Rental Reimbursement covers the cost of a renting a car after you get in an accident because your car is in the shop for repairs. It is optional coverage you could add to your policy and may be worth considering
Your Insurance company will require you to have collision or comprehensive coverage in order to be eligible for rental reimbursement. This is because if your insurance company is going to cover the cost of your car rental, they wants to make sure you are covered in the event of an accident. The need for a temporary replacement vehicle is usually because you had an accident that would have been covered under your auto collision or comprehensive coverage. Purchasing this option is easy - it’s simple as clicking a button online or calling your agent and asking them to add the coverage to your policy.
What Rental Reimbursement Covers
You should know and understand what rental reimbursement covers and what it doesn’t. It reimburses the cost of a rental car while repairs are made to your car due to a covered loss. Examples of covered losses are:
Collision with another vehicle
Crashing into a stationary object
Hitting deer or other wildlife on the road
Your insurance company will only reimburse you for the daily rental rate. So other expenses like the cost of gas or security deposit for the car are not covered. Unfortunately, it does not cover the cost of a rental while your car is undergoing routine maintenance at the shop, or while you're on vacation or some other recreational activity.
Rental cars aren’t the only option. Another option would for you to put money toward public transportation instead of a rental car.
How Rental Reimbursement Insurance Works
You have the right to choose any rental car service you want, but if you choose one that partnered with your insurance company, the rental car company can bill the insurer directly. This is really convenient because you don't have to take the time to file for the reimbursement to your insurance company. Rather, you simply sign, drive, and pick up your vehicle when it’s fixed. For example, GEICO partners with Enterprise Rent-A-Car.
Ensure the rental car company is informed of the situation when you arrange your replacement independently because you will get a discount. Even if you can’t get a vehicle through a rental car company partnered with your insurer, companies offer discounts to those renting due to an accident. Rates for those in this situation is more competitive than standard ones and to qualify, all you have to do is notify the local agent at the car rental company. The actual discount is difficult to specify, since rates will vary by the type of car, the location of the agency, and their inventory.
Your can expect car insurance company to have two types of parameters for rental reimbursement: a daily rate and a per claim limit. Some insurers offer a package that reimburses you up to $30 per day up to $900 per accident. So If you live in a city where the cost of renting a car is more affordable, like $20 per day, then your rental reimbursement can cover you for up to 45 days.
The Need for Rental Car Reimbursement Coverage and How Much
There are things to consideration when deciding if you should purchase rental reimbursement coverage. Decide if you can afford to repair your vehicle and cover the cost of a rental car out-of-pocket. Renting a car for a few days adds up quickly and you can't tell how long a repair will take--It could be weeks. If your finances are tight, then think about adding reimbursement coverage to your policy for just a few dollars each month. This will protect against unforeseen expenses.
How much rental reimbursement coverage you need depends on you. You can offset the cost of a rental car substantially (especially if you need it for an extended period), for only a couple dollars per month. Even if the limit per day doesn’t cover the cost per day of a rental car, you could end up paying much less. If you are accustomed to luxury vehicles or have a larger family that needs the space of an SUV, the cost of renting such vehicles will be higher, so consider purchasing more coverage.
Consider also how much it costs to rent a car in your city when when making the decision. Determine whether the additional monthly premium makes sense for the amount of coverage. For example, if it costs you $3 a month for a $30 per day reimbursement rate, but rentals for an economy car start at $50 a day where you live, you might feel more comfortable going for more coverage for peace of mind.
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