A reader shared how they got stuck with $1289 in charges after their rental car got hit by someone else, even though they had insurance, the other driver had insurance, and they used a credit card with rental car collision coverage.
When renting from Hertz, my rental car was rear-ended. The other driver was at fault, so his insurance company paid for the vehicle damage. Hertz told me I still had unpaid fees including:
Administrative Fee: $150.00
Loss of Use: $315.00
Diminished Value: $1289.01I filed a claim with Chase Sapphire Preferred, who is reimbursing me $465, which apparently covers the first 2 fees, but not “Diminished Value.”
‘Administrative fee’ is a bit squirrely. When you or I get hit, we don’t get to bill the other driver’s insurance a fee for dealing with them even though it’s quite a hassle. On the other hand, the rental company does have to deal with this. And thankfully Sapphire Preferred’s coverage picked it up.
“Loss of use” represents the days out of service for the car, when it couldn’t be rented out to other customers.
- For these charges to be ‘legitimate’ the rental location needs to have been fully committed, if they had cars to rent but just not this one they aren’t really losing money
- And a car being out of service for a period of time could just mean that the car is held longer and rented out more later (at least if the rental company chose to do so)
An insurer may insist on fleet usage logs to show that the rental company really lost out on the opportunity to rent a car, because they didn’t have enough cars, while the damaged vehicle was out of service. Thankfully Sapphire Preferred’s collision coverage picked this up, too.
However ‘diminished value’ is another category of charge, which can be billed in some states. This represents the rental car company’s theoretical loss on the asset, how much less the car is worth even after it is repaired.
“Diminished value” after repairs stems from one of two things,
- Poor repairs that don’t fully restore a car to its prior condition
- Stigma people may value a car less that has had to be repaired than one that’s never been damaged, even if they are in the same condition
The rental company is responsible for the repairs and can hardly argue that they had the work done poorly. So here we’re talking about ‘even though the car has been restored a theoretical buyer wouldn’t be willing to pay as much for it.’
Diminished value can be valid, depending on the state. Many insurance companies won’t pay it and do not have to. My advice was to talk to the reader’s own insurance about it, to see whether their policy covers it (though the value here may depend on the relevant deductible). It could be covered under collision or liability. And the insurer might go after the at-fault driver’s insurance for it.
I’d also press Hertz for a copy of the appraisal documenting the diminished value. There are several ways of calculating diminished value, and some can be aggressive. If you have a prepaid legal plan or other access to inexpensive legal counsel, it could be worth a lawyer letter arguing over the calculation or amount – since it is largely subjective, and assuming the car goes back into service won’t be known until quite some time in the future when the car is actually disposed of (and will likely see diminution of value from numerous future incidents that cannot be disentangled).
I don’t buy rental company collision damage waiver, relying on primary collision coverage from my credit card and my own insurance. While I like to joke that primary credit card collision coverage lets me play ‘adult bumper cars’ this strategy doesn’t actually mean I am covered 100% all the time – even when I’m not at fault. The credit card agreement you ‘sign’ leaves you on the hook even for potential charges that would be disallowed by an insurer, and at a minimum having to fight the rental company over it.
This is surprising and discouraging at the same time.
I had an accident while renting a brand new Jeep Cherokee from Avis pre-Covid era. I totaled the car after hitting a deer on a small freeway here in the US. I had a Chase Sapphire Reserve and it covered everything – nothing out of pocket for me and my insurance did not get involved at all in the claim process.
So the moral of your article is to avoid Hertz at all cost?
I would refuse to pay this fee plain and simple.
And if you question the charge they’ll send the cops to haul you off to jail.
The first credit card company that offers “diminished value” coverage on their rental car coverage – I WILL SWITCH TO. I remember when “loss of use” wasn’t covered, but enough people complained, and now most cards cover this. I will have to look into annual rental car insurance policies to see if they cover this. DAMN.
