Did you get into an accident? If your car ends up in the shop afterward, you’ll need a way to get around in the meantime. According to Enterprise, vehicles spend an average of two weeks getting repaired. With rental reimbursement coverage, your insurer will pay for you to drive a rental car during the repair time.
How It Works
Rental reimbursement (or replacement) coverage pays for you to have a rental car while your car’s getting repairs. In other cases, it may pay for public transportation costs, such as bus or taxi rides. It won’t be on your policy by default. You’ll need to choose to add it.
To buy it, you’ll most likely need to already have collision and comprehensive coverage on your policy. This is because it only kicks in when a covered loss occurs. For example, an accident or a tree falling on your car are both examples of covered losses with collision and comprehensive.
In general, where you choose to rent a car is up to you. Major rental companies like Hertz or Enterprise will probably be acceptable to your insurance provider. Many insurers partner with companies to ensure a smooth rental process.
Renting a car from a company your insurer isn’t familiar with means you’ll need to jump through more hoops. This includes requesting reimbursement on your own and keeping the necessary receipts and paperwork. It’s a good idea to consult with your insurer before renting to avoid unnecessary stress.
Note: rental reimbursement will only pay for a car of equivalent value to your own. In other words, you won’t be able to get a luxury or exotic car for a few weeks if you don’t already drive one.
Insurance companies place specific limits for rental reimbursement coverage. Limits are the maximum amount your carrier will cover. Rental replacement limits include:
- Daily limits. This is how much your insurer will cover for rental expenses each day. For instance, if your limit is $40 per day, your insurer will only pay for that amount.
- Per claim limits. This refers to how much your insurer will cover for the entire claim.
- The total number of days. Many providers set limits on how long you can rent a vehicle.
Now, what happens when you exceed your limits? In this case, you’ll need to pay out of pocket for any extra expenses you rack up. Also, keep in mind that some insurers don’t cover gas money. Make sure you fully understand and follow all the instructions in your policy to avoid any confusion with your coverage limits.
Who Pays for a Rental Car After an Accident?
In an accident, there’s an at-fault driver and a victim. With rental reimbursement, the situation changes a bit depending on which party you are. Here’s a breakdown:
What Happens When You’re At-Fault
If you caused an accident and damaged your car, your rental replacement still covers you. However, for it to do so, you’ll need collision coverage on your auto insurance policy. As we describe above, you’ll need to follow all your insurer’s coverage limits, including which car you can rent, for how long, and how much it costs.
What Happens When You’re the Victim
When you’re not at fault, the other driver’s liability insurance is responsible for the accident’s expenses. This includes rental cars. To get a rental, you’ll need to file a claim against the other person’s insurer and let them know you need one.
How Much Is It?
Rental reimbursement is relatively inexpensive. Per Elephant Insurance, it costs an average of a few dollars per month. However, the cost can vary depending on the driver. Insurance companies consider many factors when they set your rates. These are usually details about you that indicate your risk as a customer or driver, including:
- Claim history
- Credit score
- Driving record
- Where you live
Who Offers It?
You should be able to get rental reimbursement coverage from pretty much any insurer. This includes each of the top ten largest insurers in the country:
- American Family
- Liberty Mutual
- State Farm
Do I Need It?
Rental reimbursement is useful and fairly cheap, but is it necessary? This depends entirely on your situation. It’s an affordable solution if you have places to go, such as a job, after an accident. And, without insurance, rental costs can add up fast. If the following describes you, it might be smart to add it:
- You have places to go. If you have a job or need to drive around frequently while your car’s in the shop, rental reimbursement is for you.
- You can’t afford to pay out of pocket for a rental. Rental costs can get expensive. Insurance can help get you back on the road for cheap.
- You live in a city where it’s expensive to rent a vehicle. The cost of renting a car varies by area. If you live in a big city, for example, it could be expensive to rent. Insurance would be a good idea in this situation.
- You need an expensive vehicle, such as a truck or SUV. Certain vehicles cost more to rent than others. If you need an expensive one for your circumstances, your insurer will pay for one of equivalent value.
If you can afford to rent a car out of pocket, it’s not necessary. Just be prepared for costs to stack up quickly.
Keep in mind that considering yourself a “good driver” shouldn’t be a reason for avoiding coverage. Accidents can happen at any point. It’s wise to think about what would happen to you after a crash. If you can’t afford to pay for a rental car out of pocket (or if it would cause tons of stress), insurance is most often the right choice.
Frequently Asked Questions
Do I have to pay a deductible for rental reimbursement?
You technically don’t have to pay a deductible for this coverage. However, it only works if you file a comprehensive or collision claim. Both of these coverages require you to pay a deductible. So, you’ll indirectly need to pay a deductible.
Is rental car reimbursement coverage worth it?
For most people, it is worth it. First, it’s cheap, only adding a few dollars to your rates each month. Then, you should consider its value if you get into an accident and need a car. It prevents you from needing to pay hundreds or even thousands out of pocket.
However, if you can afford to rent a car out of pocket and think that adding more coverage would just be an unnecessary expense over the years, you may not need it.
How do I know if I have rental reimbursement on my policy?
There are a few ways to check if you have certain coverages. You can check your policy declarations page (the first page of your policy) and see a list of coverages. Alternatively, you can either call your agent or an insurance company representative. Both contacts can talk you through what you have on your policy.
Where can I rent a car and get reimbursed?
In most cases, you can rent a car from any company that provides them, such as Hertz, Enterprise, or Avis. However, you should check with your insurer first. Your carrier might have a network of rental companies to choose from. If you’d like to stray from the network, you’ll need to keep track of the costs and request reimbursement on your own. Ultimately, it’s easier to just rent through a company your insurer has a partnership with.