Sisters In Law: ‘My car rental company is suing me for damages that should be covered by insurance’

A man who rented a 4WD for one day while in Australia is now faces huge costs from the car rental company.

Welcome to Sisters In Law, news.com.au’s weekly column solving all of your legal problems. This week, our resident lawyers and real-life sisters Alison and Jillian Barrett from Maurice Blackburn advise about your rights when it comes to being forced to take annual leave.
Question:
“I live overseas and rented a 4WD for one day in Australia. I hit a bump and it caused some underbody damage. My insurance excluded underbody damage so I had to pay the rental company $2500 upon return to cover the damage. Now they are claiming that they also had to replace the steering rack, which I need to pay them another $2000 for, plus another $1000 to cover five days’ loss of usage.

“I took out an excess reduction insurance package, which should limit the damages I pay for to $1000, but they are claiming this is void since I violated the contract by driving recklessly. I have made my objections clear and offered to resolve via dialogue but they have sent me an intent to sue.

“Can they sue me despite me being overseas? Do I stand a chance in defending against their claim or should just try to settle via negotiation?” – Malcolm, WA

Malcolm rented a 4WD for one day in Australia. Picture: iStock

Answer:

Firstly Malcolm, what a terrible and expensive way for your holiday to come to an end.

Even though you are now overseas, the car rental company can still sue you for the damage. This is the case even if you usually live overseas as legal proceedings can occur across borders.

To determine whether you can defend their claim, you should look at the rental agreement you made initially with them. It sounds like there is an exclusion in their insurance for underbody damage, and that you were happy to pay the initial request of $2500 to settle the matter.

If there was also an exclusion in the insurance for reckless driving then you could also be liable to pay for any further damage to the vehicle, if it was linked to your driving.

You should ask for evidence to prove that the damage to the steering rack was caused by reckless driving. If it could have happened incidentally then the excess reduction insurance you took out should cover it.

You should also ask for another quote to ensure that the car rental company isn’t acting unethically and providing the most expensive quote, yet having the work performed by the cheapest repairer.

Malcolm had to pay the rental company $2500 upon return to cover the damage. Picture: Supplied

If, ultimately, you think you did drive recklessly and cause the damage, then it will likely be cheaper in the long run to pay the amount, if a mechanic deems the cost is reasonable, as you will be liable for the car rental company’s legal costs in the event they do sue and are successful.

If you did not drive recklessly, you should do some investigation yourself, which may involve speaking with a mechanic, to determine how a steering rack can be damaged to the extent it needs replacing.

You should obtain this advice from the mechanic in writing and provide a copy to the car rental company.

If a mechanic advises you that a steering rack needs replacement anyway after a certain amount of kilometres driven, then you should review your rental agreement and check how many kilometres were recorded on the odometer. If the vehicle was nearing the kilometres travelled where replacement is needed anyway, you could negotiate a lesser amount to pay.

Finally, if the car rental company takes the money off the credit card you used, without your permission, you can lodge a “chargeback” request with your credit card provider and they will investigate and run the dispute for you.

This legal information is general in nature and should not be regarded as specific legal advice or relied upon. Persons requiring particular legal advice should consult a solicitor.

If you have a legal question you would like Alison and Jillian to answer, please email [e-mail]. Get more from Alison and Jillian on their Facebook page.

Originally published as Sisters In Law: ‘My car rental company is suing me for damages that should be covered by insurance’