The Effects of a Car Accident on New York Car Rental Rates

When a consumer enters a store to purchase an item, the most the store can lose is the cost of that item. However, that is not the case when it comes to car rentals. In order to protect their investment a New York car rental company has to perform several risk assessments on any and all potential customer.

Each rental is a risk

Each time a customer drives off the lot with a New York car rental, the rental company is taking a risk, and not just for the cost of the current rental contract. The car rental company can potentially lose the entire value of the vehicle should the vehicle not be returned. However, that is not all that the car rental company is gambling. The vehicle can be impounded, during which time the car rental company still has to make the payments to the bank for the loan it took to purchase that particular car.

There is also the possibility that the car can be involved in a collision. In that case, there is the damage to the car itself which can easily cost thousands of dollars to repair. The loss to the car rental company is not just the monies that need to be paid to the collision shop; there are also ancillary fees such as towing and storage charges, which need to be paid to get the rental car to the rental lot or the collision shop. During the time the car rental is in the repair shop the car rental loses the potential revenue it should be making as a rental vehicle. This is known as loss of Use.?Once the car is repaired, the agency can choose to sell the vehicle. One would think that would limit the costs and possible losses a New York car rental company had incurred. However, most people prefer not to purchase a car that was previously damaged. A car that was previously damaged is worth less than a car that was not damaged. That is known as miminution in Value.?

Calculating losses on a damaged New York car rental

The losses which the car rental company may suffer go beyond the physical damage to the car rental itself. In the event there are injuries in the car rental, that is another potential loss and expense the car rental company incurs. There are potential injuries in the car rental car itself which the car rental company or its insurance company needs to pay for. There is also the possibility the occupants of the rental car will file suits for their injuries. That can potentially cost the car rental company thousands of dollars. Even if there are no payouts, the car rental company incurs defense and court costs to defend the case. There is also the possibility that the occupants of the other vehicle or vehicles involved in the collision will file claims for their injuries and damage to their cars.

As you can see, a vehicle accident can be a costly experience for a New York car rental company. It takes dozens, and often hundreds of rentals to cover the cost of just a single accident. It is for this reason car rental companies try to control and limit who will rent and drive their vehicles, putting into place age requirements and/or charging more for young or high risk drivers.

When you rent a New York car rental in areas that typically have more accidents, car rental rates are often higher as car rental companies need to charge more to cover the accident related expenses. In areas where there are fewer accidents, car rental rates are typically lower, even though the car costs the same throughout the state.