a car parked in front of a bush
Photograph ©2024 by Brian Cohen.

Will Artificial Intelligence Affect Insurance For Rental Vehicles?

Could this technology lead to a high stakes showdown?

Will artificial intelligence affect insurance for rental vehicles — especially as rental car companies adopt the latest technology to detect and identify damages?

Will Artificial Intelligence Affect Insurance For Rental Vehicles?

Avis rental car
Photograph ©2022 by Brian Cohen.

Artificial intelligence technology is now being used to automatically identify damage to rental vehicles, thanks to a partnership between Hertz Global Holdings and UVeye, which is a company that develops vehicle inspection systems which are driven by artificial intelligence — and will be a key component in transforming its vehicle maintenance process of the rental car company. The technology is already in use at a rental car facility at the international airport which serves the greater Atlanta metropolitan area; and it is expected to be deployed to installations at approximately 100 facilities at or near major airports throughout the United States by the end of 2025.

No company invests in costly technology unless the potential for reducing costs or increasing revenue — or, in this case, possibly both — is significant. To think that an increase in claims of damages to vehicles by the rental car companies as a result of using this new technology certainly stands to reason…

…but what if those claims by rental car companies led to a significant increase in claims to insurance companies — especially when consumers are using the benefits that are offered at no extra cost with premium credit cards with expensive annual fees?

The following statements are typically true and could possibly be interconnected:

  • Hertz Global Holdings would not invest in artificial intelligence technology that can automatically identify damage to rental vehicles if members of the executive management team did not believe that the rental car companies of Hertz, Thrifty Car Rental, and Dollar Rent-A-Car would benefit financially as a result.
  • If the technology finds more damage on rental vehicles in the past, customers will likely file more claims with insurance companies.
  • If insurance companies receive more claims to pay more money for damage:
    • Additional restrictions may be introduced to insurance policies, which could likely increase the denial rate of more claims.
    • The insurance company could either drop the policy or cancel that benefit altogether — or perhaps “blacklist” rental car companies which use this technology.

In addition to seemingly imminent financial consequences, the legal ramifications of the aforementioned statements could also potentially become high stakes in the rental car industry — especially when claims are inflated by the rental car industry or denied by the insurance industry.

Final Boarding Call

Rental car Hertz
Photograph ©2019 by Brian Cohen.

I have always thought of insurance as little more than gambling: you take a chance with the “house” — er…insurance company — by paying a premium at a set rate on a regular basis in the hopes that if something happens, your claim will be covered…

…but insurance companies have been known to deny or refuse claims if too many of them are submitted or become too costly. The chance of that happening as a result of artificial technology detecting and identifying more damage than before the technology was implemented is quite good, in my opinion.

Getting reimbursed for an insurance claim certainly helps as a benefit that is offered on a premium credit card with which a high annual fee for it is paid — but could too many claims lead to this benefit being discontinued? What about the processing fees, administration fees, and other manufactured fees that artificially raise the costs of the claims so that rental car companies may profit handsomely from the misfortunes of customers?

On other types of insurance — such as when a personal automobile insurance policy is used to pay for a claim of damage on a rental vehicle — could the premiums increase substantially? Without having submitted a claim, my personal automobile policy is already arguably one of the most expensive premiums I have ever paid in my lifetime due to factors beyond my control.

Other than the claims of “vehicles being ready when and where…customers want them” — which is specious at best — I am truly having difficulty finding a positive benefit of rental car companies using artificial technology to detect and identify damage…

…and if other rental car companies adopt the new artificial intelligence technology, consumers will likely have few choices and options with regard to renting vehicles in general — and thus have little say or leverage in fighting potentially bogus claims.

I am certainly no prognosticator and do not claim to foresee the future — so is the topic of this article a legitimate concern; or am I overreacting?

What are your thoughts?

All photographs ©2019, ©2022, and ©2024 by Brian Cohen.

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