Accounting for Law

'Aggressive' to use insurance clause to deny rental car coverage

Using an insurance clause to request that a customer pay thousands of dollars to a rental company for failing to report minor damage to the police is an aggressive way to try to deny coverage, Vancouver insurance lawyer Sean Lerner tells CTV News Vancouver.

As the broadcaster reports, the customer paid the car and truck rental company $25.99 for collision damage waiver for the day. However, he later scraped the side paneling of the cargo van he rented, resulting in roughly $500 to $1,000 in damage.

When he returned the vehicle after hours, the customer says he left a note about the damage and his credit card was later billed $1,000 for the deductible.

Although he thought the matter was settled, CTV Vancouver reports that he received a demand letter from the car and truck rental company’s lawyer two months later, stating he owed more than $4,300.

The company cited the fine print on the insurance document that said coverage is not included if the loss and damage is not reported to the company “and nearest police department at the time of the loss within 24 hours of the time of loss."

Lerner, principal of Lerner Law Corporation, tells CTV Vancouver he deals with insurance companies all the time but has never seen a clause like this.

“It's aggressive to use something like that to try to deny coverage,” says Lerner.

If the matter went to court, he adds, “my bet would be the rental car company would not succeed against him.”

The company has since reportedly given the man back the $1,000 he paid for the deductible and promised to drop the $4,300 claim, as well as offered a refund on his rental and a voucher for a future rental.

CTV News reports that the company says it would be more lenient about obtaining police reports on collision damage that doesn’t involve other vehicles, but says it would like customers to try to obtain one.

As the company is self-insured, it says it sets its own rules about deductibles and the rates it charges for the collision damage waiver.

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