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Rental Cars More Than Meets The Eye Course # 71430 2 Hour Webcast 1 FAIA Copyright 2011

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2 Rental Cars More Than Meets The Eye This is me in Death Valley

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3 Time to Get Rolling Bad advice.

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4 Main Goals Today 1. Show you what you agree to in a rental car contract. 2. Point out gaps in the PAP and BAP when it comes to rental cars. 3. Make the point that $25 a day for the Loss Damage Waiver might not be a total rip-off.

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5 A Few Questions First

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6 Our First Question In the past 12 months, have you rented a vehicle for any reason?

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7 One of my Recent Rentals

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8 Idiot about to run. 124 degrees! Idiots rental car. Car on dirt. We will re-visit this later!

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9 Our Next Question During your entire life, how many times do you estimate you have rented a vehicle of any type?

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10 Our Next Question Have you ever rented something big, like what is shown here?

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11 Question Question Have you ever read the rental car contract prior to renting?

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12 Our Next Poll When you rent a car, do you buy any of the insurance offered?

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13 Question Have you ever rented a car, only to have it damaged in some way?

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14 Class Content Rental car contracts What they say. What you can and cant do with that vehicle. Protection offered by rental car firms Why it may be a good deal PAP coverage analysis BAP coverage analysis Credit card coverage Horror stories

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15 Rental Car Contracts WARNING: Every contract is different. Read YOUR contract!

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16 Who May Drive The Vehicle

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17 Who May Drive You Anyone else on the contract Anyone authorized under your CDP# Typically fellow employee, perhaps spouse Valet parking attendant Anyone else in an emergency (defined) All operators must be at least age 25 Company H

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18 Who May Drive You Spouse/domestic partner If rented under corporate account, fellow employee All drivers must be at least age 25 and possess a valid license Company A

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19 Who May Drive Who is missing from Company A? Company A

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20 Who May Drive Who is missing from Company A? Company A ANSWER Valet Emergency

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21 Who May Drive You Anyone on the contract If rented under your corporate account, fellow employees Missing Spouse, family members Emergency Valet parking attendant Company D $

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22 Who May Drive You Spouse Anyone on the contract Missing Valet Emergency Fellow employee Kids/family members Company E

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23 Prohibited Uses

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24 Prohibited Uses Operation by non-authorized driver Use outside the U.S. Failure to use seat belts, child seats Use off paved roads Company H

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25 Sweatmans BBQ Dirt.

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26 Confession Time For Me!

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27 This is not Mars! Its Death Valley.

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28 Prohibited Uses Leaving the keys in the car Failing to close and lock all doors Use while intoxicated or on drugs Use in any type crime (drugs in car) To tow or push anything Speed contest In driver training Company H

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29 Prohibited Uses Use by non-authorized driver Tow/push anything Speed contest Use on unpaved roads Drunk/high While overloaded Outside the U.S. Company A

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30 Prohibited Uses Similar to others, but Carrying or loading anything on the vehicle. Company D $ You might be a redneck if

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31 Prohibited Uses Similar to others, but Renter shall not remove seats from auto Vehicle shall not be used to store or transport explosives or corrosives Company E

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32 Damage to the Vehicle

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33 Damage to the Vehicle Damage to the Vehicle You are responsible for any and all damage from any cause. Responsibility limited to retail fair market value, less salvage, plus towing & storage, plus an administrative fee, plus reasonable charges for loss of use. Company H

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34 Damage to the Vehicle Damage to the Vehicle You will pay us for all loss or damage to the car, regardless of cause You will pay our estimated costs You will pay for loss of use of the car, without regard to our fleet utilization, plus an admin fee, plus towing & storage charges Company A

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35 Damage to the Vehicle Damage to the Vehicle You are absolutely liable and agree to pay us for any loss or damage to the vehicle You are liable for: The full value of the vehicle Towing & storage Loss of use Admin fee Pro-rata license plate fee Diminished value Company D $ Who defines what full value is?

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36 Damage to the Vehicle Damage to the Vehicle Fair Market Value Towing, storage, admin fees Loss of use Diminished value Company E Does the PAP cover diminished value?

