Avis 2009 Annual Report Download - page 19

Table of Contents
Distribution
Budget’s truck rental business is offered through a national network, which included approximately 2,300 dealers as of December 31, 2009.
These independently-owned dealers primarily operate self-storage facilities, rental centers, hardware stores, service stations and other similar
retail service businesses. In addition to their principal businesses, the dealers rent our light- and medium-duty trucks to consumers and to our
commercial accounts and are responsible for collecting payments on our behalf. The dealers receive a commission on all truck rentals and
ancillary equipment rentals. Generally, dealership agreements may be terminated by either party upon 30 to 90 days’ prior written notice.
Competition
The truck rental industry is characterized by intense price and service competition. We compete with a large number of truck rental companies
throughout the country, including U-Haul International, Inc., Penske Truck Leasing Corporation, Ryder System, Inc., Enterprise Rent-A-Car
Company and many others.
Seasonality
Our truck rental operations are subject to seasonal demand patterns, with generally higher levels of demand occurring during the late spring and
summer months when most self-moves occur, with the third quarter typically being our busiest quarter. Generally, December is also a strong
month due to increased retail sales activity and package deliveries.
Ancillary Products and Insurance Coverages
We supplement our daily truck rental revenue by offering customers a range of ancillary optional products. We rent automobile towing
equipment and other moving accessories such as hand trucks, furniture pads and moving supplies, as well as where2 GPS navigation units. We
also make available to customers a range of optional liability-limiting products and coverages such as physical damage waivers, automobile
towing protection, personal accident and cargo insurance, and supplemental liability insurance. These ancillary products enhance our appeal to
consumers by offering customers “one-stop” moving services.
INSURANCE
We generally assume the risk of liability to third parties arising from vehicle rental services in the United States, Canada, Puerto Rico and the
U.S. Virgin Islands, in accordance with the minimum financial responsibility requirements and primacy of coverage laws of the relevant
jurisdiction. Our general coverage typically extends up to $1 million per occurrence in the event of a negligent act on the part of the Company
and this coverage is comprised of a combination of self-insurance and insurance coverage secured from an unaffiliated domestic insurance
carrier. We retain exposure for up to $9 million per occurrence, in excess of the previously described $1 million level, through an unaffiliated
fronting carrier that is reinsured by our offshore captive insurance company, Constellation Reinsurance Co., Ltd. We also purchase additional
excess insurance coverage from a combination of unaffiliated excess carriers. When a customer elects to purchase optional additional and/or
supplemental liability coverage, we generally assume the risk of liability up to either $1 million or $ 2 million, depending on the amount of the
coverage purchased.
We insure the risk of liability to third parties in Argentina, Australia and New Zealand through a combination of unaffiliated carriers and one of
our affiliates. These carriers provide coverage supplemental to minimum local requirements.
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