I had insurance for this Avis rental. How can I still owe $8,000?

By | June 17th, 2017

Just after he rents a minivan from Avis, Michael Thomas has an accident. He thinks he’s covered by insurance through his credit card. Turns out, things are a lot more complicated.

Question: I rented a Dodge Caravan from Avis. Twenty-nine minutes later I had a single-car accident. The next morning I stopped at the Avis counter, filled out the accident report, gave them all the information about where the vehicle was towed and the name of the tow company.

At the same time, I called American Express insurance, which I use with my credit card, and they eventually settled the damage for $8,594 for damages and towing. All appeared good then.

About a week ago, I got a letter telling me that I owed another roughly $7,061 for the damages. In addition, they have already charged over $1,100 to my credit card for the rental, which I have disputed twice.

They said the contract allows them to sell the car in its damaged condition at their sole discretion and any additional is owed by me. Looking at the terms and conditions, it is clear that it is at their sole discretion to do that. Can you help me? — Michael Thomas, Dawsonville, Ga.

Answer: After using it for half a century, a few years ago Avis dropped its tagline “We try harder.”

But it this case they seem to be trying pretty hard — to collect from you — based on some often overlooked provisions in the rental car agreement that we all sign when we rent from Avis, and most other rental car agencies. They sent a “claims recovery representative” after you from a third-party company, Sedgwick Claims Management Services.

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You told us even your insurers were surprised by the provision cited in the collection letter you received:

In discussing this with Amex or my own insurers (State Farm), any insurer would only pay for required damages to repair the vehicle, but no one knew the terms Avis is using to collect from me were the case.

It appears that no matter what insurer I used, they could decide on their own to sell the car and just get from me, or any other renter, the difference. When I call Sedgwick, I find they are effectively a collection company that has no interest at all in discussing this and only remind me that “by contract I owe the money, so pay it.”

And indeed, there it is in unlucky section 13 of the Avis rental terms and conditions:

… if in our sole discretion, we determine to sell the car in its damaged condition, you will pay the lesser of the difference between the car’s retail fair market value before it was damaged and the sale proceeds up to the amount specified by law.

The justification for the other $1,100 they charged you is there too:

“As part of our loss, you’ll also pay for loss of use of the car…”

Yes, even though you reported the accident the next morning to Avis, they get to charge for the time they determine the car was out of commission and unavailable for them to rent.

But you note that your Amex insurance would have protected you from this expense if Avis had properly communicated with you and Amex:

I am quite frustrated and upset since to top it all off, they charged me for rental of about two weeks when I could not have gotten it out of impound if I wanted, my not being the owner. They called it lack of use and they will not provide records to Amex showing that if they had the car, they could not have rented it. Amex would pay that if they got the docs. I only planned to rent it for 15 hours.

I want to compliment you for the way you communicated with Avis throughout this process. Despite being frustrated and upset, your communications were unflaggingly polite and professional — a tone we routinely advise consumers to use when trying to settle a dispute.

But this cautionary tale for everyone who rents a car is a case when being polite wasn’t quite enough. So you asked for our help, as well as that of your lawyer. We’re happy to hear the outcome.

“Your contact with Avis about a month ago started discussions with me, my attorney, Amex and Avis management in New Jersey,” you wrote us. “We found out why Avis totaled the car due to a possible frame bend and Amex paid a bit more to Avis. The rest was waived by Avis and I owe nothing now. Your help was invaluable and you are appreciated.”

  • Alan Gore

    Is Avis the only car rental company that does things this way? And could the whole mess have been avoided by using the Avis insurance/

  • Rebecca

    This is quite a scary story. I’m glad the OP was finally able to resolve it. Kind of puts it in a good perspective too – he remained unfailingly polite despite the obvious frustration that must come with being charged $8k despite being reasonably insured, yet we see all the time customers getting rude and profane over something relatively insignificant, like a mean look from a flight attendant. It’s always important to remember that the person reading your letter didn’t cause the problem and didn’t create the policy. And it’s human nature to want to help those that are kind to us first. Ask any customer service rep, they’ll gladly help a customer with a very difficult problem who’s polite over a customer with a very easy issue that’s rude.

