Power Report: Between a rock and a car hire company
The next few months are going to be very difficult for beauty therapist Mary Banda. Not only is she in imminent danger of having her household goods attached to cover R50000 of legal debt, but a high court judgment is due any day now on whether she must pay R300000 for a written-off rental car. story_article_left1Banda's first ordeal was swerving to avoid an animal in the road and crashing into a rock face. Her second was realising that despite having taken the car rental company's highest accident and loss waiver available, she was not covered for the damage.Unfortunately, the waiver's "exclusions", for which Banda had signed acknowledgement, kicked in. Because her accident hadn't been caused by her physically hitting something, she had no protection.Many of us mistakenly assume that a rental company's damage and loss waiver, usually mandatory, is the same as motor insurance. But rental companies are not insurance firms and are not allowed to sell insurance. Whereas comprehensive car insurance covers us for almost all accidents and damage (negligence aside), waivers serve merely to limit our liability for damage to a hire car.The only benefit, albeit a good one, for paying more for a top-end waiver is that it reduces your excess to as little as zero in the case of "acceptable" damage.But, and this is the crunch factor, if damage is deemed unacceptable - basically, if it falls into any of the exclusions - you're on your own. That's what happened to Banda after her accident en route to Lesotho in 2011. She had hired the Honda CR-V from First Car Rental because she wasn't sure her own insured car could make the journey safely.The company's terms and conditions contained an exclusion that she was liable for all loss and damage sustained in "an accident not caused by physical contact with another vehicle, person, animal or object".Ironically, if Banda had hit the animal, and there had been no negligence (like speeding), she would have been covered. Whether she and her young daughter travelling with her would have survived such a collision is another story.After Banda failed to make arrangements to pay off the R317000 demanded by First Car Rental, it issued summons against her. The matter, defended by Banda, was postponed in May last year at Banda's request, with an agreement that she would pay the wasted court costs of R54392. The case went back to trial in May this year and was finalised in a day, with judgment reserved.mini_story_image_hright1An offer to settle the wasted costs of the first trial was tabled by Banda that day, but rejected by First Car due to her reneging on an earlier undertaking to pay the debt in full. To date, Banda has not paid the costs, and First Car has asked the sheriff to serve papers on her, enabling the attachment of goods.The 34-year-old widowed mother of one, who took the highest "executive" waiver offered, said this week she had mistakenly believed she was covered, except for things like scratches, pothole damage and negligence.But First Car's strategy, development and marketing head, Melissa Storey, said Banda had admitted in court documents that she had read and understood the terms, and that they had been properly explained to her before she took the car.Said Storey: "Exclusions are clearly highlighted on our documents in purple, reference is always made to them at the collection counter and they are also e-mailed to customers after booking."For Banda it's a bitter pill to swallow. "It's a lesson I've learnt the hard way," she said. "I'll never rent a car again; I'd rather take a bus or taxi."Without doubt, car rental waiver exclusions - fairly standard across the industry - are daunting. Most exclude damage caused by potholes, sand, water, gravel roads and failure to maintain lubricant levels. Damage to tyres, rims, windscreens, and the undercarriage, other than that due to a collision, is also excluded.The driver negligence exclusion is broad and could come into play if a driver has been drinking or was using a cellphone. To be fair, proven negligence would also nullify a claim on all comprehensive motor insurance.The question, though, is whether enough is being done to ensure renters are aware of all exclusions, particularly in cases of single-car accidents, like Banda's. In the times I've rented a car, I don't recall key waiver exclusions being highlighted.story_article_left2Southern African Vehicle Rental and Leasing Association president Marc Corcoran said there would always be "additional opportunities", which members should continue to look for, to explain key terms and conditions . "However, the industry finds itself needing to balance between a paperless and speedy collection of the vehicle, which is requested by customers, and taking other customers through the various legal responsibilities," he said."The growing influence of mobile technology ... will make it more important for customers to take the time to read the applicable terms and conditions."Is taking out separate insurance, covering any unforeseen and sudden event, an option for consumers?Not according to the South African Insurance Association; none of its members offer such cover. "Most comprehensive policy packages exclude own damage to a car not insured by the underlying policy," said the association's Zakes Sondiyazi. "An example would be a hired car or a friend or relative's car."However, most policies covered policyholders who became liable for third party losses or damages while in a car temporarily driven by them.Sondiyazi said he would raise the issue at a motor committee meeting to establish why insurers did not provide such a product. Reasons, he said, could include high exposure to theft, hijack and damage in a short period; difficulty in costing the risk for such cover; and that caution exercised with a rental car was less than with one's own car.sub_head_start The Southern African Vehicle Rental and Leasing Association says: sub_head_endWhen renting a vehicle, review the terms and conditions before collecting it. These will be available on the company's website.story_article_right3When considering the daily rental rate, always check:• The applicable liability due in the event of damage or theft (this will vary depending on the waiver selected);• The applicable daily kilometres; and• Any exclusions that are highlighted in a special rate.When you collect the vehicle, where possible inspect it and report any damage to the company representative.When you return the rental vehicle, ask the rental representative for a pro forma invoice to ensure that there will be no additional charges when you leave.Power Report tip: Some car rental firms have been known to deduct charges from your credit card after you've returned a car, citing damages incurred.To further protect yourself, always take detailed, and dated, cellphone photos of the rental car when you collect it, and again when you return it.That way, you'll have your own record of existing damage, and any damage caused during your rental period.Tune in to Power FM 98.7s "Power Breakfast" at 8.50am tomorrow to hear more from Megansub_head_start Contact Megan Power sub_head_endE-mail: firstname.lastname@example.orgFollow Megan on Twitter: @Power_ReportTune in to PowerFM 98.7's 'Power Breakfast' (DStv audio channel 889) at 8.50am on Monday to hear more from MeganPlease note: Other than in exceptional circumstances, readers sending me complaints must be willing to be identified and photographed.