For many disaster response companies, portable and temporary restroom services are a big part of what they offered. With so many assets to maintain and keep track of, it pays to think how you can protect them when they are on site. 

We often overlook the topic of damage waivers. We concentrate on rental, service, disposal, and pickup and delivery pricing. With inflation, our attention is also fixed on fuel costs, cost of equipment, and employee wages and benefits. Damage waivers are a tool with which you can protect both you and your customer from the cost of repair and replacement of parts while your rental equipment is on a job site.

Question: I am not that familiar with damage waivers, and I would like to learn more. Could you provide a general overview of this topic along with suggestions and issues to consider? This may be a policy that our company should adopt.

Answer: A rental damage waiver is an optional agreement between the equipment rental company and the customer renting the equipment. If accepted, this agreement limits the customer’s financial responsibility for incidental damage to rented equipment, or, depending on the terms of the agreement, the total destruction or theft of the equipment. The most important point, regardless of the limits of damage, is that damage waivers are not an insurance policy. The renter is still responsible, regardless of fault, for all personal injuries, claims, property loss, damage or destruction of property.

WHY OFFER WAIVERS?

Due to a general unfamiliarity of the costs of our products and services, some customers may treat our equipment as inexpensive and expendable. Educating the customer about the value of the portable restroom, hand-wash station, holding tank or restroom trailer, as well as the quality of the service provided, is an excellent way to ensure our equipment is treated with more respect on the job site.

Once familiar with the cost of the rental equipment, the offer of a damage waiver to cover minor repairs or damage is much more appealing to the customer. Some will also list the cost of replacement for the major parts of a unit (toilet seat, urinal, roof, skid, etc.) as well as the cost of a new piece of equipment to show the value of paying a monthly damage waiver fee to avoid these potential charges.

The damage waiver income collected from all customers electing to participate will provide a revenue source that can be designated to handle repairs and possible replacement of equipment. Experience has shown that a large majority of customers pay for the damage waiver, but it is not required during the rental period.

CALCULATE CHARGES

As with all aspects of your operation, you first need to know the cost of doing business. What does it cost to perform a service? This includes vehicle cost and fuel, rental equipment cost, supplies, route driver salary and benefits, disposal charges, administrative support and other overhead charges. These expenses are then divided by the number of services performed and the cost of per service is determined. Hopefully this number is less than the price charged per service! If you have not done this for your company, or if you have not done this in some time, we highly recommend this exercise.

Costs of optional damage waivers vary depending on your market and the degree of coverage you wish to offer. Some offer “minor damage” waivers that cover minor repairs, damage and graffiti, charges can be anywhere from 6% to 10% of the rental charge.

Some go even further with their RDW policies to cover total destruction or theft of the equipment for higher rates. A deductible will be established based on the type of equipment being rented. For example, the damage waiver rate for a portable restroom may include minor damage and a $150 deductible for the theft or major structural damage of the unit.

Damage waivers have traditionally applied to restroom units only. However, after COVID and the growing popularity of sinks and hand-wash stations, optional charges now apply to these pieces of equipment as well. With the rapid growth and popularity of restroom, shower and laundry trailers, waivers to cover minor damage are being executed. Some PROs will offer damage waivers for trailers. Due to the cost of these trailers, it is analogous to having minor damage coverage when renting a car.

HOW TO PROCEED

Clearly communicate your optional damage waiver policy to your customer in writing. Whether you choose to offer minor damage coverage only or a deductible for total replacement of equipment. Whether it is for units only or for all equipment including trailers, be straightforward with your policies.

Offer the damage waiver agreement at the start of the rental period and give the customer the option to accept or reject. It is highly recommended to document their decision in writing.

Discuss the damage waiver agreement with the onsite job superintendent to further clarify the expectations from each party. With the various types of equipment and tools on the job site, supervisors should be keenly aware of the care and responsibility for operating and using rental equipment.   

Your terms should include verbiage that the RDW is not an insurance policy as mentioned earlier.

If the damage waiver is rejected by the customer, be clear on your form or letter that (1) the customer agrees to pay for any damage or loss of the equipment regardless of cause or fault and (2) the customer must provide your company with a certificate of insurance.

FINAL THOUGHTS

Damage waivers can be an excellent offering to your customers as well as a benefit to your company. These options clearly show that the equipment being rented is of quality and value and should be treated as such. Further, in working with your customer to offer this coverage, you show you value the customer relationship by protecting them from certain unforeseen expenditures due to damage, vandalism or the terms that you have set forth in your damage waiver program. Offer your customers these options and take pride in the condition of your equipment.