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  1. #1
    Join Date
    Jun 2011
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    Default Billed for a Rental Car Loss of Use Charge After an Accident

    My question involves insurance law for the state of: California

    I got into a single vehicle accident in an exotic car rental from http://www.clubsportiva.com/. My insurance has fully paid out ~$16K worth of damages to the vehicle. However on the original rental contract, there is a $5k wreck fee associated with car rentals due to loss of use. Here is the relevant portion of that contract

    LOSS OF USE - In the event of any damage to a Vehicle requiring repair, a loss of use fee shall be charged. This fee is calculated as one (1) day's weekend rental fee per week the Vehicle is out of service up to one (1) month, after which the Wreck Fee applies, as set forth below.

    WRECK FEE - In the event of any damage to a Vehicle in excess of minor damage, as set forth below, as a result of accident or otherwise, the Client must pay a fee in the amount of $5000 if the Client is found to be at fault. This fee is NOT part of an insurance deductible, but instead a paid deposit to Club Sportiva for added Vehicle depreciation due to damage and inconvenience to other Clients during repairs. Club Sportiva also reserves the right to bill for loss of use if Vehicle "down time" exceeds a reasonable repair time.

    My insurance would not cover my liability for that fee, but has pointed out that they cannot legally charge me this according to California Civil Code 1936 section c). The current bill seems very vague about loss of use charges, but section c) and d) implies that they cannot legally charge me for liability beyond the repair of the vehicle. The only thing that I'm not sure about is in subsection 3) of section d), it states:

    (3) A claim against a renter resulting from damage or loss,
    excluding loss of use, to a rental vehicle shall be reasonably and
    rationally related to the actual loss incurred.

    I'm not sure what they mean by loss of use here and I'm not sure whether this means I am liable for this or not.

    Here is a link to the current civil code 1936
    http://www.leginfo.ca.gov/cgi-bin/di...le=1925-1936.1

    Any help is much appreciated, thanks!

  2. #2
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    Default Re: Billed for a Rental Car Loss of Use Charge After an Accident

    You appear to be focusing on subsection (d)(3), but that subsection does not modify the limits explicitly set forth in (d)(1) and (2).
    Quote Quoting California Civil Code, Sec. 1936(b)-(d)
    (b) Except as limited by subdivision (c), a rental company and a renter may agree that the renter will be responsible for no more than all of the following:
    (1) Physical or mechanical damage to the rented vehicle up to its fair market value, as determined in the customary market for the sale of that vehicle, resulting from collision regardless of the cause of the damage.

    (2) Loss due to theft of the rented vehicle up to its fair market value, as determined in the customary market for the sale of that vehicle, provided that the rental company establishes by clear and convincing evidence that the renter or the authorized driver failed to exercise ordinary care while in possession of the vehicle. In addition, the renter shall be presumed to have no liability for any loss due to theft if
    (A) an authorized driver has possession of the ignition key furnished by the rental company or an authorized driver establishes that the ignition key furnished by the rental company was not in the vehicle at the time of the theft, and

    (B) an authorized driver files an official report of the theft with the police or other law enforcement agency within 24 hours of learning of the theft and reasonably cooperates with the rental company and the police or other law enforcement agency in providing information concerning the theft. The presumption set forth in this paragraph is a presumption affecting the burden of proof which the rental company may rebut by establishing that an authorized driver committed, or aided and abetted the commission of, the theft.
    (3) Physical damage to the rented vehicle up to its fair market value, as determined in the customary market for the sale of that vehicle, resulting from vandalism occurring after, or in connection with, the theft of the rented vehicle. However, the renter shall have no liability for any damage due to vandalism if the renter would have no liability for theft pursuant to paragraph (2).

    (4) Physical damage to the rented vehicle up to a total of five hundred dollars ($500) resulting from vandalism unrelated to the theft of the rented vehicle.

    (5) Actual charges for towing, storage, and impound fees paid by the rental company if the renter is liable for damage or loss.

    (6) An administrative charge, which shall include the cost of appraisal and all other costs and expenses incident to the damage, loss, repair, or replacement of the rented vehicle.
    (c) The total amount of the renter's liability to the rental company resulting from damage to the rented vehicle shall not exceed the sum of the following:
    (1) The estimated cost of parts which the rental company would have to pay to replace damaged vehicle parts. All discounts and price reductions or adjustments that are or will be received by the rental company shall be subtracted from the estimate to the extent not already incorporated in the estimate, or otherwise promptly credited or refunded to the renter.

