Colo. Loss-of-Use Bill Draws ACRA Opposition

PurCo Fleet Services has been joined by the American Car Rental Association (ACRA) in opposing draft legislation in Colorado that restricts the damages a car rental company can recover from an authorized driver in regards to a damaged rental vehicle.

House Bill 1187 was introduced at the behest of State Farm Insurance in an attempt to overturn the loss-of-use and administrative fee ruling in Koenig v. PurCo, according to those involved in the Koenig case.

“The American Car Rental Association supports the efforts of PurCo to actively oppose legislation in the State of Colorado (H.B. 1187) that will regulate damage collection by car rental companies,” ACRA said in a written statement. “If the bill moves forward, ACRA will work with PurCo to ensure that we safeguard the industry’s best interests to achieve those results.” The ACRA board unanimously concurred.

In the Koenig case, a State Farm customer was required by the Colorado appellate courts to pay loss-of-use and a reasonable administrative fee. State Farm is joined in its lobbying efforts by Farmers Insurance and American Family Insurance.

“These insurance companies are charging their insureds a premium to cover loss-of-use and administrative fee damage claims,” says David Purinton, president of PurCo Fleet Services. “At the same time, they are telling the car rental industry these damages are not owed. After losing that battle in the courts, they’ve changed scenery and are now trying to sell this same concept to legislators.”

According to Purinton, the effect of the bill would be to discriminate between damages that could be recovered by an individual and those that could be recovered by a rental car agency. “This makes no sense,” he says. “The damage is the same no matter who owns the car. The legislation on its face seems to raise concerns about equal protection under the laws.”

Ironically, though, with some informed changes to the bill, the legislation could actually prove beneficial to the rental car industry, says Purinton. It could provide a “détente” with the insurance industry.

“If the bill were to incorporate some of the better legislative provisions from other states by allowing a reasonable loss-of-use recovery and a fair administrative fee, then it would actually help rather than hurt the industry,” says Purinton. “But until clearer heads prevail on the language of this bill, PurCo and ACRA will vigorously oppose any effort to change the settled law that loss of use and contractually agreed administrative fees are recoverable without the need for legislation.”

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