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A car rental or car hire agency is a company that rents automobiles for short periods of time (generally ranging from a few hours to a few weeks) for a fee. It is an elaborate form of a rental shop, often organized with numerous local branches (which allow a user to return a vehicle to a different location), and primarily located near airports or busy city areas and often complemented by a website allowing online reservations.

Car rental agencies primarily serve people who have a car that is temporarily out of reach or out of service, for example travellers who are out of town or owners of damaged or destroyed vehicles who are awaiting repair or insurance compensation. Because of the variety of sizes of their vehicles, car rental agencies may also serve the self-moving industry needs, by renting vans or trucks, and in certain markets other types of vehicles such as motorcycles or scooters may also be offered.

Alongside the basic rental of a vehicle, car rental agencies typically also offer extra products such as insurance, global positioning system (GPS) navigation systems, entertainment systems, and even such things as mobile phones.

Hertz is one of the longest established rental companies, and the first in America, originally started in 1918 by Walter L. Jacobs as Rent-a-Car with twelve Ford Model T cars in Chicago.^[1]

Business models[link]

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The Rental Car Center at George Bush Intercontinental Airport

Car rental companies operate by purchasing or leasing a number of fleet vehicles and renting them to their customers for a fee. Rental fleets can be structured in several ways – they can be owned outright (these are known as ‘risk vehicles’ because the car rental operator is taking a risk on how much the vehicle will be sold for when it is removed from service), they can be leased, or they can be owned under a guaranteed buy-back program arranged directly through a manufacturer or manufacturer’s financial arm (these are known as ‘repurchase vehicles’ because the manufacturer outlines the exact price of original sale and of repurchase at the end of a defined term).^[2]

At the end of a rental vehicle's useful life, rental companies will often sell them into the used car market to dealers across the country via several methods, including direct-to-dealer and via specialized wholesale auctions companies (such as Manheim Auctions in the USA). Dealers generally will go through an inspection of the vehicles to make sure they comply with the safety standards of that dealership and then sell the car to the public. Many of these are known as program vehicles in the representation by the selling dealer.^{[citation needed]}

Types of vehicles[link]

Most car rental offices offer a range of vehicle sizes to suit a variety of budgets and space requirements and some additionally offer specialised vehicles to suit its location such as convertibles, prestige models, hybrid/electric vehicles or SUVs and passenger vans. At major airports or in larger cities, some independent car rental agencies offer high-end vehicles for rent. Some specialised companies such as Rent-a-Wreck offer older vehicles at reduced prices.

To allow for a uniform classification and easy comparison of car rental prices, the Association of Car Rental Industry Systems and Standards (ACRISS) has developed the ACRISS Car Classification Code coding system. This describes the size, door count, gearbox type (manual/automatic) and whether the car is air-conditioned, encoded into four letters. Additional classifications based on seat numbers and trunk volume were also set by the Belgian Rent a Car association in order to provide a unified system for assessing the car types in online reservation systems such as Amadeus or Argus.

Rental conditions[link]

Car rentals are subject to many conditions which vary from one country to another and from one company to another. Generally the vehicle must be returned in a good condition and sometimes must not exceed a maximum driven distance, otherwise extra fees may be incurred.

Some companies set a minimum age for the vehicle driver, which in some cases is as high as 25, even in countries where the minimum legal age to hold a driver's license is much lower. In all cases a valid, current driver's license is required in order to rent a vehicle, and some countries require an International Driving Permit.

Recent conditions have utilized GPS technology to limit maximum speeds^[3] or driving to specific regions. Renewable fuel vehicles are available in certain areas.^[4]

The majority of car rental companies require the use of a credit card to charge additional fees should a defect be found with the car on its return or for road tolls, motoring related fines or missing petrol. In lieu of a credit card some companies require a large cash deposit.

Insurance / waivers[link]

Although frequently not explicitly stated, US car rental companies are required by respective state law to provide minimal liability coverage, except in California, where the driver is solely responsible.^[5] This covers costs to a third party in the event of an accident.^[6] In most states it is illegal to drive a car without liability coverage. The rental car companies have liability with their vehicles, however some companies will charge for this, should you not provide your own insurance. As an example, in Maryland the minimal level of liability coverage is $20,000 for bodily injury and $15,000 for property damage.^[7]

It is typical, when renting a car, to be offered various forms of supplemental insurance and/or damage waivers as an optional extra at additional cost. There are several types of coverage:

• Loss Damage Waiver (LDW) – sometimes also referred to as Collision Damage Waiver (CDW) - covers the costs of damage to the rental vehicle in the event of an accident. In some countries the purchase of LDW covers all costs after an "excess" fee has been paid (e.g. all costs are covered after the first $500). Often a "Super" insurance product is available which makes this excess amount zero. Note that LDW/CDW coverage is not insurance and does not offer the same coverage as a damage insurance policy.^[8]
• Supplemental Liability Insurance (SLI) – a product often sold in the USA which provides coverage in the event of an accident causing bodily injury or property damage to someone other than the renter and passengers.
• Personal Accident Insurance (PAI) – covers medical costs and accidental death for the renter and passengers in the event of an accident during the rental.
• Personal Effects Coverage (PEC) – insures against risk of loss or damage to the personal belongings of the renter (and sometimes the members of the renter's family while traveling with the renter) during the period of the rental.
• Excess Insurance – When a car is hired in Europe, Africa, Australasia, and most of the Middle and Far East, CDW, Theft and Third Party Liability are generally included in the car rental price. There is almost always an excess (also referred to as Super CDW, Non Waiver or Deductible) on the CDW and Theft portions of the rental. A higher excess usually results in a lower premium on the insurance. Excess is used to discourage drivers from making insurance claims for small damage. If the damage is cheaper to repair than the excess then generally the driver would not claim and the insurer is saved the cost of the repair. The Excess can range from about £500 to £1,600 and is the portion of the loss that the renter is responsible for, regardless of which supplemental insurance / waiver products have been purchased. Excess is just starting to be charged in the USA, it is sometimes charged in Canada,^[9] and it is generally charged in the Caribbean, Central and South America. Excess insurance is a secondary insurance (only in place with the CDW and SLI cover) and provides coverage to the renter for the excess amount.^[10] The majority of car-rental companies in Europe will sell this cover as a 'top-up' insurance to cover the excess on their standard damage and theft insurance. Not only can this work out quite expensive, it is likely to exclude cover for damage to the windscreen, bodywork, roof, tyres or undercarriage leaving the hirer of the vehicle liable to pay out if damaged. There is however, another insurance alternative that can reduce these risks and costs.^[11][12] Specialist excess protection insurance from a number of other insurers can offer excess protection, much broader coverage and may include cover for those areas often excluded. In the event that the vehicle is damaged or stolen, the rental company will charge your credit card for the excess amount and you then claim for reimbursement on your vehicle hire excess protection policy.

In the USA, the sale of these supplemental insurance/waiver products may be regulated by each states' insurance departments and a special limited license may be required by the rental company in order to sell them.^[13] The specific coverage offered can differ substantially depending on the state or country in which the car is rented.

References[link]

External links[link]

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