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What to know about car rental reimbursement coverage

Father helping teenage daughter with hockey equipment at car Photo by Hero Images/stock.adobe.com

Patricia Soler would be at a loss without her SUV. The busy mom ferries her 2 sons—and their surfboards, mountain bikes, and other sporting equipment—from one activity to another nearly every day near their home in San Juan Capistrano, California. If a crash were to put Soler’s vehicle in the shop, she’d need to rent an SUV, which could cost more than $60 a day.

Due to pandemic-related supply-chain issues, even minor repairs can now take a couple of weeks. So if Soler had to rent a car, it could cost her $800—or more. That’s why she includes rental reimbursement coverage on her auto policy. If you depend on your car for daily activities, you might want to do the same. Here’s what to consider before contacting your insurance agent.

What rental reimbursement covers

Your auto insurance will pay for a rental car while your insured vehicle undergoes repairs following a covered loss (such as a crash, vandalism, or fire) or for a specified amount of time set by your policy if your car is deemed not repairable. Be sure to read your policy carefully as coverage varies.

How rental reimbursement works

You’ll either rent a car yourself and submit the receipts to your insurance company for reimbursement, or a rental agency that’s been approved by your insurer may bill your insurance carrier directly.

Coverage limits

Coverage is typically limited to a certain time period with per-day and per-accident maximums—for example, $50 per day and $1,500 per accident, meaning you’d pay for any costs over $50 a day and you wouldn’t be reimbursed for more than $1,500, no matter the total costs.

What rental reimbursement doesn’t cover

Rental reimbursement does not cover rental car costs while your car is in the shop for scheduled maintenance. It also usually does not cover the cost of fuel or any optional insurance you might decide to purchase from the rental agency.

What it costs

It varies depending on your car and your insurance company, but on average, it’s around $40 per vehicle, per year.

When you might need more than the standard coverage: If you know you’d need to rent an SUV, minivan, or pickup truck, make sure to adjust your coverage limits. Most rental reimbursement covers only the cost of a standard mid- or full-size sedan.

Ask an Agent: Renting a car on vacation

Question: I’m renting a car on vacation. Does my personal insurance policy cover the vehicle, even if it’s more expensive than the one I own?

Answer: Most insurance policies with comprehensive and collision will cover the cost to fix or replace a car you are driving in a covered loss (minus your deductible), even if it’s worth more than the one on your policy.

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