Why length of collision-related car rentals is going down

The record-high lengths for collision-related car rentals seen during the pandemic are now on the decline, new data show.

And yet, the rising severity of repair costs and a shortage of repair experts still challenge Canada’s property and casualty insurance industry. 

Length of rental (LOR) in 2024 Q4 was 15.4 days — a full, one-day decrease from the same period last year, rental car company Enterprise reports. That’s compared to 2022 Q4, which saw a record-high LOR of 17.1 days. 

The drop in LOR over the past two years can be credited to a few things, including an overall decrease in collision and property damage claims volumes, and fewer parts delays, experts tell Canadian Underwriter.

“With insurance premiums rising, many consumers are either dropping coverage or raising their deductibles to afford their policies. When this happens, there is less likelihood of a collision claim being filed — especially for minor damage,” says Ryan Mandell, Mitchell’s director of claims performance.

Plus, “supply chains have been right-sized over the past year, and parts availability has improved, leading to fewer delays in the procurement of replacement parts,” says Mandell.

More often, vehicles are declared total losses, which means insurers replace rather than repair insureds’ cars.

“With rising repair costs and used vehicles worth less, collision-damaged automobiles are more likely to be declared a total loss,” says Mandell.

“While the industry has been feeling the lingering effects of parts availability issues since COVID-19, the gradual and continual improvement of these issues could be partially responsible for the lower length of rental (LOR),” Stuart Klein, vice president of collision programs and executive director, I-CAR Canada at AIA Canada. “Additionally, there has been about a 1% increase in total losses, leading to fewer large jobs in repair shops and contributing to a reduction in backlog.”

However, even with a full-day decrease, “overall results are still 3.6 days higher than four years ago,” Enterprise writes in its Canada Length of Rental Q4 2024 report.  

Average repair time in 2021 totalled 12.8 days, while in 2020 collision-related car rentals were out for 11.8 days.

“As the numbers reflect, LOR in 2024 continued to decline from 2023’s highs but remains higher than it was pre-pandemic,” Enterprise writes. “While these positives are encouraging as we enter 2025, other challenges remain.” 

 

What’s contributing to the length of rentals

Part of the the reason why repair lengths are still high is because there is an ongoing talent crunch in the collision repair industry.

Delays in collision repair services, which started in 2021, have since continued. That’s partly due to an ongoing repair technician labour shortage in Canada and the U.S. 

The lack of new talent in the collision repair industry has insurers paying longer for car repair rentals. “Encouraging new talent into the collision industry remains a key initiative for many organizations,” says Enterprise.  

That, coupled with the rising severity of vehicle collisions, means insurers are still paying for longer and costlier rental periods.

Plus, substantial insured damages arising from Alberta’s record-breaking hailstorm last August are contributing to longer recorded rental periods. The Aug. 5 hailstorm ranks as Canada’s second-largest insured loss event in history. It caused roughly $2.8 billion in insured damage and 130,000 insurance claims.

Total loss frequency in Canada was 26.5% in 2024’s fourth quarter compared to 21.8% in 2023, explains Mandel.

 

Province by province 

Not every province is seeing LOR decreases.  

Auto insurers in New Brunswick (-0.2 days), Ontario (-2.1), Prince Edward Island (-1.3) and Quebec (-1.3) are all benefitting from shorter rental times, whereas insurers in Alberta, Nova Scotia, and Newfoundland and Labrador are not. 

In Alberta, LOR was up 0.9 days compared to the same time last year. This also marks the longest LOR compared to the rest of the provinces, at 18 days.  

In Nova Scotia, LOR was up 0.2 days (16.3 days). Newfoundland and Labrador saw the biggest increase of 1.2 days (16.4 days).  

Data for Saskatchewan, Manitoba and B.C. were not available.  

 

Feature image by iStock.com/Bilanol