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How Does a Rental Car Reimbursement Work?

hand giving rental car keys to driver reimbursed by insurance company

By providing you with a rental free of charge when you need one. What if your vehicle needs repair at a body shop after an accident? You’ll need alternate transportation to get around and to work, so you ask yourself: Who will pay for the rental? That depends on who was at fault and the car insurance you have. Depending on the situation, you might be eligible for the cost of a rental car reimbursement. Let’s take a closer look at how this works and answer the question: is rental reimbursement worth it?

What is Rental Car Reimbursement?

Rental reimbursement provides money to help you pay for alternate transportation costs under a covered insurance claim. This is money that comes from your insurance company if you have this type of optional coverage. Typically, the average person will add this type of coverage to their full coverage auto insurance policy since it doesn’t come standard. Having reimbursement will make your premium higher. Most insurance companies will not let you add rental reimbursement unless you have a full coverage policy, including comprehensive coverage and collision coverage.

Some companies will reimburse a relative or a friend if you use their auto while yours is being repaired. Others will pay for public transportation like bus transportation costs, vehicle rideshare companies, subways – even air travel.

When Do Insurance Companies Pay for a Rental?

Insurance companies pay for rentals if your ride is stolen or is damaged under a covered claim. If someone else is at fault for the accident, that driver’s insurance will likely kick in to help pay to fix your vehicle. Their rental reimbursement coverage should also pay for you to use a rental. If it doesn’t, you may need legal advice. A claims adjuster will make the determination. If you are involved in an accident, be sure and file a police report. A commercial auto policy has different rules than a personal one.

Suppose you’re the at-fault driver and have only liability. In that case, your liability insurance will pay to fix the other driver’s vehicle. It also might cover that driver’s rental, but it won’t pay for yours.

To ensure that you’ll get reimbursement coverage, no matter who is at fault, you need collision coverage or comprehensive coverage. Then, you can add reimbursement to the plan.

The policy will reimburse you for the cost of your rental car, even if you’re at fault for the accident. The same goes if your vehicle is stolen. That means rental reimbursement is worth it since you don’t have to worry about getting around or paying an expensive bill if you’re in an accident.

When Does Rental Reimbursement Not Apply?

Your coverage does not extend to times when your auto is in the shop due to a mechanical issue, routine maintenance or other non-covered event. If that’s the case, you should plan ahead to solve your transportation needs like going to work or other important engagements. 

The same thing happens with vacations or going away from home. Your insurance provider won’t cover a rental nor travel.

How Much Does Rental Reimbursement Cost?

The rental cost is between $100 to $200 annually, depending on how much rental reimbursement you add to your policy. Your limits will determine your price. Your insurance limit will also determine what kind of car you can rent. You can rent a vehicle that costs more, but you’ll be paying the difference. Get an exact quote contacting your insurance provider. You should also take into account expenses like gas, mileage and security deposits.

How Long Will Insurance Pay for My Rental?

You will have different options, but most include a daily and claim limit. For instance, the policy might cover up to $30 a day, with a maximum dollar amount of $900. Once it reaches $900, you will have to pay out of pocket. You can also get a much higher claim limit, such as $2,250.

Is Rental Reimbursement Worth It?

If you are going to carry full coverage, having rental car reimbursement is worth it. The rental cost is negligible and it may save you some aggravation down the road. Let’s take a look at how this could save you some money.

The average cost to rent a vehicle these days is expensive. Of course, it depends on what kind of wheels you get, but you could be looking at up to $450 per week! So even the most expensive reimbursement package, at $100 additional per year, would be well worth it if you find yourself in these circumstances.

The process can be confusing, so it’s best to speak to a licensed agent. They can explain how much people usually need rentals. You can pick a plan that makes sense for your situation. 

What is the Difference Between Rental Reimbursement Coverage and Rental Auto Insurance?

Rental car insurance is taken out on a rental to protect you – and others – if something happens while you are operating that rental. Reimbursement helps you pay for the actual rental fees associated with the vehicle itself.

Rental coverage insurance is offered through the rental agency, in most cases. However, you may already have it as part of your full coverage. Additionally, many credit cards offer rental insurance as a perk of using that card to rent the auto. It’s always best to be prepared with knowledge before you go to the rental agency so you know what types of insurance you may need, if any.

Should I Pay for the Rental Car Insurance?

It depends on your existing policy. The rates charged by rental companies are accrued daily and can add up fast. So, you will need to know before you get to the counter what protection you already have. Let’s take a look at the 4 types of personal auto insurance you can buy from the rental agency and whether you need them.

1. Rental car collision: It pays for damages and loss resulting from a wreck (or other collision) and theft (if the rental is stolen). Do you have full coverage already or are you paying with a major credit card? If those instances are in place, you probably don’t need this add-on.

2. Rental car liability: If you get into an accident in the rental and someone sues you, this protects you. Unless you feel like you need some extra protection, this liability is already included in standard liability, which all rentals have.

3. Personal accident: It helps pay for medical expenses of you and your passengers in case of an accident. If you already have personal injury protection or MedPay – or you have good health insurance that covers you in this scenario – pass it up.

4. Personal effects: Covers your items stored in the rental. Your homeowners or renters should cover your belongings in this instance. If you do not have either one and you plan to be in a touristy area where you will be leaving valuables in your vehicle, this might be a good one to buy.

It’s always recommended to ask specific questions you may have and read the fine print in these types of rental car insurance. For example, what should you do for roadside assistance in a rental?

How Does My Insurer Reimburse Me For a Rental?

Typically, there are two ways you can get reimbursed for rental coverage. Once the claims adjuster has finished, you can decide. If you want to use your own choice of rental agencies, you will pay the bill and submit it, and your insurer will reimburse you after you. The other – and many will argue better – way is to use the rental agency your insurance has a relationship with, in which case, the bill will be paid without you in the middle.

Why is this considered the better way? In these instances, you may end up with a better replacement vehicle since there is an established client-customer relationship between your insurer and the rental agency. Plus, you won’t have to worry about submitting a claim for your expenses.

Do Deductibles Apply in Rental Reimbursement Coverage?

Normally, deductibles don’t apply with this type of coverage. However, it’s always best to consult directly with your insurance provider to avoid nasty surprises. Also, you should take into account that the reason that you need a rental reimbursement is an accident that will render your car useless for at least a few days, in which case you’ll probably use your collision insurance coverage or other products that were needed.

Get an Online Quote for Affordable Rental Auto Reimbursement Today

If you don’t want to pay for a rental if you’re in an accident, it’s time to get rental car reimbursement coverage. Our Freeway Insurance agents are licensed and bilingual and ready to give you a quote at (800) 777-5620 or you can visit one of our convenient locations. You are also welcome to purchase low-cost full coverage car insurance with a rental car reimbursement add-on online.

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