UPDATED: Aug 5, 2013
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Rental reimbursement coverage is a non-essential but very helpful addition to your auto insurance policy. In the event that your vehicle is rendered non-drivable by an accident, rental reimbursement will pay for you to rent a substitute vehicle. There are some limitations to this coverage, however, so it’s a good idea to confirm the exact policy details with your insurance company.
In most cases, rental reimbursement coverage will only be applied to covered accident claims. This means that you cannot use your insurer’s rental coverage while your car is in the shop for basic maintenance. You also may or may not be able to carry rental insurance on a vehicle with no collision or comprehensive coverage; check with your agent to confirm.
Some insurance companies handle rental coverage through reimbursement only. This means that you would pay for the rental car, then receive a check reimbursing you for the money you spent. Other companies will pay for a rental car directly as long as you use an approved vendor. Most insurance companies will work with Enterprise or Hertz Rent-a-Car.
Limits of Rental Reimbursement
There are two primary ways that rental reimbursement coverage can be applied. The first works off of a single limit: You have a pre-determined amount of coverage to use, and once it’s exhausted, your company will no longer pay for the rental car. For example, if you have a $900 limit, you can apply that in any way you wish. The more expensive the vehicle, the less time you will have in it, and vice versa.
The other, more common method, is a daily limit. This way, your insurance company agrees to pay for a certain amount toward a rental car for a certain number of days. If you exceed either limit, you would pay for the difference out of pocket. For example, a 30/30 policy allows you a maximum of 30 days in a $30/day vehicle. If the vehicle costs $35 a day but you only rent it for 10 days, you would still pay the additional $50 out of pocket.
You can adjust the limits of your policy to suit your needs. For example, if you have a large family, you will want to purchase coverage with a high limit. This will enable you to rent a minivan or SUV. In some areas, rental cars can be quite expensive; knowing the basic cost of a rental car in your neighborhood is a good way to estimate how much coverage to buy. In general, rental coverage is quite affordable, so a higher limit shouldn’t cause your rates to increase too dramatically.
Additional Rental Reimbursement Expenses
Whenever you rent a vehicle through your insurance company, there are a few expenses that will generally not be covered by your policy. The first is the airport surcharge if you pick the vehicle up from an airport location. While airports have extended hours, they make up for this convenience with higher fees. Whenever possible, wait until the weekday to rent a car from the agency’s regular location.
Additionally, the “collision damage waiver” offered by the rental company is unnecessary. This waiver acts as insurance for the rental in case anything were to happen to it. If you opt to buy this, it will be added to your rental bill, and the insurance company will not cover it. Instead, your auto insurance policy already covers damage done to a rental car so long as you have full coverage on your own vehicle.