You hired the car, even paid for the extra “peace of mind” insurance. Only after the accident happened did you learn of the fine print forcing you to pay for all glass and tyre damage plus salvage costs. You could be on the hook for thousands.
We compared the contracts of 12 rental car companies and found some concerning T&Cs buried within. Our Wellington mystery shopper also hired vehicles from Avis, Enterprise and Hertz to assess how excess-reduction cover is promoted to customers.
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If you don’t want to pay a massive excess if your rental car is damaged, you’ll need to fork out for excess-reduction cover. At between $17 and $40 a day, it isn’t cheap (see our table).
Rental car companies sing the praises of these packages. Our mystery shopper was told that, with the excess reduction paid, she didn’t “have to worry” (Enterprise), “was all covered” (Hertz) and the package “just covers [her] for everything” (Avis).
However, all 12 rental car companies we compared have a long list of exceptions buried in their T&Cs. Some are standard – no policy will cover you for accidents if you’re off-roading or speeding.
Others aren’t so standard. Tyre damage was excluded in the T&Cs of seven companies. Five companies rule out damage to accessories, while four excluded the vehicle’s GPS device.
Europcar customers have three excess-reduction options from which to choose – but have to go for the priciest, GoZen, if they want cover for glass, lights and tyre damage. At $273 a week, it was double the cost of some competitors’ packages. Even then, its customers are still liable for all damage to the vehicle’s roof and accessories.
You may get little chance to learn what the exceptions are before it’s too late.
At the Enterprise counter, our mystery shopper received only part A of the agreement (a single page), which she was asked to sign. She first had a chance to read part B of the agreement (a 16-page brochure on the back seat of the rental car) after she’d taken possession of the car.
Enterprise says “our employee should have articulated the exemptions to our protection products far better, as well as provided the full rental agreement. This is something that we will investigate and, if necessary, provide further guidance and training.”
Enterprise only has part of its terms and conditions on its website, so our mystery shopper had no way to find out everything she was in for before she signed the agreement. The company says it’s “in the process of reviewing” which terms and policies are available online.
Avis offered its written T&Cs in a folder that was handed over once the customer had signed and paid. Hertz never gave a written copy of its T&Cs to our mystery shopper, even when she asked for the “insurance stuff”.
... customers would have a good chance of arguing in court that the T&Cs were not binding if they hadn’t been given a copy of them before they signed.”
While Avis and Hertz have a copy of their rental T&Cs on their websites, a customer would need to go looking for them.
Hertz says a copy of the T&Cs should have been provided to the mystery shopper. “Hertz apologises that on this particular occasion the correct documentation was not provided and is reviewing its customer service procedures and training to better help our customers in the future.”
Avis ignored our messages.
Auckland University contract law researcher Alex Sims, who has researched unfair contract terms, says it’s concerning that businesses aren’t always presenting their T&Cs upfront.
Under these circumstances, a customer could challenge the rental agreement in court, she says. “I think customers would have a good chance of arguing in court that the T&Cs were not binding if they hadn’t been given a copy of them before they signed.”
The Commerce Commission says it isn’t necessarily a breach of fair trading laws if a consumer hasn’t seen all the T&Cs before signing up.
“It would likely be a breach of the Fair Trading Act if false or misleading statements were given about the T&Cs previously to encourage the signing of the contract or if the T&Cs in the contract contradicted consumers’ legal rights,” the commission says.
Based on our mystery shop, we’re concerned consumers are being sold excess reduction packages with misleading information about the cover provided. We’ve asked the commission to look into the issues we found.
Alex Sims is a former Consumer NZ board member.
You might assume your travel insurance would cover you for accidents involving a rental car.
All the contracts we checked say the customer is liable for both the repair costs (which travel insurance covers) and any so-called “consequential losses”, such as towing costs and the profits the company loses while the vehicle is out of action (which travel insurance doesn’t cover) – up to the value of the excess.
