Rental Car Damaged by Third Party Whilst In My Care

 
Old Oct 6, 11, 6:45 pm
  #1  
Original Poster
 
Join Date: Jul 2008
Location: Kent, UK
Programs: BA Gold, SPG Platinum, Marriott Platinum, Hilton Diamond
Posts: 3,810
Rental Car Damaged by Third Party Whilst In My Care

I've not posted on the Budget forum before, but I'm reasonably regular on the BA board and the trip reports forum. I'm hoping that the knowledgable people on this board will be able to advise me on a little situation that I ended up in with Budget in Australia.

I rented a car in Perth, parked it next to the cabin that I'd rented at a holiday park and then went off with friends for some wine tasting. The car was parked in a parking space which was back from the road. When I got back I was approached by someone who told me that he'd hit the car when parking his caravan. The front was damaged, light scratched and the bonnet was dented. He spoke to his insurer and started claim procedures.

I spoke to Budget to inform them of the incident and they basically told me that I was fully liable and that I would have to pay the excess on the rental agreement ($2500) and then I would have to try to claim the costs back from his insurer. They were not interested in pursuing any recovery themselves, despite the fact that the guy admitted liability and his insurer were willing to cover the cost of the repairs. Budget refused to speak with his insurance company directly, which put me square in the middle between Budget and the company. I was surprised, given that it is not my car, I do not own it. I had expected Budget to pursue the claim for repairs from the insurer, like any owner of any car that had been damaged by a third party.

I was charged for the repairs, plus 'loss of use' fees and an admin fee. They even had the nerve to charge an admin fee on top of the admin fee (a percentage rate on top of the entire account). I argued this and was told, very rudely, that they would take me to court and I would lose. They were threatening on the phone and very aggressive. They made a bulk charge on my credit card, leaving me to then try to claim everything back from the third party's insurer.

The insurer was actually very helpful, but given Budget's refusal to speak to them directly, communication was difficult. The insurer refused to pay the admin fee and loss of use, saying that Budget had not provided suitable evidence. The loss of use was based on predictions and presumptions, average utilisation etc, rather than evidence of bookings that had to be refused because the car was being repaired.

The insurer said that they would normally deal with Budget directly and had never heard of a renter being treated in this manner. I consistently pleaded with Budget to talk with the insurer directly, but they flat out refused each time, saying that it was all my issue to deal with.

Eventually, with help from the insurer, the admin fee and loss of use fees were dropped by Budget. The repairs were paid for by the insurer, so I am not out of pocket. It seems as though Budget were using the threat of court action and ambigious terms in the rental agreement to scare me into paying questionable charges.

The insurer has urged me to speak to the ombudsman here and make a formal complaint, based on the fact that Budget were laying charges on me for which they had no evidence.

Based on other's experience, is this what one could expect to occur in this situation?
matthandy is offline  
Old Oct 6, 11, 6:50 pm
  #2  
 
Join Date: Oct 2003
Location: PDX/AUS
Programs: AA-UA-AS IHG-SPG-Carlson
Posts: 4,562
Originally Posted by matthandy View Post
....The insurer has urged me to speak to the ombudsman here and make a formal complaint, based on the fact that Budget were laying charges on me for which they had no evidence....Based on other's experience, is this what one could expect to occur in this situation?
I don't have direct experience,
but am not surprised the rental company would take this approach.
This scenario seems exactly what the companies use
routinely to try to scare me into buying their insurance.

BTW... Who is this ombudsman you wan't to speak to ??
MrHalliday is offline  
Old Oct 6, 11, 9:25 pm
  #3  
Original Poster
 
Join Date: Jul 2008
Location: Kent, UK
Programs: BA Gold, SPG Platinum, Marriott Platinum, Hilton Diamond
Posts: 3,810
Originally Posted by MrHalliday View Post
BTW... Who is this ombudsman you wan't to speak to ??
It's a term for the regulator over here and it's also used in the UK. In the US, you might use a different word.
matthandy is offline  
Old Oct 10, 11, 8:16 pm
  #4  
Moderator, Alaska Airlines & FlyerTalk Evangelist
 
Join Date: Mar 2004
Location: SGF
Programs: AS, AA, UA, AGR (ex-75K, GLD, 1K, and S+), Choice Diamond, HZ PC, Costco Exec, NPS Passport
Posts: 22,882
Unfortunately, I don't know what the rules, regulations, laws, and standard practices are in Australia.

In the U.S., though, every third-party-caused damage incident I've EVER been involved with or heard of has seen the rental agency pursue the claim (at least initially) through the third party's insurance company.

