Enterprise’s Van Horn: Vehicle damage recovery is “not a profit center”

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Roger Van Horn is the vice president for corporate loss control at Enterprise Holdings, which owns Enterprise, National and Alamo. Since I’ve received a lot of recent questions about car rental damage claims — many from Enterprise customers — I wanted to ask him a few questions about what happens when a car is dinged or scratched.

How is the rental process supposed to work, in terms of inspecting a vehicle for pre-existing damages?

We conduct a pre-rental vehicle inspection, which includes cleaning, refueling, necessary maintenance and damage review, for all of our brands. Our Enterprise Rent-A-Car service model involves employee interaction with every customer during the vehicle selection process. This allows us to make a physical inspection with our customer – before a rental car is driven off the lot.

Our Alamo Rent A Car and National Car Rental service models don’t involve employee interaction unless questions arise, so cars are not inspected in the presence of customers at the commencement of the rental. Because accidents are an unfortunate fact of life, some of our Alamo and National customers do personally inspect rental cars for additional peace of mind and to provide them a clear understanding of the overall condition of the vehicle from the start of the rental period.

Regardless of brand, it is our normal practice to inspect the vehicle upon return with the customer present.

How do you define “wear and tear” and is there ever a time when a customer would be held responsible for “wear and tear?”

Because major damage is almost always very obvious, the vast majority of questions concerning claims revolve around smaller damage that some might mistakenly consider “wear and tear.” We do not hold customers responsible for everyday “wear and tear,” including minor dings, scuffs, chips or windshield “stars.” However, some consumers might have a much broader definition of what they would consider “wear and tear” on their personal car – including smaller dents, cracked windshields, scratches and other minor damage.

Our definition of damage may be more precise because car rental customers typically expect and often demand undamaged vehicles. Furthermore, the majority of our cars are sold within a year or so, and what some customers might otherwise consider “minor” damage has a direct impact on the sales price and our overall ability to market the vehicle. That being said, less than two percent of our rental transactions involve vehicle damage.

Most renters feel that any damage claim should start with an acknowledgment of damage. Is that practical?

Generally, customers are present when a damaged vehicle is returned, and acknowledgement is routinely obtained. However, it’s not always practical for customers to be present when the agent inspects the vehicle. They may drop off a vehicle after hours or at a location other than the rental office or circumstances may not permit them to wait for the agent to inspect the vehicle. In those cases, we inspect the vehicle as soon as possible and follow up with the customer if any damage is discovered. It is important to understand that the rental transaction is not complete until the vehicle has been inspected.

If an employee signs off on a car after a customer returns it, does that mean the customer is free and clear?

If our employees inspect the vehicle and finalize the transaction with the customer present, then any readily apparent damage discovered at a later time is our responsibility. However, there are times when damage is not readily observable during the return process and only discovered when the vehicle is driven or later inspected. In those instances, a renter may be contacted to determine how the damage might have occurred. A claim may be made when available evidence suggests the damage occurred while the renter had possession of the vehicle.

What documents do car rental customers receive when there’s a damage claim?

Customers receive an itemized bill, including a repair invoice, an estimate, or an independent appraisal. Whenever possible, labor, paint, parts and other costs, such as towing, are calculated to reflect high-volume discounts that we receive as a car rental company. This competitive price, in turn, is passed along to customers and if the actual repairs are completed for less, we refund any difference.

Charges for “loss of use,” “diminishment of value” and an administrative fee are itemized and calculated as set forth in our current rental contract:

“Loss of use” is based on the total number of labor hours from the repair estimate, divided by four (which is a conservative estimate of labor hours that can be incorporated into each work day) and then multiplied by the daily rental rate. If a vehicle is stolen and not recovered, or if the car is deemed only salvage, the “loss of use” charge is calculated at 15 days.

“Diminishment of value” is calculated at a fixed rate – 10 percent of the repair estimate. The fee is zero if damages are less than $500.

Administrative fees are assessed as follows: a $50 fee if the repair estimate is greater than $100 and less than $500, a $100 fee if the estimate is $500 to $1,499, and a $150 fee if the estimate is greater than $1,500. In addition, renters are responsible for impound fees and other related charges.

Can you briefly describe the appeals process for damage claims?

A customer’s first opportunity to express concern about a damage claim is during the return process if he or she is present. When customers are not present, the rental location will document the damage and then forward a report to our Damage Recovery Unit office, which processes damage claims on behalf of our regional subsidiaries and all three car rental brands.

The rental location or the Damage Recovery Unit office then contacts the renter about damages as soon as possible. Likewise, it is helpful for customers to communicate as soon as possible with our Damage Recovery Unit office if they have any questions. We look into each situation carefully and thoroughly, and certainly will carefully review any documentation provided by the customer.

Are all unpaid claims forwarded to a collection agency?

On rare occasions, if we reach an impasse with a customer, we refer a claim to an outside collection agency for further handling – but only as a last resort. We prefer to work with our customers directly so that they are comfortable with the process and continue to do business with us.

Any time a customer is concerned, he or she should immediately contact us. We will do everything we can to properly investigate and resolve the claim as quickly as possible. Keep in mind that very few rental transactions result in damage, and less than one percent of claims result in customers disputing their responsibility. The vast majority of disputed claims are resolved to the customer’s satisfaction. Our employees, both in the branches and in the DRU office, are focused on getting the facts right and maintaining a customer’s long-term loyalty.

What’s the most common misperception about the damage claims process?

Most rental vehicles are valued at $15,000 to $20,000, or more. Yet sometimes customers mistakenly believe if they didn’t personally cause or witness any damage – for example, a “hit-and-run” incident in a parking lot – that they are not responsible. This is one of the most common misconceptions about rental vehicle damage. In fact, customers are financially responsible for any damage or theft that occurs during a rental transaction, regardless of fault or negligence – just as if they owned the rental vehicle themselves.

One other commonly-held belief about claims is that they’re a source of profit to a car rental company. True or false?

Our Damage Recovery Unit office does not operate as a profit center, and we try to be very conscientious about properly assigning all related costs associated with vehicle damage claims. It is important to note that no rental or Damage Recovery Unit employees are compensated for identifying, assigning or collecting on damaged vehicle claims.

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