How Does Rental Car Insurance Work?
Rental Reimbursement Coverage is optional protection you can add to your auto insurance policy. You pay a small amount added to your premium and get reimbursed when renting a replacement vehicle if your personal car is being repaired due to an insurance claim. Coverage only applies when your own insurer is paying for repairs to your car. If another driver is at-fault, their liability insurance will cover the cost of your rental car.
The coverage has a set policy limit, normally $600, $900, $1000 & $1200 that daily accumulates for the length of time you need the replacement. Once your limit is exhausted, the vehicle owner is responsible for any amount over their policy limit. This limit includes any applicable taxes that are added to the daily rate.
Here is an example. Say your rental reimbursement policy limit is $900. This is the maximum amount of coverage your policy will pay for a rental vehicle while repairs are made to your covered vehicle. The rental reimbursement coverage provides for the reasonable length of time necessary for your repairs to be completed.
If you have a 4-day repair, you don’t have an automatic $900 in rental coverage to use. It only covers the number of days needed to make those repairs in a reasonable length of time. If the number of days to repair was twenty-one days, insurance reimburses for twenty-one days of rental but only up to the $900 policy limit. Any rental cost over the policy limit would be at your expense.
How to Make Rental Reimbursement Coverage Work For You
Communicate with the rental company to know when your policy limit will be exhausted so you have no surprises. Remember that rental cars have different prices. A luxury SUV will cost more per day than a smaller economy vehicle. Once your vehicle is in the repair shop, If you are concerned your rental coverage may be exhausted, you can check with the rental company and request a smaller vehicle or less expensive one, which would give you more days and less cost out of pocket.
Supply chain challenges have greatly impacted repair part availability, shipping of parts, and labor resources. Car repair shops have experienced many delays in delivering parts, which has increased the number of days you may need a rental. If the repairs are delayed, and your rental reimbursement limits are low, you risk paying a lot of money out of pocket in rental expenses once the policy limit is exhausted. This is why it is important to check with your agent to make sure you have enough rental coverage.
There is also a shortage of available rental cars due to the pan
demic quarantine. Body and repair shops have been backed up and are so busy they can’t get to the repairs immediately. Many insurance carriers are paying rental reimbursement costs up front for the number of days it will take to repair the vehicle because customers can not find a rental car.
The customer can’t schedule a rental until the shop confirms a repair date. Continue to follow up and get a firm date for the repair to begin. Before dropping off your vehicle, confirm that the shop has all of the parts needed to do the repairs, so you do not have a delay in getting the repairs completed. Ask the shop what day the vehicle will be ready. Then you have an idea of when you will need to pick up your vehicle and return the rental all on the same day.
The Risks of Not Having Rental Car Reimbursement Coverage
If you do not have rental reimbursement coverage, you will be financially responsible for purchasing a rental to replace the use of your car after an auto claim. If you're a cautious driver, you may be perfectly fine not purchasing this optional coverage. On the other hand, it may be worth it if you think that you are likely to be in a car accident within the next few years.
If you opt not to add the coverage, plan accordingly to have the extra resources available to pay for that expense out of pocket in case of an at-fault claim. Ask your independent insurance agent for a rental car reimbursement coverage quote. It's usually pretty inexpensive. Then take the quoted amount and put an equivalent into a savings account to help build an emergency fund.
Should You Get Rental Car Insurance?
When you rent a vehicle, whether it be as a result of a claim or you're traveling, you will most likely be offered to purchase rental car insurance by the rental company. Your personal car insurance can cover your rental car. You may or may not want to consider purchasing this supplemental insurance depending on what type of rental car you choose.