UPDATED: Mar 13, 2020
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If something truly unfortunate happens to your vehicle, and it needs to be in the body shop for a while getting repaired, you’re probably going to need an alternate form of transportation.
But public transit ranges from fairly poor to dangerous in most areas. Constantly paying for cab fare or rideshare (like Uber) can get expensive very quickly.
And you can only ask friends and family for rides so many times before it becomes too inconvenient for them. For many drivers, the easiest option is just to spend some money on a rental car until they get their vehicle back.
If you’re worried about this happening to you, you’re not alone. Many drivers who want to avoid this financial expense decide to purchase optional rental reimbursement coverage.
But is it a good idea for everybody? Or are there drivers out there who would be better off keeping their premiums low by not purchasing this coverage?
We will go over the specifics of rental reimbursement coverage in this article. Once you know the facts, you can make an informed decision about whether or not rental reimbursement auto insurance coverage is a good idea for you.
Understanding the Limits of Rental Reimbursement Coverage
While rental reimbursement coverage is very helpful for avoiding major expenses while your vehicle is getting fixed, it isn’t completely comprehensive (unfortunately).
There are certain things that rental reimbursement will not pay for, and you should know what they are. You should also know what it does pay for so that you can budget around meeting your transportation needs until you get your vehicle back.
Rental reimbursement coverage will not pay for:
- The gas you purchase to keep your rental vehicle going
- Rental costs associated with regular vehicle maintenance
- Rental costs associated with going on vacation
- Incidental expenses associated with the rental, such as security deposits, rental insurance, and other costs
As far as what your rental reimbursement coverage will pay for, that’s fairly simple. As we’re sure you can guess by now, this coverage will pay for the cost of your daily rental.
This can cost anywhere from $25 a day to $100 per day, depending on where you live, the vehicle you need to rent, and the type of coverage you purchase.
If you’re thinking about purchasing rental reimbursement coverage, it’s a good idea to already have comprehensive/collision coverage on your policy first.
Most of the time, your insurance company will not reimburse you for rental expenses outside of a claim filed against your Collision coverage.
And if you don’t have any Collision coverage to file a claim against, you may not benefit at all from purchasing rental reimbursement coverage.
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If you’re concerned with buying just the amount of coverage you need and nothing more, you might want to call around to local rental agencies and find out approximate costs for the vehicle you might need to rent in the event of a serious accident.
It’s also a good idea to get in touch with your insurance company to figure out which rental agencies they have affiliated themselves with. More often than not, you’ll get a discount from renting from these businesses.
Furthermore, it’ll be easier to get your reimbursement since the company will bill your insurance company directly instead of asking for cash upfront from you.
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Determining If Rental Reimbursement Coverage Is Necessary
One of the most important factors that will determine whether or not you need rental reimbursement coverage is the type of coverage you purchase, and the amount your insurance company will charge you for it on your monthly premium.
You can choose either 100 percent of your per diem rental costs, or a shared percentage of those costs (around 80 percent per day is fairly normal). The coverage package you decide on will also have a maximum payout per accident.
This can typically range anywhere from $600 per accident to $3,000 per accident or more but may vary based on your insurance company and state laws. Regardless of how much coverage you choose, it usually costs no more than a few dollars a month.
As you can see, the increase in your monthly premium seems fairly small. Over the course of a year, it may only cost you an extra $48-$52 per year to have that peace of mind.
Even over the course of 5 years, for example, rental reimbursement coverage can cost you a total of $612 which, when compared to the actual costs of your average rental, may or may not be worth the expense.
Of course, you may not have average needs when it comes to getting around town. And you shouldn’t settle for an average car insurance premium, either.
You should definitely shop around between different companies in your area, and find the most respectable agency who is willing to offer you the coverage you need at a price you can afford.
Of course, you can spend lots of time, money, and aggravation doing this all by yourself – or you can let us help you out with that by using our handy dandy quote generator here on this page.