Thrifty Car Rental 2011 Annual Report Download - page 18

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Fleet Leasing Programs
DTG Operations has historically made fleet leasing programs available to Dollar and Thrifty U.S.
franchisees for each new model year. Additionally, DTG Canada has historically made fleet leasing
programs available to Canadian franchisees for each new model year. However, in recent years, the
Company has made fleet leasing programs available only on a very limited basis.
Competition
There is intense competition in the vehicle rental industry on the basis of price, service levels, vehicle
quality, vehicle availability and the convenience and condition of rental locations. Dollar and Thrifty
and their franchisees operate mainly in the U.S. airport market, relying on leisure, tour and small
business customers. In addition to local and regional vehicle rental companies, Dollar and Thrifty
and their franchisees’ principal competitors are Alamo, Avis, Budget, Enterprise, Hertz, Advantage
and National.
The Canadian vehicle rental markets are also intensely competitive. Most of the Canadian market is
operated either directly or through franchisees of the major U.S. vehicle rental companies, including
Alamo, Avis, Budget, Enterprise, Hertz and National, as well as Dollar and Thrifty.
Insurance
The Company is subject to third-party bodily injury liability and property damage claims resulting
from accidents involving its rental vehicles. In 2011, 2010 and 2009, the Company retained the risk
of loss up to $7.5 million per occurrence for public liability and property damage claims. The
Company maintains insurance coverages at certain amounts in 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, 2011, the Company had Vehicle
Insurance Reserves of $86.5 million. The Company’s obligations to pay insurance-related losses
and indemnify the insurance carriers for policies they have underwritten are collateralized by surety
bonds and letters of credit. As of December 31, 2011, these letters of credit and surety bonds totaled
approximately $48.5 million and $3.5 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 $10.3 million and
$43.9 million, respectively, as of December 31, 2011.
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,