Just another reason NOT to rent from Hertz! If u think this is bad; try dealing with this in a foreign country. Hertz becomes the aggressor with NO consideration to customer. I keep informing my company’s employee travel dept of all the issues I have w/ Hertz. I have to apply and justify the reason why I don’t want to do business w/ Hertz. Most of the time it’s approved.
This happened to me with a Hertz rental and Amex initially refused to pay it. The key in the language of the terms is that they will only pay diminished value if allowed by law. In the case of Minnesota it is allowed which is what I argued and they ended up paying it.
Hertz was also willing to significantly reduce the amount after pushing back a little, but unbeknownst to me Amex had already paid the full amount.
@Kebum Lee – If you didn’t pay you would likely have criminal charges filed against you for theft. Sorry but that is reality. You can’t always pick and choose what you pay for and what you don’t.
This is the final nail in the coffin
I will never rent from Hertz as long as I live
As Criminal as OJ but they don’t use a gun
@AC – Not paying such a fee isn’t theft. They might try to collect or even sue you, but it’s not a criminal matter.
The renter would not be responsible for the Diminished Value charges anyway. Hertz would need to go after the driver who rear ended the rental car, not the person who rented it.
My final nail was when they started having people arrested for no reason and KEPT DOINT IT even after it was widely publicized. Now it’s just funny how bad Hertz is
@ Gary — One more reason to just take uber, but I suppose soon enough uber will try to collect these fees from riders.
@David the driver is ultimately responsible for all losses based on their rental contract, again whether diminished value applies depends on the state as I understand it
LOL @ diminished value resulting from an accident when the car will be sold with history as a rental car. The accident will not diminish the value of that car. Hertz is scum.
So if I summarize the takeaway here:
If you are unlucky while driving a rental car, you will have to cough up big money and there’s nothing that can be done to protect you.
Is this for real?
I can’t believe we get simply screwed like this.
Gary, Is there any way they can file a criminal complaint for non-payment? If not, then one could dispute it in small claims court.
The key is it’s already a rental car, and appraisals that start with a non-rental car to figure diminished value are flawed.
But yeah, no reader of yours should ever rent from Hertz.
Courts a loath to grant speculative damages. As Gary astutely points the actual amount of the diminished value won’t be known for years since there could be additional damage that would dramatically change the valuation and assessment to various parties of diminished value. One could therefore argue that the matter wasn’t ripe meaning the facts in the case haven’t matured into an existing substantial controversy warranting judicial intervention. In other words, Hertz needs to wait until they sell the car and the the amount of diminished, if any, is known to come after you.
AC is wrong. Failure to pay would be a dispute over breach of contract. That’s a civil matter. Hertz would have to file a lawsuit and prevail in that suit.
This highlights an important gap in some credit card insurance (we’ll it’s not really insurance but that’s another story). If credit card excludes payments for diminished value be aware you could be on the hook for those costs if you don’t carry your own auto insurance or if that insurance doesn’t cover diminished value even if it covers you when driving a rental car. BTW I’ve not seen insurance that does and my attempt to purchase coverage for this and was unsuccessful.
Which leads to the observation that it might be better if one had an accident that the car was totaled since in that case it wouldn’t be repaired and so there is no value to diminish. Not that I’m suggesting anyone…
I do not know why my first comment never made it.
Here is my experience. Rented an almost brand new Jeep Cherokee from Avis and ran over a deer – the car was a total loss. A claim through Chase Sapphire Reserve took care of everything and my insurance company was never contacted or involved in any of the process.
I just looked at what Avis billed me, there is an admin fee of $300, loss of use of $466, and storage or towing expense of $135. This was back in late 2019, so pre-COVID.
@JL wrote “If you are unlucky while driving a rental car, you will have to cough up big money and there’s nothing that can be done to protect you. Is this for real?”
There may be things you can do.
You can see if your auto insurance company will sell you a rider that covers diminished value, or a specialized policy like the ones from Amex (if they cover diminished cost), not rent in jurisdictions that permit these costs or not rent from companies that assess them.