    (2) The estimated cost of labor to replace damaged vehicle parts, which shall not exceed the product of
    (A) the rate for labor usually paid by the rental company to replace vehicle parts of the type that were damaged and

    (B) the estimated time for replacement. All discounts and price reductions or adjustments that are or will be received by the rental company shall be subtracted from the estimate to the extent not already incorporated in the estimate, or otherwise promptly credited or refunded to the renter.
    (3)
    (A) The estimated cost of labor to repair damaged vehicle parts, which shall not exceed the lesser of the following:
    (i) The product of the rate for labor usually paid by the rental company to repair vehicle parts of the type that were damaged and the estimated time for repair.

    (ii) The sum of the estimated labor and parts costs determined under paragraphs (1) and (2) to replace the same vehicle parts.
    (B) All discounts and price reductions or adjustments that are or will be received by the rental company shall be subtracted from the estimate to the extent not already incorporated in the estimate, or otherwise promptly credited or refunded to the renter.
    (4) For the purpose of converting the estimated time for repair into the same units of time in which the rental rate is expressed, a day shall be deemed to consist of eight hours.

    (5) Actual charges for towing, storage, and impound fees paid by the rental company.

    (6) The administrative charge described in paragraph (6) of subdivision (b) shall not exceed
    (A) fifty dollars ($50) if the total estimated cost for parts and labor is more than one hundred dollars ($100) up to and including five hundred dollars ($500),

    (B) one hundred dollars ($100) if the total estimated cost for parts and labor exceeds five hundred dollars ($500) up to and including one thousand five hundred dollars ($1,500), and

    (C) one hundred fifty dollars ($150) if the total estimated cost for parts and labor exceeds one thousand five hundred dollars ($1,500). An administrative charge shall not be imposed if the total estimated cost of parts and labor is one hundred dollars ($100) or less.
    (d)
    (1) The total amount of an authorized driver's liability to the rental company, if any, for damage occurring during the authorized driver's operation of the rented vehicle shall not exceed the amount of the renter's liability under subdivision (c).

    (2) A rental company shall not recover from the renter or other authorized driver an amount exceeding the renter's liability under subdivision (c).

    (3) A claim against a renter resulting from damage or loss, excluding loss of use, to a rental vehicle shall be reasonably and rationally related to the actual loss incurred. A rental company shall mitigate damages where possible and shall not assert or collect a claim for physical damage which exceeds the actual costs of the repairs performed or the estimated cost of repairs, if the rental company chooses not to repair the vehicle, including all discounts and price reductions. However, if the vehicle is a total loss vehicle, the claim shall not exceed the total loss vehicle value established in accordance with procedures that are customarily used by insurance companies when paying claims on total loss vehicles, less the proceeds from salvaging the vehicle, if those proceeds are retained by the rental company.

    (4) If insurance coverage exists under the renter's applicable personal or business insurance policy and the coverage is confirmed during regular business hours, the renter may require that the rental company submit any claims to the renter's applicable personal or business insurance carrier. The rental company shall not make any written or oral representations that it will not present claims or negotiate with the renter's insurance carrier. For purposes of this paragraph, confirmation of coverage includes telephone confirmation from insurance company representatives during regular business hours. Upon request of the renter and after confirmation of coverage, the amount of claim shall be resolved between the insurance carrier and the rental company. The renter shall remain responsible for payment to the rental car company for any loss sustained that the renter's applicable personal or business insurance policy does not cover.

    (5) A rental company shall not recover from the renter or other authorized driver for an item described in subdivision (b) to the extent the rental company obtains recovery from another person.

    (6) This section applies only to the maximum liability of a renter or other authorized driver to the rental company resulting from damage to the rented vehicle and not to the liability of another person.
    I have not examined the company's contracts to determine whether it is trying to circumvent the statute by describing itself as a "club" and, if that is the case, have no present comment on its membership contracts (which I have not seen) or whether they would or could create a claim above what is permitted by statute.

  3. #3
    Join Date
    Jun 2011
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    7

    Default Re: Billed for a Rental Car Loss of Use Charge After an Accident

    Thanks you for the answer. How does this change if the rental company is a club? The company is a club membership, however I am not part of that club. I signed up for a one day excursion, and thus I assume or believe that it should be the same as a rental.

  4. #4
    Join Date
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    Default Re: Billed for a Rental Car Loss of Use Charge After an Accident

    Read my last sentence again.

    If you're not in the club, any club-based provisions shouldn't be relevant to your situation.

  5. #5
    Join Date
    Jun 2011
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    7

    Default Re: Billed for a Rental Car Loss of Use Charge After an Accident

    Ahh thanks! Didn't realize that being in a club with club rules could override statute.

  6. #6
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    Default Re: Billed for a Rental Car Loss of Use Charge After an Accident

    ... Potentially.

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