Managing the aftermath of a car accident can be a stressful process. It doesn’t end when you drop your damaged car at the repair shop. While minor repairs from a fender bender can take one to three days, vehicle damage from a major collision can take three weeks or longer to repair.
Whether your ride is in the shop for a few days or a few weeks, you’ll still need a vehicle to get around. That’s when rental reimbursement as part of a car insurance policy has you covered.
What is rental reimbursement coverage?
Rental reimbursement coverage is optional coverage you can add to your auto insurance policy that reimburses or pays upfront for the cost of a rental car if your vehicle is damaged in a covered claim. It’s relatively affordable, usually less than $200 a year. In order to add rental reimbursement to your auto policy, the car insurance company typically requires the vehicle to carry full comprehensive and collision coverage.
Rental car coverage is subject to specific policy limits like a set dollar amount and time frame when rental reimbursement costs would be covered. For instance, pays rental expenses up to $30 per day for 30 days or until your car is back on the road. Any additional rental car costs over the daily limit would be your responsibility.
It’s important to note that rental reimbursement coverage isn’t just to defer the cost of a rental vehicle. Often, rental reimbursement includes other transportation expense coverage such as public transportation fares, Uber or Lyft service, or even taxi rides.
Rental reimbursement coverage vs. rental insurance
While the two terms sound similar, rental reimbursement coverage and rental car insurance are not the same.
Rental reimbursement is not included in standard collision or comprehensive coverage but can be added onto auto insurance policies for a low cost. This coverage means insurance will pay the costs of securing a rental in the event of necessary car repairs after a covered accident.
Rental car insurance is what rental car companies ask you to add as in case your rental car breaks or is involved in an accident. Typically, your insurance covers you while driving a rental car, but you may want more coverage if you don’t carry full comprehensive and collision coverage.
How does rental reimbursement insurance work?
If you have as part of your collision coverage and have an at-fault accident, your insurance will cover some costs of a rental or alternative transportation for a covered event.
In some cases your auto insurance company directly pays the rental car company, especially if it’s a trusted or in-network partner. In other cases, you’d have to pay the daily rate on the rental and then be reimbursed through the claims process.
However, you may be able to take advantage of rental reimbursement even if you don’t carry full coverage. In a situation where the other driver has been determined to be at fault, their insurance would reimburse costs associated with a covered loss, including the cost of your rental car.
In both scenarios, you shouldn’t have to pay a deductible, but there may be a per claim limit to this coverage. That’s why you should always consult with an auto insurance agent or your policy prior to renting for an extended period.
It’s also worth mentioning that rental reimbursement won’t usually cover a rental for routine maintenance or other repairs not associated with an accident.
What rental costs does the car insurance company cover?
Rental reimbursement coverage has its limits. Most states allow you to rent a similar car to the one covered under the policy, but the limits for reimbursement are fixed.
What does that mean in practical terms? Let’s say you’ve been in a covered accident and you have rental reimbursement. Your insurance company limits coverage to $40 per day or $1,200 per claim.
Your SUV is going to be in the shop for at least a month, so you rent a similar one for $50 per day. Your insurance pays the rental company $40 per day and you’re billed for the remainder of the balance. Once the rental bill rolls hits $1,200 claim limit, any additional rental costs are your responsibility.
Are there rental car costs insurance won’t cover under rental reimbursement?
Keep in mind that even if you have rental reimbursement or travel expense reimbursement for a covered accident or theft, the following usually aren’t part of your coverage:
You’ll also need to make sure the accident or the repairs needed are due to a covered event. For instance, if your car has engine failure, that’s usually covered under a warranty from the car’s manufacturer or the dealership and wouldn’t be eligible for any policy benefits from collision or comprehensive coverage.
How much does rental car reimbursement cost?
Part of determining how much coverage you need and if it’s worth it involves assessing the financial trade-off. How much does adding rental reimbursement coverage to your auto insurance cost versus the cost of renting a car?
The average cost of renting a car varies depending on the vehicle, rental company, and location. You’ll pay around $81 per day according to a across the country, although that figure goes up substantially in some urban areas.
Meanwhile adding rental reimbursement coverage averages around $100-$200 a year depending on the daily limits and coverage you choose. Using back-of-the-napkin math, you’ll pay roughly the equivalent of two days’ car rental fee for a year’s worth of rental reimbursement coverage.
Can I add rental car reimbursement coverage after an accident?
Unfortunately, adding rental reimbursement after an accident won’t help you with your current rental car costs. But it could help avoid financial fallout if you have a covered event in the future.
If the other driver was at fault, their property damage liability coverage should cover your rental car until your damaged car can be repaired, replaced or you are reimbursed for its value. If fault has not been determined, you’ll have to rely on your own rental reimbursement coverage or pay out of pocket and get reimbursed later.
5 reasons rental reimbursement might be worth it
Rental reimbursement is optional, but there are several reasons experts advise adding this coverage to auto insurance policies for most drivers.
1. Rental reimbursement is relatively inexpensive.
In terms of value, rental reimbursement offers quite a lot of coverage for a relatively low cost. An with Qualtrics concluded that even though 59% of eligible policyholders don’t have rental reimbursement coverage, half of those policyholders still rented a car after filing a claim.
2. Rental car coverage provides consistency during a difficult time.
Enterprise Rent-A-Car data indicates the average rental period after an accident is . In the wake of an accident, the last thing you need is worry about how you’ll get back to your daily routine. Rental car reimbursement steps into the breach to reduce stress and minimize disruption during the . Plus having your own vehicle is a huge help if you have to begin shopping for a .
3. You can adjust coverage to meet your needs.
Rental reimbursement isn’t a one-size-fits-all coverage option. Most insurance companies provide options to increase daily limits, so you can adjust your out-of-pocket expenses depending on the rental car market you live in, the size of vehicle you’ll need and more.
4. Rental reimbursement covers other transportation costs.
Renting a car isn’t your only option with rental reimbursement coverage. Rental reimbursement coverage typically pays $30 or $40 a day. That can go a long way toward covering public transportation or rideshare costs until you get your wheels back.
5. Multiple risk factors increase your likelihood of being in a car accident.
While the average driver doesn’t get in an accident every year, the National Safety Council says certain risk factors like driving can affect your likelihood of being involved in an incident. Living in certain states like South Carolina or Massachusetts also increases your risk, where as many as have an at-fault accident on their record.
If you’ve been considering rental reimbursement, talk to your auto insurance agent to find out what kind of insurance coverage is available. Even if you only have an accident once every few years, rental reimbursement can go a long way toward making a stressful situation a little easier.
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