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How good is your car hire insurance?

Editorial Staff

A recent court action against a car hire company demonstrates that the insurance sold with the car is not necessarily what hirers think it is.

A four wheel drive vehicle hire company, Smart Corporation Pty Ltd, trading as Australia 4WD (A4WD) is the subject of proceedings by the Australian Competition and Consumer Commission (ACCC). The ACCC says that A4WD amended its terms of service in 2016 and that the amendments include unfair terms in that it would be able to charge hirers for any "excessive wear and tear and/or damage" to vehicles during a period of hire. But the so-called "driving behaviours" (sic) were such that they were within the range of activities that many would consider normal, regardless of the type of vehicle - "driving at night outside built-up areas, above the speed limit, or when visibility was poor." The company used GPS-supported tracking to determine if such activity had been performed.

We consider these contract terms are unfair because they allow Australian 4WD Hire to charge customers for purported vehicle damage without having to prove any actual damage occurred,” ACCC Chairman Rod Sims said in a statement announcing the action. But it was the consequences of these actions that caused the ACCC the most concern. The ACCC alleges that Australian 4WD Hire acted "unconscionably" by enforcing these terms against certain consumers and withholding at least AUD500 of their security deposits for excessive vehicle wear and tear. When these customers disputed these actions, the company threatened them with further charges and referral to authorities unless they agreed to the penalty.

And there's more: it is also alleged that, since 2014, Australian 4WD Hire has represented on its website that all rental vehicles would have the benefit of off-road insurance when in fact more than half of its vehicles were only insured for damage to third-party property. Australian 4WD Hire’s contract also gave it the discretion to not lodge an insurance claim for single vehicle incidents and instead hold customers liable for all cost.

A4WD operates in locations across Australia including Alice Springs, Broome, Cairns, Darwin and the Gold Coast, areas where travel out of town, and at night, is normal behaviour.

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