Car in the store? You could spend thousands on rental fees

Sammy Welch stands next to the Toyota RAV4 in Toronto on September 1. Welch has been renting the RAV4 for six months while his car sits in the shop awaiting repairs.Duane Cole/The Globe and Mail

Sammy Welch spent more than $4,500 on car rental costs this summer — and not because of a revenge trip. The expense is more like using a loaner vehicle while his own Ford Flex awaits a new headlight at a Mississauga repair shop.

Mr. Welch’s SUV has been in the shop since March 9, after a collision with a streetcar in Toronto deformed the hood and broke both front headlights. The Heist: The body shop couldn’t get their hands on a second of the two new headlights the car needs.

Meanwhile, Mr Welch’s $3,000 insurance coverage for the cost of the replacement rental expired in May, leaving his one-car family to pay out of pocket for the rest of the summer.

In another quirk of the COVID-19 economic recovery, vehicle repair times often stretch from weeks to months as auto mechanics and body shops struggle to source everything from sensors from engine to catalytic converters, according to experts.

And because service delays extend far beyond standard insurance coverage for alternative transportation costs, consumers like Mr. Welch find themselves paying rental fees without reimbursement.

“Nobody takes responsibility for it and nobody wants to cut you a deal,” he said, adding that he still doesn’t know when the crucial lighthouse will arrive. “It’s just ridiculously expensive.”

“I’ve seen drivers wait three or four months for a vehicle repair, when their insurance policies only cover a fraction of what they need to cover,” said Kelsey Hawke, insurance expert on the financial product comparison site RATESDOTCA.

It doesn’t help that ongoing automotive supply chain issues and growing travel demand have driven rental costs skyrocketing. The average vehicle loan price in Canada is currently hovering around $140 a day, up 33% from last summer’s already high rates and roughly double what consumers were paying over the past from the same period in 2019, according to data from KAYAK, a travel search place.

While the rates for loaner vehicles that rental operators negotiate with car dealerships, body shops or insurers are lower than the retail rates available to the public, they have also increased amid a shortage of car rentals. nationwide,” said Craig Hirota of the Associated Canadian Car Rental Operators. (ADDICT).

Vehicle rental companies are still rebuilding their fleets after selling between 30 and 40 percent of their vehicles when rental demand crashed amid the 2020 shutdowns, Hirota said.

But slower-than-usual auto production amid dogged supply chain grumbles has weighed down those rebuilding efforts, he said. And long repair times mean some rental vehicles themselves languish in body shops and mechanics, further exacerbating the shortage, he added.

“Everything feeds on itself,” he said.

As the world waits for supply chain issues to be resolved, consumers may want to review their car insurance policies, Ms Hawke said.

Under Ontario’s direct compensation property damage insurance system, drivers are generally covered for alternative transportation costs – such as a rental vehicle, taxi fares and public transit tickets – when they are not responsible for a collision, Ms. Hawke noted. .

But your insurance probably won’t pay out any money if you’re found liable for the damages, unless you’ve purchased an optional loss-of-use endorsement, she added. (In cases where you are partially at fault, the insurer will cover a percentage of the cost.)

For stolen vehicles, the norm is around $900 in freight charges, a sum that can also be far less than what you might need these days while waiting for a new car, Ms. Hawke said. Strengthening this coverage also requires an optional endorsement.

Quebec, Nova Scotia, New Brunswick, Newfoundland and Labrador, Prince Edward Island and recently Alberta have also adopted the DCPD approach. And British Columbia’s basic vehicle damage coverage works the same way.

Manitoba’s basic public insurance plan will pay up to $1,411.20 after tax for transportation costs if your vehicle is stolen, but loss of use coverage is extra. In Saskatchewan, coverage for temporary transportation costs is also optional.

Speaking of Ontario, Ms Hawke said insurers in the province typically provide duration-based loss of use coverage endorsements – often with durations between 30 and 90 days – or capped at a certain amount. in dollars. Annual fees vary, but you can expect to pay around $40 or $50 for an additional 30 days or $1,500 of coverage, according to RATESDOTCA.

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