What is Rental Reimbursement Coverage?
Rental reimbursement coverage is an optional insurance policy that will cover the cost of a rental car if you’re unable to drive your primary vehicle.
Most auto insurance companies provide rental reimbursement coverage. However, it’s not included on all plans by default. No states require rental reimbursement coverage, and it’s a totally optional policy. If you do pay to add rental reimbursement coverage to your auto insurance policy your rental will be covered for any claim your comprehensive coverage or collision coverage would normally cover.
What is rental reimbursement coverage? What does it cover? Is it worth adding on to your policy? How do you submit a claim for rental reimbursement? Below, we’re explaining everything you need to know about rental reimbursement coverage.
Rental Reimbursement Coverage Explained
Rental reimbursement coverage, also known as replacement rental coverage, is an inexpensive optional policy offered by most insurers.
If you’re unable to drive your car for almost any reason, then your insurance company will cover the costs of a rental vehicle. If your car is damaged in an accident, if it needs to go to the repair shop, or if it cannot be driven because of any other unfortunate event, then your rental reimbursement coverage could kick into effect.
Usually, however, you can only add rental reimbursement coverage to a policy with collision coverage and comprehensive coverage already in place. Collision coverage covers repairs to your vehicle after an accident. Comprehensive coverage covers repairs to your vehicle from non-collision scenarios, like a tree falling on your vehicle or somebody vandalizing your car.
The reason you need collision and comprehensive coverage before adding rental reimbursement coverage is so you’re covered in situations where the accident is your fault or fault can’t be determined. If you are ruled not at-fault for the accident, the other party’s liability insurance will pay for your rental car while your vehicle is being repaired. Rental reimbursement coverage can only be used if it’s not the other party’s fault and your vehicle is already being repaired through a comprehensive or collision claim.
What Does Rental Reimbursement Insurance Cover?
Rental reimbursement insurance covers the cost of a rental car – up to a certain limit – when your primary vehicle cannot be driven.
Coverage varies between insurers. Typically, the coverage applies to incidents where your own car has been damaged or requires repairs. If your car was damaged in a car accident, for example, by theft or vandalism, or by severe weather, then you may need to rent a vehicle, and your rental reimbursement insurance may cover the cost of that rental.
Most policies have a strict limit on your amount of coverage. Your policy might cover $25 per day, for example, or $750 per accident. You’re allowed to rent a vehicle more expensive than $25 per day – but your insurance will only cover $25 of it, up to a maximum of $750.
Check your per day and per accident limits on your rental reimbursement coverage to ensure you’re adequately covered.
How to Claim Rental Reimbursement Insurance
There are two broad ways to make a claim on your rental reimbursement insurance:
- Rent a car from an approved provider and have them bill your insurance company directly (your insurance company will mention which providers to work with)
- Rent a car from any car rental agency and pay the cost upfront, then submit receipts and a claim form later to be reimbursed
Before doing either of these things, it’s generally a good idea to talk to your insurance company to make sure your situation meets the requirements for rental reimbursement coverage.
What Isn’t Covered by Rental Reimbursement Insurance?
Not all car rentals are covered by your rental reimbursement insurance.
In almost all cases, the protection only covers situations where your car is being repaired for damages covered under your car insurance policy. As stated above, rental reimbursement coverage can be added only if you already have collision insurance and comprehensive insurance.
If your car has experienced damages that are not covered by your policy – say, it’s in the repair shop for windshield repairs and you don’t have comprehensive coverage or windshield coverage – then you won’t receive reimbursement for the cost of your rental car.
Furthermore, rental reimbursement insurance does not cover rentals while your car is in the shop for general maintenance.
Obviously, you won’t be covered for recreational rentals either.
Should You Buy Rental Reimbursement Coverage?
Rental reimbursement coverage isn’t typically expensive. The typical rental car reimbursement coverage costs anywhere from $30 to $60 per year for basic coverage. With rental cars costing over $100 per day in certain cities, rental reimbursement coverage can save you a lot of money if you do need to rent a vehicle. However, rental reimbursement insurance isn’t the right choice for all drivers.
The first question to ask yourself is this: do I have a backup vehicle of my own? Some families have two or three vehicles they can drive, for example. If you do have a backup, you might want to skip buying rental reimbursement coverage because you already have an extra car to drive in case one is being repaired.
Alternatively, some people don’t depend on a vehicle. You might not need a vehicle to get to work every day. You might work from home, for example, and be within walking distance of a grocery store. Other people live in cities with convenient public transportation or have friends and relatives that could drive them around if needed.
Think of your personal situation before adding rental reimbursement coverage to your policy. For some people, it makes a lot of sense. For others? Not so much.
Conclusion: Is Rental Reimbursement Coverage Worth It?
To recap, rental reimbursement coverage will pay for a replacement rental vehicle for you while your car is in the repair shop after an accident. It’s easy and inexpensive to add rental car reimbursement coverage if you already have collision and comprehensive coverage as part of your car insurance policy.
Ultimately, it’s up to you to decide if rental reimbursement insurance is worth it. Some see it as a minor cost for additional peace of mind. Others see it as an unnecessary expense. Like most optional insurance policies, you’ll only realize how useful it is when you actually need to use it.
If you think rental reimbursement coverage is right for you, please contact your insurance company. A quick five-minute phone call with your agent could get it added to your policy today.