Rental Car Reimbursement Coverage

Have you rented a car recently? What surprised you more – the price, or the lack of availability of vehicles? Both points have become issues in the last 12-24 months as the auto industry, and subsequently the auto rental companies, continue to manage through adverse effects due to the Covid pandemic and supply chain issues. Although insurance carriers have negotiated better rates for their customers during the period when an auto is in for repair due to an accident, the rates are significantly higher than they were two years ago. Due to this, renting a car while your car is in the shop can be very expensive. The total expense grows more as the average number of days cars are in the repair shop has grown from 18 days to 22 days.

Is there a solution to these increasing costs?

Rental Car Reimbursement Coverage is an extra endorsement you can add to your auto policy if you have physical property coverage (Collision or Comprehensive coverages) that provides reimbursement of a rental car while your car is out of commission and being repaired due to a covered loss. This coverage is not available if you only have Liability only coverage since you are not covering your auto for any physical damage, just the damage you may cause to another person’s property (state law requirement).

How and when does Rental Car Reimbursement Coverage work? If your auto was damaged due to a run in with a deer (Comprehensive coverage) or you collided with another auto (Collision – your fault), the insurance company would reimburse you for the rental car costs, if one is needed, for up to 30 days, typically. Without Rental Car Reimbursement Coverage, you would have to pay for the vehicle rental costs out of your own pocket or make do without an auto.

If another driver hit your vehicle and it needed to be repaired, their insurance company would cover your rental car expenses since the other driver was at fault. If another driver is not at fault for your accident, you need to protect yourself from high out of pocket expenses for a rental car while your car is being fixed.

Any accident or event that results in damage to your car is very unfortunate and will likely result in a deductible needing to be paid by you. Rental Car Reimbursement Coverage is a very inexpensive endorsement that can be added to your policy and can save you significant additional money should you need a rental car while yours is being repaired.

Rates to Consider

Annual premiums for Rental Car Reimbursement Coverage can range from $15 – $50 per YEAR, per vehicle, depending on your carrier and the amount of Daily Rental Reimbursement Coverage you desire. This is the big variable for Reimbursement Coverage – the Daily Rental Rate. Compact or Intermediate sized cars rental rates are much less expensive than the rates for a full-size SUV or luxury sedan. In a recent survey of reimbursement rates (10-2022) provided by a car rental company with negotiated insurance carrier preferred rates, the following are examples of Daily Rental rates:

• Compact / Intermediate Cars – $40/day
• Full Size Sedan – $50/day
• Minivan – $60/day
• Full Size SUV – $75+/day
• Electric Vehicle – $100+/day

If you drive a minivan and want to continue to drive a minivan while yours is being repaired, you will need to ensure your Daily Reimbursement Rate is at least $60/day. The premium costs for this benefit would be approximately $40 per YEAR added to your current coverage. This added extra annual cost is less than the expense for the first rental day!

City and State taxes may have an impact on the total daily rate, so be sure to factor those in to making a decision as to the maximum daily rental rate of reimbursement you prefer on your policy.

Please keep in mind that if your family has a vehicle that is typically driven by an individual under 21, the parent will need to “swap” autos with that underage driver since most rental car companies do not allow underage drivers to drive rented cars. With this thought, families are encouraged to add the same Rental Reimbursement Coverage for all vehicles on the family policy – especially considering the minimal costs.

For assistance or to have us review your Auto policy, shoot us an email – Info@MHSinsurance.com