Thrifty Car Rental 2010 Annual Report Download - page 18

excess of its retained risk. The Company retains the risk of loss on supplemental liability insurance
sold to vehicle rental customers.
The Company retains risk of loss up to $5.0 million for general and garage liability. The Company
retains the risk of loss for any catastrophic and comprehensive damage to its vehicles. In addition,
the Company carries workers' compensation coverage with retentions in various amounts up to
$500,000. The Company also carries excess liability and directors' and officers' liability insurance
coverage.
Provisions for bodily injury liability and property damage liability on self-insured claims and for
supplemental liability insurance claims (collectively referred to as “Vehicle Insurance Reserves”) are
made by charges to expense based upon periodic actuarial evaluations of estimated ultimate
liabilities on reported and unreported claims. As of December 31, 2010, the Company had Vehicle
Insurance Reserves of $107.7 million. The Company’s obligations to pay insurance-related losses
and indemnify the insurance carriers for fronted policies are collateralized by surety bonds and
letters of credit. As of December 31, 2010, these letters of credit and surety bonds totaled
approximately $51.5 million and $3.4 million, respectively.
The Company also maintains various letters of credit and surety bonds to secure performance under
airport concession agreements and other obligations which totaled approximately $17.1 million and
$45.0 million, respectively, as of December 31, 2010.
Regulation
Loss Damage Waivers
Loss damage waivers relieve customers from financial responsibility for vehicle damage. Legislation
affecting the sale of loss damage waivers has been adopted in 25 states. These laws typically
require notice to customers that the loss damage waiver may duplicate their own coverage or may
not be necessary, limit customer responsibility for damage to the vehicle or cap the price charged for
loss damage waivers. Adoption of national or additional state legislation affecting or limiting the sale,
or capping the rates, of loss damage waivers could result in the loss of this revenue for Dollar, Thrifty
and their franchisees.
Franchising Regulation
As franchisors, Dollar and Thrifty are subject to federal, state and foreign laws regulating various
aspects of franchise operations and sales. These laws impose registration and disclosure
requirements on franchisors in the offer and sale of franchises and, in certain states, also apply
substantive standards to the relationship between the franchisor and the franchisee, including those
pertaining to default, termination and non-renewal of franchises.
Other Matters
Vehicle rental and leasing companies have insurance liability exposure for amounts up to each
state’s minimum financial responsibility for the actions of any person driving a company-owned
vehicle. Vehicle rental companies are also subject to various federal, state and local consumer
protection laws and regulations including those relating to advertising and disclosure of charges to
customers.
Dollar and Thrifty are subject to federal, state and local laws and regulations relating to taxing and
licensing of vehicles, franchise sales, franchise relationships, vehicle liability, used vehicle sales,
insurance, telecommunications, vehicle rental transactions, environmental protection, privacy and
labor matters. The Company believes that Dollar’s and Thrifty’s practices and procedures are in
substantial compliance with federal, state and local laws and is not aware of any material
expenditures necessary to meet legal or regulatory requirements. Nevertheless, considering the
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