  • KanExplore

    I’ll admit this is the first I’ve heard of this provision. Is this standard with Avis? With the industry? Something they just snuck in recently to stick it to customers? I’d definitely like to learn more about this. Congratulations to Dale, Elliott, and his lawyer for getting it resolved in this case.

  • greg watson

    I doubt it, & I’m surprised that you brought that up ??…………….the insurance , that is.

  • PsyGuy

    Whenever you rent a car, the rental agency is not your friends and family, they are in this for the money. Damaging their property means they assume they are out the maximum they could conceivably imagine, and that’s what they will bill you. This is why when I rent cars (personally), I do so with a visa that carries about a $300 credit limit, which is enough to pay rental fees. If they try to charge it past that it’s just declined. In such a similar scenario, I just let the Bank card or my insurance handle anything and everything else.

  • PsyGuy

    Not to my knowledge, it’s all of them. European agencies, are the worst.

  • PsyGuy

    It’s been their for a while to my knowledge. It’s just getting exercised more often, as even minor damage gives them an excuse to sell the car and bill you the difference based on MSRP value, and then they buy a replacement vehicle at fleet and discount prices, and pocket the difference. It’s more cost effective than using a repair and body shop, and a third party adjustment company, etc.

  • Alan Gore

    Let me rephrase: is the credit card company rental insurance model so far out of sync with the standard rental car billing for accidents (not counting ‘weird’ accidents and outlier rental companies, like Dollar and Sixt) that we should standardly just take the rental company insurance, pricing that cost into any deal we see in our searches?

  • Phyllis Morris

    What is really scarey is that Avis has quietly been purchasing their competitors. They quietly purchased Dollar in 2012 after two years of pursuing them. When I rented a car in March from Dollar their website was different and the terms and conditions were very different and very unfriendly. I took a lot of pictures of the rental and reported some scratches to the gate person. He had me fill out a prior damage form and I told him I had taken pictures of the car. There’s very little choice in rental companies now.

  • jsn55

    So … you rent an Avis vehicle, have complete insurance coverage through your credit card or personal insurance, damage it badly, and Avis will come after you for more money than the insurance covers? This is nuts. Gotta love the lawyers, especially the hungry lawyers.

  • Sandra

    I know this must sound like I’m dense but what does OP stand for. I know it the person who writes to Chris’ team but what do the initials represent? Thanks!

  • michael anthony

    Christopher could write a book on the ins and outs of renting cars and ways to avoid being taken for a ride. But given their track record with every fee possible, his book would probably be out of date within a year due to an assortment of new fees and schemes they’ve dreamed up.

  • ctporter

    OP is Original Post or Original Poster, LW would be the Letter Writer.

  • Tim Mengelkoch

    Don’t feel bad. I asked that same question about a year ago :-)

  • Sandra

    Thanks for the explanation!

  • Sandra

    Thanks…it makes sense now.

  • LonnieC

    The other responses are best. However, I seem to remember OP being defined as “offended party”, a long time ago.😊

  • Sandra

    Thanks, LonnieC….all the explanations make sense;; original poster, offended party no matter, now I can make sense of the sentences.

  • Lindabator

    Sixt is a newer company here, but is one of the largest and oldest in Europe – not comparable to Dollar

  • Lindabator

    always been there

  • Lindabator

    actually, it has a lot more to do with HOW the cars are built — composite materials are lighter and easier to do a lot of damage – better for the environment and gas mileage, not so great for accident repairs

  • Lindabator

    Alamo, Enterprise and National are one company – Hertz, Dollar and Thrifty are another – Budget and Avis are the last of the big 3

  • Lindabator

    Depends on your insurance coverage – here in Michigan we have godawful rates, but by requirement have to over-cover, and this means no sweat anywhere else, as it is far more than those states even require

  • Lindabator

    Not a new fee — if the damage is substantial enough, the insurance coverage determines it is a total, and that is what happened here

  • Alan Gore

    But Sixt seems to attract an unfair share of rental car complaints on this board.

  • Phyllis Morris

    I rented from Dollar in Vegas in April and my contract referenced Avis terms and conditions.

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