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Car rental franchise

Today, a car rental service is becoming in demand all over the world. Firms rent vehicles to individuals and organizations for a fee. Moreover, as a guarantee, customers are offered to issue a franchise.

Features of a franchise when renting a car

What is a franchise and how it works, many businessmen who develop their own business know. Why franchise is needed when renting a car, not everyone knows.

In this case, it plays the role of insurance. Indeed, during the use of a rented car, a road accident or breakdown may occur, which will entail considerable expenses. Unfortunately, compulsory car insurance does not always cover them in full. That is why firms specializing in car rental use a franchise. It allows you to reduce potential risks without increasing financial costs.

This type of insurance shows its effectiveness if, during the rental period, a car is damaged:

  • glass;
  • wheels;
  • chassis and other details.

That transport rental companies have the right to withhold a certain amount from customers in the form of insurance, which will act as a guarantee and protect lessors from unplanned expenses associated with repairing a car or covering damage in connection with an accident.

Customers of car rental companies also have some benefit from the franchise. It is expressed in the fact that in case of damage to the rented car, they will not have to cover all the damage. The amount indicated in the contract in the form of a franchise will be deducted from them.

For example, a person rented a car and took out insurance for 25 thousand rubles. During the rental period damaged the wing of the car. Its repair will cost 40 thousand rubles. However, under the contract, he is obliged to pay only 25 thousand rubles.

In theory, a deductible is a voluntary form of insurance. This means that the tenant has the right not to pay it. However, in practice, in case of refusal to register a company, other forms of guarantee are often used:

  • They increase rents by an average of 20-25%.
  • Blame the tenant in the event of an accident or breakdown.

Therefore, refusing a franchise can be extremely disadvantageous for tenants. This is especially true for people who do not have sufficient driving experience or do not know all the subtleties of traffic rules in a foreign country. For them, any breakdown of the car can result in large expenses.

Full insurance

Franchise when renting a car is different. She can:

  • compensate for only part of the costs;
  • cover them completely.

The second option, called the zero deductible, is common in European countries. Each state has its own rates for this type of insurance. The average amount is about 20 euros per day rental. To increase the number of people wishing to arrange a zero deductible, car rental companies regularly hold promotions and provide customers with a discount on its payment.

According to the principle of operation, the zero deductible is similar to the CASCO system. In the event of an accident or serious breakdown, it fully covers the cost of repairs. At the same time, it costs 1.5-2 times cheaper than partial insurance.

Despite the advantages of such insurance, it does not guarantee tenants a full guarantee against expenses. The list of insurance events does not include the following actions of the driver:

  • driving while intoxicated;
  • violation of traffic rules;
  • aggressive driving style

If any of these situations leads to an accident or damage to the rented vehicle, despite the existence of a zero deductible, the client will have to pay the lessor the full cost.

Franchise payment system for a rented car

Depending on which franchise the client chooses when renting a car, it will be paid in different ways. If standard insurance is issued, then a certain amount is blocked in the account of the tenant. The account is unlocked after the tenant returns the car on time without any damage.

To get the money back, the lessee will need to provide the following documents to the company from which the car was rented:

  • identification;
  • vehicle rental agreement.

Having received them, the employee of the rental company will be required to inspect the car. If no damage is detected, the count will be thawed. The bank may take 15-20 days to conduct this operation. Then the money will be returned to the tenant. If there will be minor damage or traffic violations recorded by the traffic police, then they will return not the entire amount, but part of it, minus the costs.

If the client wishes to issue a zero deductible, the funds in the account will not be blocked. The cost of full insurance is either calculated separately or summed up with the rent.

There are many ways to pay a deductible for a rented car. It all depends on the rental company. In large and medium-sized companies, the required amount can be paid using an embossed bank card (credit or debit). Small organizations that do not have equipment for working with cards accept cash for calculation.