A Michigan agent alerted me to a new problem
with the rental car claim. Budget Rental
now has this clause in their rental agreement:
“If the car is damaged, you will pay our estimated repair cost, or if,
in our sole discretion, we determine to sell the car in its damaged condition,
you will pay the difference between the car’s retail fair market value before
it was damaged and the sale proceeds”
In this case, the insured rented a Ford
Freestar valued at $26,500 and brought it back damaged. Budget sold the car at auction in its damaged
condition for $11,700 and billed the renter for the difference. The renter’s personal auto policy paid the amount
it would have cost to repair the car plus loss of use for a total of $7873. The renter was responsible for the
difference: $6926.
Does the renter have any recourse? Not really.
He signed the contract with the rental car company; it establishes his
financial obligation. The wording of the
insurance policy determines what the company will pay for the loss. When the proceeds of the policy do not meet
the obligation under the rental agreement, the renter is legally liable for the
difference. Actually, Budget has the
contractual right to charge the $6926 to the renter’s credit card. Had the renter purchased the Loss Damage
Waiver (LDW) from Budget, it would have covered all of his legal obligations
for the damaged vehicle.
Last week I was in Indiana and I heard a
similar claim; this one was with a different rental car company. The renter was being billed for over $3000
additional after the car had been sold in its damaged condition.
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