Or you just shrug and shoulder the risk figuring that you can negotiate with the company over how much they will settle for. Which is the conclusion I think people who have thought about this come to.
I don’t see why they went after the renter. The at fault person should be charged any of those fees, or at least their insurance policy. If the person lost control of their car and hit a Hertz car on the lot while it wasn’t rented out, who would they go after? Its all semantics. I’d sent Hertz a bill for billing me charges not owed by me. I’d also refer Hertz to the others persons insurance company to collect since it was their fault.
That said, as you state, the diminished value is subjective. If I’m going to have to pay it, I’ll take them to small claims court and make them prove the amount. How do you prove diminished value? At the same time, if my car is wrecked in a collision, and the insurance company is say Progressive, who is terrible to deal with, and they insist on using after market parts, then I have a claim for diminished value on my car because the duty of the insurance company is to repair the car to the same condition it was prior to the collision.
Totally agree with @ Rich.
Whatever “diminished value” the car might suffer to a theoretical buyer is paltry compared to the “diminished value” of the subject car being for the term of its life a rental car.
That charge is outrageous and another reason why I would avoid using Hertz.
Gary — Has anyone compiled a list of “diminished value” states?
@UnionThat wrote “I don’t see why they went after the renter.”
Because the renter agreed to it. That’s what happens when you sign something.
Matthiesen, Wikert & Lehrer publish a pdf outlining the law and cases pertaining the a rental company’s ability to recovery for loss of use. They also publish a similar document summarizing which states require insurers to pay for diminished value. Both make for interesting reading if you are into that sort of thing.
I haven’t found an equivalent document describing a rental company’s ability to recover diminished value although the loss of use makes references to two cases on in Idaho and the other in Minnesota that did allow for recovery. Given that’s unless one has a good reason to believe a state doesn’t not permit recovery for either loss of use or diminished value it would be prudent to assume that they all do.
The renter is not without recourse.
First his primary policy (assuming he has a personal vehicle) would have to respond if a claim was filed. I personally prefer to let my insurer Duke it out with other insurers – it is what I pay them for. Yes my rate may go up but it is worth it to avoid this nonsense.
Second, the renter can refuse to pay. Hertz can sue the renter and the renter can then interplead the driver who was at fault. A hassle for sure but ultimately the driver at fault is the one liable.
Hertz cannot have you arrested because you did not steal the car. This is simply a civil case for breach of contract, tort (damaged property) or debt collection. Very different from the bogus “stolen vehicle” reports that hertz files with police. The cops will tell them to pound sand on their civil complaint.
For sure this is another reason not to rent from hertz as typically a vehicle owner will claim against the driver who caused the accident. But hertz likes to cut corners and shaft its customers rather than do the right thing.
Yet another reason why not to rent from Hertz. Haven’t there been enough of these too scare everyone away yet?
They went after the renter because they have his credit card.
I’ve been through this with a Hertz rental on a Chase card that offered primary coverage. The only distinction was that I was at fault in my crash.
In my case I had about $3900 in physical damage, $275 in loss of use, $150 admin fee, and $1700 in diminished value. This was in 2018.
Here’s what I learned:
* Hertz won’t provide any meaningful backup for their diminished value calculation. I demanded it and they just sent me a screenshot from some black-box computer program. They plug in some variables (in-service date of the car, date of loss, capitalized cost of the car, depreciation rate, mileage, and the repair cost) and it spits out a diminished value number. They said they don’t know anything more about how it gets calculated.
* Chase was willing to cover everything EXCEPT the diminished value, since it’s specifically excluded in their T&Cs.
* Travelers (my personal auto insurer) was willing to cover only the physical damage. They refused to cover the administration fee, loss of use, or diminished value.
* Hertz was willing to negotiate on the bottom line number. They ultimately came down a little over 20% from the original bottom line number. But that wasn’t quite enough to let Chase cover the whole thing, since diminished value was about 28% of the total.
