Imagine you’re in an accident. Fortunately, no one is hurt and everyone walks away without injury. Your vehicle, on the other hand, has seen better days.
You still need to get to work, get the kids to school, drive to the grocery store and generally get around. How will you do that while your car is being repaired or replaced? If you have rental reimbursement coverage, you don’t have to worry. Here’s what you need to know about insurance and rental cars.
What is Rental Reimbursement Coverage?
First things first, it’s important to understand that rental reimbursement coverage doesn’t automatically come with your insurance policy. You’ll need to request rental reimbursement coverage when you buy your policy.
In most cases, you can also add the coverage later, even if you’ve owned your policy for years. But it’s worth noting that rental coverage must be added before you’re in an accident. Make sure the policy is in place prior to your need for a rental.
That said, rental reimbursement is an optional addition to your insurance policy that covers the cost of a rental car should you be involved in a wreck. Your insurance agent can help you to determine how much coverage you’ll need, but there are generally limits on your coverage.
For instance, your policy may cover you for $30 a day or up to $900. This is just an example, of course, so make sure you’re familiar with what your specific policy entitles you to.
How Long Can I Rent a Car Under My Insurance?
If you are involved in an accident, your insurance company will usually cover the cost of a basic (not luxury!) car rental until your car is fixed. You’ll be allotted a budget per day or per incident, and when that coverage runs out, you’ll pay out of pocket. Hopefully, your car is repaired by then!
If your car is totaled, your insurance company will usually limit the amount of time your rental will be covered. Budget your time accordingly and begin to shop for a new car as soon as possible. Otherwise, you may be stuck without transportation or, worse, hitching rides with friends and family.
How Will I Be Reimbursed for My Rental?
Payment for your rental car will work one of three ways under your rental reimbursement coverage plan.
- You will rent a vehicle through an agency of your choice, or one specified by your insurance company. You are billed directly, and your insurance company will reimburse you.
- You will rent through an agency specified by your insurance company. That company will bill your insurance directly, and you will never have to pay for your rental out of pocket except in the case of a deductible or costs in excess of your coverage.
- In some cases, your insurance company may “prepay” you for your rental. This is convenient, but rare. You’ll receive a lump sum of money which is to be used toward the rental of a vehicle.
As always, make sure you know the terms of your policy before you need to use your benefits. This will save you a lot of frustration in an already stressful time.
How Much Do Insurance Companies Pay?
The amount of money you’ll receive with your rental reimbursement coverage depends entirely upon your insurance company. If this type of coverage is important to you, it’s imperative that you look around for the coverage that best suits what you predict your needs will be.
Remember that many insurance policies require a deductible to be paid before you can receive benefits. This is sometimes true for rental reimbursement coverage. In addition, if the cost of your vehicle rental costs more than your daily allotment, you’ll be required to pay the difference out of pocket.
If you anticipate your car repairs will take a while, or if you need time to shop for a new car, opt to rent the most budget-friendly rental you can reasonably afford. This will make your benefits limit last a bit longer.
Finally, remember that your insurance company will not cover the cost of your gas, nor will they cover your security deposit on a rental car. Be prepared to provide your credit card information and driver’s license at the rental desk to satisfy the rental company’s requirements.
Conclusion: Rental Car Reimbursement Coverage
If you’ve been in an accident, you can still get around if you have rental reimbursement coverage. You will be covered for the cost of a rental vehicle, but it will also increase the cost of your car insurance, so it’s not the best option for everyone. Consider your options, speak with your insurance company directly, and consider the cost and affordability, as well as the actual benefits of this optional coverage.