What is Rental Reimbursement Coverage?
If you’ve been in a car accident—and have collision coverage as part of your auto insurance package—your insurance company will cover the cost of repair or replacement of your vehicle. Rental reimbursement coverage is an optional policy addendum that covers the cost of a rental car while your vehicle is in the shop being repaired.
If you operate a business in which you have multiple employees who operate company vehicles, rental reimbursement coverage should seriously be considered. If an employee is in an accident, you need to have an affordable option for a rental vehicle while the car is in the shop.
What Does Rental Reimbursement Cover?
Rental reimbursement coverage will pay for the cost of a rental car up to certain policy limits. A common option is $25 per day up to a maximum of $750 per claim (and options go all the way up to $100 per day/$3,000 per incident). Most auto insurance policies have a time limit as well—commonly 30 days or less. However, this only applies if you were at fault for the accident or damage incurred.
If another party was responsible, their insurance company is responsible for covering your rental car. A third party’s car insurance may not pay 100% of the cost of the rental and usually has a time limit, so you may still incur some out of pocket expenses.
Your auto policy should extend collision and comprehensive coverage to your rental car, so it should not be necessary to purchase additional coverage for the rental through your insurance company. As always, be sure to confirm with your agent that you do have this extended coverage.
What is NOT Covered by Rental Reimbursement?
Rental reimbursement coverage will not cover:
- Cost of fuel/gas
- Cost for mileage
- Security deposits
NOTE: If the car you’re renting goes above the daily limit your auto insurance will cover, you will be responsible to pay the difference.
How Much Does Rental Car Reimbursement Coverage Cost?
Rental car reimbursement is typically an additional $35–$60 a year ($2–$5 a month) on top of your comprehensive/collision coverage with your auto insurance policy. The amount is typically minuscule, and if your job or everyday life requires consistent use of a car, it may be nice peace of mind. If your business owns numerous company vehicles, this is often a standard addition to a commercial vehicle auto policy.
However, for some, the additional cost of $35–$60 a year over the course of 10+ years may end up being more costly than paying out of pocket costs for one accident (assuming the average person is in a car accident once every ten years). Compare the average cost of a rental car for a two-week timespan against the cost over 10 years and it may help you decide whether or not to invest in the additional coverage.
Renting a Car with Insurance
Option #1: You can arrange a rental car and pay the expenses out of pocket. You must track your expenses and keep your receipts to submit to your insurance to be reimbursed for the cost. This is the preferred option if you want to choose your rental car, use your rewards program, pick a specific car rental dealer, etc. The downside is that you won't know what your insurance company will cover and you and your business may end up eating some of the cost.
Option #2: The second option is to allow your auto insurance to acquire the rental car for you. If you choose this option, insurance companies will pay for the rental directly and handle all the necessary paperwork. Many insurance providers have agreements with certain car rental companies (such as Geico and Enterprise) where they can obtain a more affordable rate.
Get a Free Quote for Commercial Rental Reimbursement Coverage
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