* I tried to get fancy and have Chase pay what they were willing to pay, and have Travelers pay the rest, since each was willing to pay $4000 or more and Hertz was willing to accept about $4600. But that backfired. Chase refused to pay anything unless it came with a full release from Hertz. And when I talked to Travelers about whether they could cover the delta, they went ahead and paid the physical damage portion without my approval and without getting me a release from Hertz! Chase then still refused to pay anything in respect of diminished value (even though they were previously willing to pay far more than the remaining balance to settle the thing). So in the end, Travelers paid the physical damage (which should have been paid by Chase), Chase paid the admin fee and loss of use, and I paid the last few hundred dollars necessary to get Hertz to the level where they’d issue a release. Sigh.
Ask the rental car company to submit itemized invoices for any charges such as processing paperwork, etc.. If these don’t include documentation of work done, hours worked etc ask for that information.
Ask for a copy of the diminished value appraisal and confirm it is by an independent licensed appraiser (if required in that state). Confirm the appraiser personally inspected the car. Review the basis for the diminished value calculation and confirm the appraisal is for a vehicle in commercial not private use as the diminished value should be less.
Note that some states allow a company to recover diminished value or damage to the vehicle, whichever is less but not both.
Ask for copies invoices for all repair work done on the vehicle. Confirm the work was done by an independent shop or the company itself. Ask the company to confirm the amounts shown are amounts actually paid by the company (not just internal number or payments not including discounts or rebates).
If the company refuses to provide any of this information and charges your credit card you have a basis for bringing a small claims court action where you reside assuming the company has a presence in your state, which almost all the rental companies do.
Gary,
I had a recent <48 hour (mostly highway and less than 150 miles total) rental out of SFO with a mainstream rental agency (name isnt important right now) – and I have top tier status with them. It was my first personal rental with them in some time (vs everything else being business) and I put it on my United Explorer Business card. When I returned the car, they told me on inspection that they found some damage to the under carriage of the car – obviously I was not happy but nothing I could do at the moment. Interestingly, I got an email the next day asking me about my experience renting from them – and I clearly gave them an objective piece of my mind (like how rarely does anyone actually inspect the cars and no one looks under them and I am not getting on my hands and knees to inspect a car in an airport parking garage). The email said that they would reach out to me asap to discuss my less than ideal experience…. obviously no one has reached out and I cant wait to see what comes next……. as soon as I got to the lounge at SFO, I called my work travel agent and told them to change my 17 day rental that I was picking up that afternoon to a different company.
I know these types of things are common in tourist areas of Europe – but maybe with increasing vandalism (the agency warned me not to leave ANYTHING in the car while I was inn San Fran) and nonsense like this – you can write about what we can do to protect ourselves from all of this craziness? What's next – the airlines charging passengers if their seats break?
I thought Hertz was out of business….
Reason #1001 to NEVER rent from Hertz. Have your credit card company issue a new credit card with a new number. They won’t litigate diminished value.
