CAR PRACTICE CASE STUDY on costing money, increasing frustration and making your rental car insurance company uneasy…names have been changed…RENTAL
At Smilin’ Jim’s Auto Rental, Jim was having a fan-tabulous day. George Barrow from Barrow’s High Tech… that dot com business down the street and around the corner… came into the shop and reserved 10 cars for four weeks to use as pool vehicles that 30 drivers will share. Wahoo, 10 cars! Jim was just beside himself with dollar sign happiness. He wrote the contracts and because he follows through with every rental, offered Renter’s Collision Protection (RCP)…
Jim drew up one contract per vehicle with Barrows High Tech on the top line, including Renter’s Collision Protection on each car.
Mr. Barrow signed the contract. He provided a list of the 30 drivers (which did not include his name), and went on his way.
The following day, 10 employees of Barrow’s High Tech came by to get the keys. Jim made copies of each driver’s license to have on file. Jim stapled the list of drivers to the contract.
Jim sure was smilin’ when all 10 cars left the lot.
One week later…..
Jim stopped smilin’.
Two of the cars came back with some damage: one for $1500.00 and the other with $3700.00 Jim instructed Mr. Barrow to file a claim with his RCP, but was surprised to learn that the driver had to report the claim, but Mr. Barrow was not a driver and the current list of drivers of the two vehicles swore up and down that the damage did not occur on their watch…..
Because no one filed any reports nor stood up to accept responsibility, RCP would not pay for the damage until someone did.
So, Jim contacted his own insurance company. As Jim was worried about claims from injured third parties, he has no choice but to report the incidents to his insurance company and face the music. His liability carrier freaked out when they found out he had 10 different drivers on each vehicle.
Jim is still waiting to get paid for the damage that Barrow says they bought insurance for.
So what do we learn from this rental fiasco?
When the opportunity to rent a number of cars to one organization comes up, go over the following procedures with your insurance company and RCP to be sure you close coverage gaps.
1) Call your insurance company and confirm the maximum number of drivers each vehicle can have.
2) Write up a rental contract that specifically lists individual drivers both as renter and driver. All 30 drivers must sign each contract….really.
3) Mr. Barrow can sign as the guarantor to pay but his company cannot be listed on the top Line…..The “company” cannot drive. The rental contract is between the rental car company and the driver(s), not between the rental company and the payer. In this case, Barrow High Tech.
4) Drivers have a certain obligation, and signing that contract reinforces that obligation.
Also, any one that is driving has to have liability insurance. This needs to be confirmed with the 30 drivers…If the drivers are listed on an automobile policy owned by Barrows, then get a copy. If not, the drivers personal liability goes with the rental.
5) As for the RCP policy: There should be a policy for each vehicle, but RCP does not restrict the policy to a particular car. In this case, 10 policies with 3 different drivers on each policy. That way any damage to any car is covered.
6) Remember 250 dollar deductible needs to be collected for each claim.
In Summary: ave a good working relationship with your liability carrier, have a good working relationship with the folks at RCP. Be sure you take advantage of as many FREE telephone sessions with RCP as you can.
But most important, “ask permission first….then you will not have to beg forgiveness later”.