This can make excess reduction packages more appealing as they mostly cover both. Of the 12 companies we reviewed, the exception was Go Rentals, where you’ll always pay consequential losses.
Ace also insists you pay all salvage costs, whether you’ve paid extra to reduce your excess or not. If an Omega rental car is in a single-vehicle crash, the driver will also be on the hook to pay the towing service.
Another way rental companies encourage you to purchase pricey excess-reduction packages is by requesting a bond if you don’t.
Depending on the company you choose, this bond can be as high as $4500 on cars and $6000 on campervans or motorhomes.
Of the 12 companies, the majority “pre-authorise” this amount on a credit card, which effectively holds the amount so you cannot spend this money elsewhere. If you are planning on using your credit card for other things, large pre-authorisations can interfere. It often takes a week or more for the funds to be released.
In contrast, Jucy insists on payments – so it takes your money and then processes a refund when you return the car. Omega uses pre-authorisations if you have a credit card, but if you only have a debit card, you’ll have to pay the bond.
If you’re heading overseas, you can be caught out if the rental company insists on payment rather than pre-authorisation as you may be charged currency conversion fees on the payment.
When renting an Apollo campervan in Cairns, Consumer member Peter Gates paid nearly $200 in transaction fees on the AU$3750 ($4091) bond payment and refund on to his credit card. “This was about what the additional insurance would have been,” he says.
As well as insurance, we compared key policies of the 12 rental car companies. Some hide away customer-unfriendly terms, such as credit card surcharges and cancellation fees, in the fine print.
Most companies offer unlimited kilometres – so you can drive as far as you like during the hire period. If you’re planning a long-distance trip, you’ll need to check whether distance limits apply to the vehicle you booked with Avis, Budget, Europcar, Hertz and Thrifty.
Four companies – Ace, Apex, Ezi and Go Rentals – don’t have a credit card surcharge. Of the rest, these range from 1.73% to 5.18%.
You’ll still pay the excess on a rental car even if another driver was at fault. The only exception we found was Europcar (if the other driver accepts liability). Eight other companies will eventually refund your excess if they recover the costs from the at-fault driver. But it’s tough luck for Apex, Avis and Budget customers.
If you return a vehicle late, you’ll likely be charged another full day’s rental. However, 11 of 12 companies offer a grace period, ranging from 29 minutes to two hours. Omega has no grace period.
If you need flexibility, you may want to book with Enterprise, Ezi or Thrifty, as they don’t charge cancellation fees. Ace, Go Rentals and Jucy require you to pay a deposit upfront. Apex, Europcar and Omega ask for your credit card details to secure the booking. If a company buries its cancellation fees in fine print, it could be considered an unfair contract term (which you could challenge).
Bringing Fido along for the ride? Apex allows pets, as does Europcar (but you’ll need to get its permission). Most companies ban animals, though make an exception for disability assistance dogs.
Consumer member Howard Fraser was caught out when he didn’t check the wheels of a rental car during the initial inspection. On returning the vehicle, a tear in one tyre was picked up. The British rental company wanted to charge him £156 ($301), but he negotiated it down to £95 ($183). “It occurred to me the rental company was getting a new tyre (at my cost) in replacement for one that had done 10,000 miles,” Mr Fraser says.