I rented from Hertz about 6 weeks ago because of the 4 hour grace period you get with the Biz Platinum and Presidents Circle. Never again! It was a 48 hour rental and my car broke down twice. First time had to wait 4 hours for help, 2nd time 9 hours. Luckily I was in a safe location but basically spent my whole weekend in my hotel room waiting or this Taco Place. I’m a woman traveling solo and the only way I could get a new car was to ride back 2 hours to the Atlanta airport at MIDNIGHT with the shadiest tow tuck driver you have ever seen in your life (reeking of weed). I’m assuming this happens with most rental car companies but you can’t return a car rented from a corporate location to a private location so that’s why the only way to get a new car was at the airport location. Luckily I was in Athens, GA and they had an airport shuttle so I didn’t have to ride back with the tow truck driver. I had to make the decision if I wanted to approve an “unattended tow” and not be with the car when it was returned, or ride back with the driver. I decided on the unattended tow. I took a video of me giving him the keys and him driving off with the car wondering if I would end up in jail in a few months. Then Hertz tried to charge me for an extra rental day since it took them a while to check the car back in after he returned it. I had to pay for the jump the first night b/c their payment desk closes at 9pm. Luckily the 2nd day Hertz paid the driver in advance. Luckily Hertz did reimburse me for the rental and all of my expenses and I have the receipt that the car was returned. The rental desk at the airport was no help and laughed at me when I asked for a refund for my expenses and they said that was the funniest thing they have heard all day. So I emailed customer service and they surprisingly responded within 24 hours and refunded what I paid for the rental and the other expenses my credit card within about a week. I added up all of the time spent calling them about this over that 48 hours and it was 6 hours. They kept telling me someone would be there soon so of course I had no idea it would take 4 or 9 hours. Awesome vacation. 🙁
They use AAA and for some reason there was no-one available both days so they had to find other companies. This is Athens, GA – a decent sized city. The college kids weren’t even back yet so the town was dead. Why would no one at AAA be available? I eventually called AAA myself and let them know the situation and told them I’m a member. That didn’t seem to help at all. I did learn that you can use your own AAA membership for a rental car, so if this ever happens to me again I will probably call AAA directly and not even deal with the rental car company. I feel like I probably would have gotten better service that way. Another thing I learned is to choose the most common car on the lot. Since my issue was that the car needed a new battery, it could have been an easy fix if Autozone had the battery in stock. (Although I would have still been waiting for the tow truck driver).
So it’s financially better for the customer to have the rental car totaled in an accident than to have a lesser accident?
Isn’t it the case in some places that once the rental car has sustained damaged and needs repairs amounting to something like 40% (or more) of its pre-accident value in repairs, then the car should be considered totaled and have its full pre-accident value written off and the vehicle value considered to be zero?
Remember to avoid all the other companies owned by Hertz – Thrifty (abysmal reports from Kona, HI) and Dollar.
@GUWonder: Yes, in my case it definitely would have been better for me if the car had been totaled, as Chase would have covered 100% of the value, while they refused to cover the diminished value claim.
About 16 states, by my count don’t allow “diminished value” charges at all. Another 5 potentially don’t permit it, but it’s hard to tell. A smattering of others don’t seem to allow speculatively calculated values and essentially the calculation is speculative.
Don’t think that Hertz is the only rental car company charging this to run to other companies. I had it with Enterprise. It was a few years back and they tried to tack on $1,200. I was renting due to my car being in the body shop from being hit by a car running a red light. In this case, I was hit by a car whose driver was texting and she slammed into my rear. My insurance company balked at the amount. I asked Enterprise how they came up with the amount. They couldn’t give me an answer. I got the insurance to write a letter saying that the value charged made no sense and there was no evidence from Enterprise that the basis they used had any reasonable certainty of occurring which is the standard in PA. Enterprise dropped the charge. I don’t know what they do in PA now.
You’ve got to know your state law to know how to fight it, but this can be successfully fought. Virtually every state has real standards which much be used to make the calculation. The companies generally have an algorithm and have gotten away with it because they don’t get challenged very often.
I use American Express for the CDW type coverage and they won’t pay for DV while they will pay for LOU. I’m at the point of my life where I won’t accept nonsense charges like DV. I challenge it, particularly because I think the charge calculation is bogus virtually all the time.
As to refusing to pay it…I know people who have tried that with Hertz, Avis, Budget and Enterprise. They all lost in that effort as the credit card always put the charge through. Plus these companies will go to small claims courts to recover the money if you don’t pay and somehow get the credit card company to side with you. You’ll lose in court because the court will correctly call it breach of contract. They’ll add in attorney’s fees and court costs which mean your bill will even be higher by not paying.
Gary thank you for posting this. As a California resident after reading your previous post about Hertz once again arresting customers based on their poor IT systems I sent an email to Hertz to demand they remove all my personal information from their systems. I will never do business with this horrible company again after doing business with them for decades in multiple countries on multiple continents. They should be driven out of business. This “diminished value” charge is b.s. as were two of the bogus charges they added years ago in South Africa that I fought tooth and nail — and I won.
and to think I thought this article was going to be about CC insurance failing to pay for a flat tire