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37 Insurance Offered Insurance Offered Loss Damage Waiver $26.99/day Liability/UM Insurance Supplement $1 million -- $12.44/day Personal Effects Coverage $1,800 Personal Property $2,500 Medical (per person) $175,000 ADD $5.50/day Company H

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38 Insurance Offered Insurance Offered Loss Damage Waiver. $27.99 Personal Accident Insurance. $4.00 AD&D $175K, medical $2,500 Personal Effects Protection. $2.95 $600 per person, $1,800 max Additional Liability. $14.43 $1M, but no UM. Company A

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39 If You DO Buy the Insurance..

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40 If You Do Buy Use of the car in any prohibited manner will void Loss Damage Waiver and cause you to be responsible for loss or damage to the car. Remember, prohibited uses Non-authorized driver Off paved roads DUI Company H

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41 If You Do Buy LDW does not apply if: You use the vehicle in violation of the prohibited use section You fail to remove & secure the keys, or close & lock all doors & windows, and the vehicle is vandalized Company D $

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42 PAP Coverages

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43 PAP Coverages Five coverages: Liability PIP Med-Pay UM Part D Damage to Your Auto

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44 PAP Liability 1. You or any "family member" for the ownership, maintenance or use of any auto or "trailer". Take aways later on Any auto or trailer What is an auto?????

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45 What Is An Auto Websters A road vehicle driven by mechanical power.

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46 Is It An Auto - Test

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47 Road vehicle driven by mechanical power?

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48 Road vehicle driven by mechanical power?

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49 Road vehicle driven by mechanical power?

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50 Is This An Auto? Is This An Auto? Road vehicle driven by mechanical power?

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51 Road vehicle driven by mechanical power?

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52 PAP Liability Exclusions

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53 Car Business 6.While employed or otherwise engaged in the "business" of: a.Selling; b.Repairing; c.Servicing; d.Storing; or e.Parking; vehicles designed for use mainly on public highways.

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54 Business Use of Big Stuff 7.Maintaining or using any vehicle while that "insured" is employed or otherwise engaged in any "business" (other than farming or ranching) not described in Exclusion A.6. This Exclusion (A.7.) does not apply to the maintenance or use of a: a.Private passenger auto; b.Pickup or van; or c."Trailer" used with a vehicle described in a. or b. above.

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55 Less Than Four Wheels We do not provide Liability Coverage for the ownership, maintenance or use of: 1.Any vehicle which: a.Has fewer than four wheels;

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56 Non-ISO Cautions

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57 What is an Auto? Non-ISO cautions. Company A Auto means a land motor vehicle: a. of the private passenger, pickup body, or cargo van type; b. designed for operation principally upon public roads; c. with at least four wheels; and d. with a gross vehicle weight rating of 12,000 pounds or less, according to the manufacturers specifications.

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58 What is an Auto? Non-ISO cautions. Company B Non-owned auto means a private passenger auto or utility auto. Utility auto means a vehicle with a load capacity of 2,000 pounds or less of the pickup body, van, or panel truck type which is not used for business purposes.

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59 What is an Auto? Non-ISO cautions. Company C... Car means a self-propelled land vehicle with four or more wheels, with a GVW of 10,000 pounds or lessand a motorhome if such motorhome is listed on our declarations page.

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60 PAP Liability - Primary/Excess From the PAP: OTHER INSURANCE However, any insurance we provide for a vehicle you do not own, including any vehicle while used as a temporary substitute for "your covered auto", shall be excess over any other collectible insurance. Some state statutes may change this.

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61 PAP Medical Payments

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62 Med Pay Who Is An Insured B."Insured" as used in this Part means: 1.You or any "family member": a.While "occupying"; or b.As a pedestrian when struck by; a motor vehicle designed for use mainly on public roads or a trailer of any type. 2.Any other person while "occupying" "your covered auto".