Ultimately, the primary renter (as the person who contracted with the rental company) remains liable for any costs not paid by the third party's insurance (so if their insurance fights the rental company on some of the ancillary costs like loss of use, administration fees, or diminished value charges, the primary may still see a bill for those items), but standard practice in the U.S. is to at least try to pursue the third party who caused the damage and only fall back to the renter if that avenue proves unfruitful.

Not sure if this is applicable Down Under, but one strategy I've heard some success with in the U.S. is for you to report the damage claim to your insurance and then have Budget deal with your insurance company. Tell your insurance company that the damage was caused by a third party and you have their insurance claim information. Your insurance company will pay Budget and then go after the third party's costs on their own, thus insulating you from any unpaid charges from the third party's insurance company and relieving you of the work of pursuing the claim with the third party.
jackal is online now  
Old Oct 10, 11, 9:06 pm
  #5  
 
Join Date: Jun 2010
Location: Melbourne, Australia
Programs: QFF NB, Velocity Silver, Hertz 5*, Avis Preferred, Thrifty Blue Chip (Oz), Europcar Privilege Exec.
Posts: 378
jackal (and matthandy), unfortunately the way it works in the US is in no way similar to the way it works in Australia.

I am not sure which type of insurance you are suggesting you should rely on to deal with Budget, but as you and I have discussed on this forum previously, in Australia no-one has a blanket insurance policy like you do in the US. Further, car insurance does not usually cover rental cars, as far as I am aware (there may be the odd policy which does). Travel insurance (for overseas residents) may cover the excess or provide full LDW cover (I am not familiar with their terms). Travel insurance issued to Australians will only cover the excess and will specifically exclude legal liability (as will most other forms of insurance) for use of motorised vehicles. In the absence of travel insurance, Australians do not usually have insurance which would cover a rental car in any way.

matthandy (and jackal)

All Australian car rental agreements provide that the excess will be charged if the vehicle is damaged whilst in the renter's care, regardless of cause. Although I haven't had personal experiance damaging a rental car (though I have had two friends who have damaged rental cars - in both cases it was their fault though), my interpretation of this has always been that based on the agreement, they have an authority to debit your credit and will debit the full excess as soon as they become aware the car is damaged. Your experience and that of my two friends confirms this. Your experience also confirms my understanding that the rental car companies would not get involved with third parties when they an authority to charge the excess to your card if the car is damaged whilst in your care, regardless of cause. From their perspective, why would they want to get involved when it costs them time and money to do so?

This is the first I have heard of a rental car company in Australia charging loss of use fees (it is common in the US, from my understanding). My understanding of the rental agreeemnt is that provided you comply with the terms of the agreement and pay the excess (note that the excess is subject to GST and the airport fee, and some rental car companies charge their admin fee [usually 3.5% in Australia] as well) and the admin fee for the damage, provided the agreement specifies it, that is all you are liable for. If they pushed the loss of use fee, I would be lodging a complaint about that, either to their head office and/or to consumer affairs or fair trading (I do not think their is an ombudsman in any state that deals with car rental complaints). You may wish to make a complaint regarding the whole experience anyway, but my understanding is you may not get far.

Finally, out of interest, what the total amount Budget initially billed or charged to your credit card and what was the breakdown?

I am not saying that the way it operates in Australia is right, just that it is the way it is - I personally think it is a little harsh, but I also think the way it operates in the US is very generous to the renter (rather ironically!).
AdMEL is offline  
Old Oct 14, 11, 10:38 pm
  #6  
 
Join Date: Jun 2010
Location: Melbourne, Australia
Programs: QFF NB, Velocity Silver, Hertz 5*, Avis Preferred, Thrifty Blue Chip (Oz), Europcar Privilege Exec.
Posts: 378
From Budget terms and conditions:

LOSS DAMAGE WAIVER, DAMAGE AND LOSS OF PROPERTY
8.1 Subject to this clause 8, You are liable:
(a) for the loss of, and all damage to, the Vehicle; and
(b) for all damage to the property of any person:
(i) which is caused or contributed to by You or any person You allow to drive the Vehicle; or
(ii) which arises from the use of the Vehicle by You or any person You allow to drive the Vehicle.
This clause 8 does not apply to any damage or loss for which Budget is
liable to You under this Rental Agreement.
Remember that references to the ‘Vehicle’ include all of its parts,
components, Accessories and contents (see the definitions of ‘Vehicle’ and

‘Accessory’ in clause 1).
8.2 Subject to clauses 8.3 and 8.4, Budget waives Your liability under clause 8.1 for damage to, or loss of, the Vehicle and will ensure that You and any Authorised Driver are entitled to be indemnified under the Budget Insurance Policy, if:
(a) You accept and pay for the Loss Damage Waiver option on the Rental Document (or if it is included in Your rate); and
(b) You pay the Excess Amount for each separate event involving:
(i) damage (including hail damage) to, or loss of, the Vehicle;
or
(ii) damage to the property of any third party which is caused by the
use of the Vehicle by You or an Authorised Driver.
8.3 Additional amounts payable: In addition to Clause 8.2, You must always pay
to Budget the following costs and fees:

