the hire company claims. They probably can afford to employ an assessor to dispute the spurious claims or inspect the "repair".

Well, the person's real but it's just a made up name, see?

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Never had travel insurance or car hire excess insurance go up after a claim even though total claims on both far exceed the premiums I will ever pay. Ordinary car insurance, buildings and contents insurance and every other sort of insurance keep going up even though I have never made a claim on them. Just remembered car breakdown insurance (AA/RAC/Green Flag) strangely that went down the year after I made a claim.

In my case I insured the excess risk independent from the Hire company as it was the cheaper option than taking their daily rate for excess insurance. The car was damaged (not my fault but irrelevant), Europcar invoiced and charged my credit card with a reasonable amount for the damage, provided supporting documentation for the repair costs, insurance4carhire reimbursed me, everyone happy apart from Europcar (maybe) as they missed out on the income from their excess insurance daily rate.

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I'm curious about "out of use charges", which seem to be a legal stretch. They're trying to charge consequential damages based on lost profits, which may be quite hard for them to prove. I'd be surprised if they run their businesses quite that lean. I've never been refused a rental because the previous person broke it - has anyone come across that?

The existence of this type of "condition" helps them sell excess "insurance", and drives the third-party excess insurance businesses. Even so, I can't find any online information about individuals who've successfully or unsuccessfully fought those charges in the UK. There's one US record from 2012, but nothing since. I wonder if out of court agreements with no-publicity clauses have been made.

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@Roguevfr, do you work for a car rental company?

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@Roguevfr, +1

For anyone _really_ interested, here’s Avis budget group’s 2018 financial statements. https://avisbudgetgroup.gcs-web.com/static-files/91a14739-83cd-4dfb-b225-a44150eb8988

Key points:
2-4% net profit margin
Average $50/day rental rate (so if you’re paying under €40/day for an average car at peak times, you’re doing really well. Bear in mind this average will be depressed by large corporate customers).
70%+ utilisation rate. If you think of the peak-to-trough seasonality of e.g. Geneva car hire, that implies close to 100% utilisation in a busy week but still 50% in a quiet week.

The simple fact remains that car hire is a low margin, low return on capital business. There may be an argument about _how_ car hire companies charge (is everyone advocating higher rental fees to pay for those who trash their cars?) but they aren’t, in aggregate, overpricing their services.

@Roguevfr, My impression is that a lot of this "eagerness to extract money for, real or imagined, extras" is down to the fact that whilst you are nominally hiring the car from Avis, Hertz or whoever, you are in fact at the point of hire, receiving the car from a local franchise ? Are the franchisees under a lot of pressure from above ? I had a franchise business many years ago, and it's a very difficult relationship to get right. We did not and exited within a couple of years Laughing

with a few other "rebels" , that's to say most of them Laughing

Different line of business though.

You know it makes sense.

The reality is that daily rental prices are unrealistically low. This is offset by the charging of an additional cost for cdw. The fact that you can subvert or choose not to purchase this is down to the renter.
From the hire company point of view it's an opportunity to achieve a reasonable cost for the service, additionally offsetting SOME of the cost of damage incurred.
The company I worked for priced the cars including full insurance cover, but we found many people would prefer to pay a lower rental price and "take the chance" of leaving the excess in place. The 3rd party excess insurance policies discussed here did not exist in those days.
In common with many companies, we self insured, meaning there was legal insurance cover as far as the law requires, but no cover at all in respect of indemnifying the company for repairs/damage to vehicles. All damage costs were paid directly from revenue. Nonetheless , all our cars were bought brand new, and never hired (If at all possible) with any noticeable damage on them.

As ever, if you go to a small local company, you will get older, more liable to be damaged cars, and you should expect to get what you pay for.
As for the costings for excess insurance, several people have commented that these are high. As I stated before, these should be considered part of the daily rental cost. I think it's ridiculous that people will apparently happily pay €100+ for the weekly rental of a pair of skis costing €500 , but baulk at paying €200 for a car costing €25000.
As for the 3rd party insurance company against the excess being cheap , it's actually relatively costly, since it only covers the excess amount (usually 5 or 6oo pounds or euros) for a premium of around 10% of that maximum amount.

The excess is generally pretty low in reality too, since a modern day car of even lower spec could easily have a heated ,motorised mirror with a blind spot sensor in it costing more than the excess maximum. You'd be hard pushed to find a high spec car windscreen with heating elements and rain sensors/ auto light sensors in it for less than a grand .

The high percentage of "slight damage" rentals evident in airport hires is obvious - high occupancy cars, wrong side of the road/never driven a car with left hand drive, unlit roads, winter conditions , lots of luggage with sharp metal edges etc etc. Kerbed wheels and tyres are commonplace and yet can easily put a car off the road for several days - virtually no cars come with spare tyres these days.
Lost keyless ignition fobs are another major cost nowadays, averaging £300+ for replacement , the branch the car was rented from will rarely hold the second spare key.

Otherwise you'll just go on seeing the one name:

Interesting discussion. Thanks. It seems a difficult business model so we welcome what looks like quality excess insurance to help cover potential costs and some dreadful practices to make money. It clearly pays to be careful as we’ve found with our Holiday Autos and AXA experience above i.e. not paying a perfectly reasonable excess claim !

A snowHead

A snowHead

Well, the person's real but it's just a made up name, see?

I wish the rental companies would provide their own annual policies. This would enables them to charge a premium for avoiding the paperwork hassle of using a third party, as well as locking in business (if I’ve paid for the Avis annual policy, renting from Hertz becomes disproportionately more expensive). I’d happily pay for such a policy.

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@Roguevfr, you worked in the industry, I didn't. I do however work in insurance and doubt that the annual policy providers are making a huge loss. It wouldn't surprise me if there was some sort of right to challenge the amount deducted from the card left as guarantee. Let's face it if there is spurious damage I wouldn't agree that the amount demanded be debited, it would effectively be a dispute over the amount on the card that would be subrogated to the insurer. Not my area of expertise but that's my line of thinking.

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Once again,in my experience the rental companies pay for ALL damage to their vehicles, directly from income/profit . The 3rd party annual coverage company might well expect there to be justified repair costs in order to pay your claim, but effectively that's up to YOU to prove , they have no contract with the rental company.

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I've recently done three trips back to the UK this year flying and renting as opposed to driving all the way back.

The first couple of trips I bit the bullet and went with the rental Co's insurance as car hire was so cheap anyway, almost less than the cost of the train tickets to from the airport to where I was going!

Plus there is a huge advantage to renting as the cars are walking distance from the terminal and means I can book stupidly early return flights without the hassle of getting taxi and or very early trains and drop off is so easy.

Then after reading this thread, trip last weekend for three days I booked insurance through Rentalcover.com and saved around £40

Dropped car off at 06:00 having filled it up etc etc

Then checking my statements see there was a charge for £32.45 on Tuesday.

So filled with dread rang Customer Services up and started my enquiry - was not too painful getting through, and was told the charge was for cleaning!!!

Now the weather in the UK was grim and I had been driving around country lanes and there were a few leaves in the car and dried mud maybe but nothing excessive, which I explained and then I was put on hold for around 4mins and I thought here we go the line will soon go dead etc

She came back and said my card would be refunded as there was no supporting documentation as to why there was a cleaning charge!

So is this a new scam - as my OH said, it's like a hotel charging you for a cleaning charge, bit like AirBnB

Help!!

Car hire beware. Prices have dropped but insurance has rocketed.

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