I got into an accident in my rental and now the evil car rental company wants me to pay diminished value! Help!

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Joined: Tue Sep 29, 2020 11:55 am

I got into an accident in my rental and now the evil car rental company wants me to pay diminished value! Help!

Post by Simon »

First of all, they are not evil. Before you got the keys you signed a contract where you agreed to be liable for all losses resulting from an accident regardless of whether you are at fault or not. Those losses include diminished value. So the first part of this is unpleasant but easy. Yes, you are absolutely legally liable and this is 100% aboveboard.

The next question is something like: "but shouldn't my/credit card/rental insurance cover this?" Unless you are in Georgia the answer is "no." Why? Because only in Georgia your own insurance's Collision policy will cover diminished value. Most auto insurance policies from your credit card also exclude diminished value. And that is why the rental company is going after you. But also, because it's easier. Sometimes even if the accident is not your fault, they will still go after you because it's easier. Why is it easier? Because you signed a contract to assume full liability, they have your credit card on file and they can send your account to collections. So sometimes, it's easier to collect from you then pursue the at-fault driver or their insurance.

"What if I just don't pay?" I'm sure you are not the first who has thought of this "solution". If you don't pay, the car rental company might simply charge your credit card or send the bill to collections damaging your credit score and history. Not paying is not a very good idea.

"But it was wasn't my fault!" I understand. But you signed the contract and are liable. You should go after the at-fault party or their insurance to get compensated for everything you must pay to the rental company. In the industry, this process is called subrogation. Insurance companies do a lot of subrogation between each other. Unfortunately, in this case you might have to do your own subrogation and claim all the losses from the at-fault insurance since the rental car company doesn't want to bother with that and would rather go after you because they decided it's easier.

The bottom line is this. The accident resulted in diminished value of the rental company's vehicle. You signed a contract agreeing to be liable for that. Unless you are in Georgia, whatever insurance coverage you have likely doesn't cover diminished value. So you must pay and if you don't there are consequences.
Do you need more help? Sick of adjuster lies? Check out these resources!

How to choose a reputable diminished value appraiser?
How does a diminished value claim work for a car accident?
Frequently Asked Questions about Diminished Value

Simon Galperin is a senior auto appraiser at Tiger DV and an expert on diminished value. He consults attorneys, insurance companies and individual car owners on the subject of automotive diminished value.
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