(a) the cost of repairing any:
(i) Overhead Damage or Underbody Damage;
(ii) water damage to the Vehicle;
(iii) damage to the Vehicle or to the property of any third party caused
by a breach of clause 3, 4.1 or 5;
(iv) damage to a tyre or an Accessory not attributable to normal wear
and tear; and
(v) damage to the Vehicle or to the property of any third party caused
deliberately or recklessly by You, any other driver of the Vehicle or
any passenger carried during the Rental Period;
(b) the cost of replacing, if lost or stolen, an Accessory; and
(c) if You have breached the Rental Agreement, a per day loss of revenue
fee based on the estimated downtime of the Vehicle.

8.4 (a) For the purposes of this clause 8.4, ‘Recovery Costs’ means, in relation
to the loss of, or damage to, the Vehicle;
(1) any appraisal fees;
(2) any towing, storage and recovery costs; and
The relevant points are in bold. The way I interpret it is, that provided you do not breach the rental agreement and pay the excess, you are not liable for any other costs. However, if you breach the rental agreement, you become liable for loss or revenue.
AdMEL is offline  
Old Oct 15, 11, 1:11 am
  #7  
Original Poster
 
Join Date: Jul 2008
Location: Kent, UK
Programs: BA Gold, SPG Platinum, Marriott Platinum, Hilton Diamond
Posts: 3,810
Originally Posted by AdMEL View Post
From their perspective, why would they want to get involved when it costs them time and money to do so?

This is the first I have heard of a rental car company in Australia charging loss of use fees (it is common in the US, from my understanding). My understanding of the rental agreeemnt is that provided you comply with the terms of the agreement and pay the excess (note that the excess is subject to GST and the airport fee, and some rental car companies charge their admin fee [usually 3.5% in Australia] as well) and the admin fee for the damage, provided the agreement specifies it, that is all you are liable for.....

....Finally, out of interest, what the total amount Budget initially billed or charged to your credit card and what was the breakdown?
Originally Posted by AdMEL View Post
The way I interpret it is, that provided you do not breach the rental agreement and pay the excess, you are not liable for any other costs. However, if you breach the rental agreement, you become liable for loss or revenue.
Thanks AdMEL for your very useful and insightful response. I actually refused to pay the excess initially, since I felt it was their responsibility to have the car repaired and deal with the third party's insurer directly (as any owner would if their car was involved in an accident and as advised by the third party's insurance company as the standard practice). As you say though, why would they bother when they can just screw their customers over with much less effort? (Having said that, it took 7 weeks, 10 phone calls and 20 emails to resolve, so I'd say that this has cost them more time and effort than it would have done to actually talk to the insurer directly).

After a long and very aggressive phone call (with the lady from Budget not even letting me finish my sentances, and telling me that she didn't need to let me either! ) I arrived at the airport to be told that I wouldn't be charged anything at this stage and that they would hold the car for a quote, at which time they would charge my card for the exact amounts as laid out in the rental agreement. These were as you have described, including 'loss of use'. However, as you have pointed out (and I had determined myself), I was only liable for loss of use if I had breached the agreement. However, no-where in the agreement does it explain what constitutes a breach. One could argue that not paying the excess could be a breach, and if so, this is a very dirty tactic by Budget, appearing to be lenient, but in turn causing me to breach the contract. Based on my experience, that would not surprise me at all.

With the help of an expert in such things at the third party's insurance company, I was given enough ammunition to dispute the loss of use charges, since these were based on forecast utlisation (which showed about 85% for the month with a total fleet of almost 100 cars) and not any actual facts such as "we had to turn away the following bookings".

It took about 2 or 3 emails and phone calls to actually get a break down of charges, and then a further 3 emails to get them to produce one that actually made sense and wasn't full of their internal charge codes. I threatened to dispute the charge with my bank unless they were able to tell me exactly what I had been charged for and give me a proper receipt showing the GST breakdown (which they are required to do so by law for any invoice over $1000).

All in all, a total nightmare, threatening phone calls and emails from Budget, disputed charges and general stress. It is fair to say that I will never be dealing with Budget ever again. Ironically, the third party were very pleasent and easy to deal with as were his insurance company. Both were pretty bewildered by Budget's behaviour, especially the insurance company, who said they'd never seen a case like this and the fact that Budget were refusing to speak to them directly! Crazy.
matthandy is offline  

Thread Tools
Search this Thread