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In a related question @Harper wrote the following:

Note that airport car rentals will NOT permit you to drive off paved roads, literally paved roads, read the contract!

In addition, @PeterM mentions the following:

While you may get away with it, if anything at all happens to the car the rental companies will do their utmost to make the the renter take full liability. This includes things that could happen though no fault of the driver. In addition in the US at least there have been rental car companies that have installed GPS trackers in their cars, so the company could know where you have been no matter how well you attempt lie about it.

So what are the practical implications in the following scenarios:

  1. You drive on the unpaved road with no damage to the car
  2. Your car is damaged sometime after you've visited the unpaved road - say from an accident on a regular highway
  3. Your car is damaged directly on the unpaved road

For an example of a popular unpaved road, see Mauna Kea on Big Island in Hawaii which is visited by tens of thousands of tourists per year in their rental cars. "Practical" in this question refers to how much money you will lose by visiting the unpaved road.

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As far as I'm aware, there are no rental companies that actively validate that you've stayed on paved roads. The GPS trackers are there primarily as an anti-theft precaution, and while they may have the capability to record where you've been, I haven't heard of them being used for this purpose. In any case it would be quite difficult to reliably differentiate between paved and unpaved in a programmatic way, the GPS wouldn't know this so you'd need to snap to roads and then compare against some third-party dataset.

So in practice, the only ways to get "busted" are to either have an accident off paved roads, in which case your location will be reported and your violation likely detected, or to return the car with dirt/damage that makes it clear you've been off paved roads.

So to answer your questions:

  1. Nothing happens. (This is assuming the car is returned tolerably clean as well as undamaged; I once had to wash a rental on my own after my GPS led us onto an unpaved and very muddy "shortcut" across a mountain, but I did this preemptively and there were no consequences.)

  2. As long as the damage was unrelated to the unpaved road, the rental company will cover normally.

  3. Any insurance you've purchased from the rental company is now null and void, so you are fully responsible for damages.

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  • For point 3: Even insurances which would come with credit cards or similiar means might be void, so the conditions of those should be checked carefully as well.
    – dunni
    Jan 18 at 7:47
  • Does the insurance being voided include liability insurance? If so you could have a big problem if you hit someone else or if you are stopped by the police.
    – ajd
    Jan 19 at 23:41
  • @ajd That will depend on the jurisdiction. In Australia compulsory third party insurance for death & injury can't be voided, but you'll likely be on the hook for everything else. Jan 20 at 2:42
  • In Australia, hire car standard insurance normally excludes damage to the underside and the roof of the vehicle Jan 20 at 4:54

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