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63 Med Pay - Exclusions Car business Business Use of Big Stuff Less than four wheels

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64 Uninsured Motorists Coverage

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65 UM Who Is An Insured B."Insured" as used in this Part means: 1.You or any "family member". 2.Any other person "occupying" "your covered auto". Mom, Dad, and the kids get UM in a rental car. Family Members

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66 UM - Exclusions Not many out there These exclusions do NOT apply: Car business Business use of big stuff Less than four wheels Remember: UM is state specific.

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67 UM Stacking vs. Non-Stacking No unique differences for UM relating to a rental vehicle

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68 Physical Damage

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69 The Grant of Coverage We will pay for direct and accidental loss to "your covered auto" or any "non-owned auto", including their equipment, minus any applicable deductible shown in the Declarations. If there is a loss to a "non-owned auto", we will provide the broadest coverage applicable to any "your covered auto" shown in the Declarations.

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70 Non-Owned Auto Any private passenger auto, pickup, van or "trailer" not owned by or furnished or available for the regular use of you or any "family member" while in the custody of or being operated by you or any "family member"; or

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71 For physical damage..Any private passenger auto, pickup, van or "trailer

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72 For physical damage..Any private passenger auto, pickup, van or "trailer

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73 Question? Does the standard ISO PAP cover loss of use charges down time?

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74 Loss of Use Charges Expenses for which you become legally responsible in the event of loss to a "non- owned auto". We will pay for such expenses if the loss is caused by: a.Other than "collision" . b."Collision However, the most we will pay for any expenses for loss of use is $20 per day.

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75 Why pay $25+ for Damage Waiver?

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76 #11 Deductible PAP deductible applies

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77 #10 Loss Valuation PAP pays ACV Rental car contract may say full value Diminished value $15,000 on an SUV !

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78 #9 Loss Settlement PAP carrier has right to inspect vehicle

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79 #8 Loss Payment Rental car firm may require immediate payment Credit card may be charged Delay in payment by PAP carrier

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80 #7 Indirect Losses Down Time PAP covers $20/day One renter was hit with $2,000 in charges

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81 #6 Administrative Expenses Towing, storage, and appraisal fees imposed by rental car firm PAP covers these, up to $600 maximum; loss of use + admin fees = $600 max

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82 #5 Other Insurance PAP is excess in non-owned autos Credit cards are typically excess Excess vs. excess how does it work?

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83 #4 Excluded Vehicles & Territories PAP covers private passenger auto, pickup, van trailer No cycles, box trucks, motor homes $1,500 limit on non-owned trailers Territory is U.S., Canada, Puerto Rico, territories & possessions Not Covered by the PAP! Possible limited BAP coverage

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84 #3 Excluded Uses & Drivers Older PAPs exclude business use of non- owned pickup or van PAP may have driver exclusion

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85 #2 Additional/Future Costs Increased cost of PAP Re-pricing from preferred to standard CLUE hit

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86 #1 The Hassle Factor Life simplification! Hello insurance agentIm calling you from Alaskaand its not good news!

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87 Bottom Line Loss damage waiver is expensive but it may be worth the price! I always buy the LDW.

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88 Question Are you any more likely to buy any of the insurance from the rental car firm the next time you rent?

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89 Time to Change Hats Take off the PAP hat Put on the BAP hat

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90 BAP Symbols 1. Any auto (Liability only) 2. Owned autos 7. Specifically described autos 8. Hired autos (Liability/Physical damage) 9. Non-owned autos (Liability only)

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91 Important Question When David rents a car for FAIA business, who is rentingDavid or FAIA? Why is this important? Who is an insured

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92 You is the BAP named insured, typically a corporation. If David rents the car, did you hire the car? Very controversial. Easy solution thoughCA 20 54

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94 Makes an employee an insured for liability, even if auto rented in his/her name. Still need Symbol 1 or 8. Provides physical damage coverage when employee rents in own name Performing duties related to YOUR business.

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95 Recommendation Always add the CA 20 54 to all BAPs Also, every BAP should include Symbol 8 for physical damage coverage. Just do it!

