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

Just after he rents a minivan from Avis, Michael Thomas has an accident. He thinks he’s covered by rental 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.

A surprising collection letter

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.”

The fine print

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 the 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.

American Express rental insurance coverage

But you note that your Amex rental 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.

The good news

I want to compliment you on 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.”

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