|Company||Excess reduction ($)||Accessories[tick]||Glass/windscreen[tick]||GPS[tick]||Lights[tick]||Overhead[tick]||Tyre[tick]||Other notable exclusions||Bond||Bond return policy|
|Salvage costs||$0 - $750 (pre-authorisation)||Reversed|
|Apex||126||no||yes||yes||yes||yes||yes||Recovery of bogged or immovable vehicles||Credit card details||NA|
|$10 - $200 (pre-authorisation)||Reversed|
|Enterprise||116.45||yes||yes||yes||yes||C||yes||Single-vehicle accidents at night in remote locations||$200 (pre-authorisation)||Retained for 14 working days|
|$200 plus rental amount (pre-authorisation)||Reversed|
|$0 - $4000 (pre-authorisation)||Reversed|
|Go Rentals||126||no||yes||yes||yes||yes||yes||Consequential loss; salvage costs after single-vehicle crash||$0 - $4500 (pre-authorisation)||Reversed|
|yes||no||yes||D||Recovery of bogged or immovable vehicles; single vehicle rollover damage||$0 - $2000 (payment)||May retain for unspecified period|
|Omega||126||B||yes||yes||yes||yes||no||Salvage costs after single-vehicle crash||Credit card details or $400 - $2500 (payment)||Refunded|
GUIDE TO THE TABLE EXCESS REDUCTION shows the cost to reduce the insurance excess to zero for the cheapest car available for a 7-day holiday in June 2018 from Auckland airport. AAvis and Budget do not offer a zero-excess option, so the cost to reduce the excess to $345 is shown. INSURANCE COVER compares notable insurance exceptions between rental car companies and is based on the company website information, inquiries and mystery shops.
▃ indicates cover is included in some excess-waiver packages or available as an optional extra. Bup to $400. Cunless damage caused by low-object collision. Dunless damage caused in single-vehicle crash. BOND refers to any-sized car. Bond return policy outlines what the company does with the bond on the return of the undamaged, clean and topped-up vehicle. na = not applicable.
|Company||Kilometres||Credit card surcharge||Excess for not-at-fault crash||Grace period||Cancellation fees||Pets allowed|
|Ace||Unlimited||None||Yes, returned if costs recovered||1 hour||10%||Disability assistance dogs only|
|Apex||Unlimited||None||Yes||1 hour 59 minutes||10% (3 to 30 days prior); 20% (within 72 hours); 50% (no shows)||Yes|
|Avis||Limited distances may apply||2.53% Visa, Mastercard; 3.57% Amex, Diners||Yes||29 minutes||Unspecified fee may apply if within 48 hours||Disability assistance dogs only|
|Budget||Limited distances may apply||2.42% Visa, Mastercard; 3.57% Amex, Diners||Yes||59 minutes||Unspecified fee may apply if within 48 hours||Disability assistance dogs only|
|Enterprise||Unlimited||1.73% Visa, Mastercard; 5.18% Amex, Diners||Yes, returned if costs recovered||2 hours||None||No|
|Europcar||Limited distances may applyA||2.19%||Not if other insurer agrees to pay||30 minutes||$57.50 (if within 2 hours)||Yes, if approved|
|Ezi||Unlimited||None||Yes, returned if costs recovered||1 hour||None||No|
|Go Rentals||Unlimited||None||Yes, returned if costs recovered||1 hour||10%; 50% (if within 24 hours); 100% (collection day)||No|
|Hertz||Limited distances may apply||2.29%||Yes, returned if costs recovered||29 minutes||$50; $100 (if within 24 hours); whole payment (no shows)B||Disability assistance dogs only|
|Jucy||Unlimited||2% Visa, Mastercard; 4% Amex||Yes, returned if costs recovered||1 hour||20% (if within 21 days); whole payment (collection day)||Disability assistance dogs only|
|Omega||Unlimited||$3.95 booking fee||Yes, returned if costs recovered||None||20% (if within 72 hours); 40% (if within 24 hours)||Disability assistance dogs (unless pet is caged)|
|Thrifty||Limited distances may apply||2.30%||Yes, returned if costs recovered||59 minutes||None||Disability assistance dogs only|
GUIDE TO THE TABLE based on the company website information, inquiries and mystery shops. Aspecialty vehicles only. EXCESS shows whether a hirer must pay an excess to the rental car company if they are involved in a crash where they are not at fault. GRACE PERIOD is the time in which a hirer can return a car after the designated time without being charged an additional amount. Bprepaid reservations only.
By Olivia Wannan