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96 BAP Liability Coverage Temporary Substitutes Symbol 7 for all coverages Company car in shop for repairs Insured rents a car as a temporary substitute vehicle What is covered? Liability only Physical damage only Both Nothing

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97 BAP Liability Coverage Temporary Substitutes The answer is: Only liability No physical damage coverage without Symbol 8

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98 BAP Liability Coverage Key point Every BAP needs to have either Symbol 1 or Symbol 8 for liability And (at a minimum) Symbol 8 for physical damage .ALL THE TIME! I knowI have said this twice.

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99 BAP Liability Coverage Primary/Excess BAP Liability is primary. Contractually assumed.

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100 Med Pay & UM Symbols available for use: Symbols 2, 3, 4, 7 Therefore, no BAP med-pay or UM for a rental car

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101 Physical Damage Symbol 8 required Does the carrier have a limit per vehicle?

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102 Physical Damage Primary/Excess From the policy For Hired Auto Physical Damage Coverage, any covered "auto" you lease, hire, rent or borrow is deemed to be a covered "auto" you own. However, any "auto" that is leased, hired, rented or borrowed with a driver is not a covered "auto".

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103 Physical Damage Loss of Use Loss Of Use Expenses For Hired Auto Physical Damage, we will pay expenses for which an "insured" becomes legally responsible to pay for loss of use of a vehicle rented or hired without a driver, under a written rental contract or agreement. However, the most we will pay for any expenses for loss of use is $20 per day, to a maximum of $600.

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104 BAP Policy Territory 7. Policy Period, Coverage Territory The coverage territory is: a. The United States of America; b. The territories and possessions of the United States of America; c. Puerto Rico; d. Canada; and e. Anywhere in the world if : (1) A covered "auto" of the private passenger type is leased, hired, rented or borrowed without a driver for a period of 30 days or less; and (2) The "insured's" responsibility to pay damages is determined in a "suit" on the merits, in the United States of America, the territories and possessions of the United States of America, Puerto Rico, or Canada or in a settlement we agree to. CA 20 54 Still need these!

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105 Credit Card Coverage

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106 Question Have you ever read your credit card agreement as it relates to rental cars?

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107 Credit Card Coverage Warning! Each card is different Read the fine print!

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108 Each one is different

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109 31 days or less Physical damage coverage only Excess coverage You must decline LDW Must pay for entire rental with the card MSRP of $50,000 or less Loss of use covered, as supported by fleet utilization logs MasterCard

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110 MasterCard No pickups, full size vans, off road vehicles, trailers, motorcycles Various excluded countries No coverage if rental agreement violated Void if DUI Rentals where LDW was purchased not covered Admin fees, diminished value not covered

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111 American Express Remember.. each AMEX is different

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112 American Express Optional service.Must sign up $24.95 per rental $100,000 for damage to car (Primary!) $100,000 AD&D $15,000 per person med-pay $15,000 per person contents

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113 American Express Covers rentals for up to 42 days Exclusions: Customized autos Antique autos Off road & cycles Campers/moving vans & trucks Trailers Certain countries (Aust. NZ, Jamaica)

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114 Horror stories claims

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119 Horror stories claims Traveling doctor $13,000 in damage. 90 days to resolve.

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120 Horror stories claims Using points to rent/Amex card

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121 Horror stories claims Using points to rent/Amex card

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122 Horror stories Claims The rolling tire Damage: $1,080 Loss of use $111(Denied) Admin fee $101 (Denied) Diminished value $120 (Denied) Deductible: $500

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123 Horror stories Claims Rock Climbing Hit & Run Company H: We will be in touch! be in touch! $4,400 damage $370 admin fee $620 loss of use $3,100 diminished value Customer refused to pay Company H Company H filed suit. Lawyers involved Four-day rental.

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124 Question When your customer calls next time about a rental car, has this material helped you?

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125 Unauthorized Entity Issues Verify with the DFS: www.fldfs.com / www.myfloridacfo.com 1-800-342-2762 / 1-877-MY-FL-CFO

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126 Listen up. REAL important!

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129 Electronic Option

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130 Rental Cars 71430

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Rental Cars More Than Meets The Eye Course # 71430 131 FAIA Copyright 2011