What Is Rental Car Reimbursement Insurance Coverage and Is It Worth It?

There are some things in this world that you just don’t want to have to spend your hard-earned money on. One of these is paying for the added expense of renting a car after yours is damaged or totaled in an accident. The thing is, while you wait for your car to get fixed or search for a new one, you probably can’t go without a car for weeks on end. You may have people who rely on you for rides, like your kids or grandparents; you may need a car to get to work or to fulfill your job responsibilities; or you may simply have places to go and things to do that can’t wait. So, what can you do? The Gilbert Insurance team is here to explain how adding rental car reimbursement insurance coverage to your auto policy may help you keep your life moving—and potentially save you hundreds of dollars—if your car is ever out of commission because of a crash.

What does rental car reimbursement insurance cover?

This auto policy endorsement helps you pay for a rental car while your vehicle is being repaired or, in a worst-case scenario, while you’re searching for a new car to buy after you’ve had a covered total loss.

However, it’s important to note that rental car reimbursement insurance is not meant to help you pay for a rental car every time your vehicle is in the shop. For example, this coverage does not apply if your car is undergoing routine maintenance. Additionally, you can’t use this coverage to pay for a rental car while you’re on vacation or traveling for business.

How does rental car reimbursement insurance work?

Immediately after an accident in which your car is damaged or totaled, the first critical step is to start the claims process by either contacting your local insurance professional, like Gilbert, or filing a claim directly with your insurance company. Then, if you have rental car reimbursement insurance coverage, often your insurance company will recommend a nearby rental car company you can contact. Some insurance carriers may even do the legwork for you, working directly with the rental car company to book a vehicle for you. Additionally, you will want to verify with your insurer whether the rental car company’s invoices will be sent directly to the insurance company or if you’ll be getting the charges and then must submit receipts to the insurer for reimbursement. We want to stress that it is extremely important to make sure that you have the proper approvals and authorizations from your insurance company prior to renting a car, and to lean on your local insurance agent for assistance.

Is rental car reimbursement coverage available to every Massachusetts driver?

To be eligible for rental car reimbursement insurance, you need to have both collision and comprehensive included in your auto policy. Though collision and comprehensive are also optional coverages for Massachusetts drivers, we strongly encourage drivers to include them in their auto policies, as they generally provide invaluable protection in a variety of scenarios. For example, collision coverage may help you pay to repair or replace your car after an accident in which you hit another vehicle or an object like a mailbox, telephone pole, or guardrail. Comprehensive, on the other hand, may cover the costs related to fixing your car after it’s been damaged by events such as theft, fire, extreme weather, and vandalism. So, there are many good reasons to have collision and comprehensive, not the least of which is that it allows you to access rental car reimbursement coverage.

Are there any coverage limits to rental car reimbursement insurance?

Your car insurance company will usually limit how much you are allowed to spend per day, as well as in total, on a rental car. For example, your insurance carrier might limit you to $50 a day with a total spending budget of $1,500. However, if you’re looking for a bigger budget than this, you’ll be happy to hear that some carriers’ limits extend to as much as $100 a day, or $3,000 total. So, as you can see, this coverage is not one size fits all and you can select higher coverage limits. However, doing so typically increases the cost of this endorsement slightly.

In addition, most insurance companies limit how long the coverage will last—usually up to 30 days from the date your claim is filed. If you hit your specific total spending or time limit and still require a rental car, you’ll have to start paying for the vehicle out of pocket.

Something else to keep in mind is that you can always rent a car beyond the daily limit set by your insurance company. For example, if your daily limit is set at $50 but the car you’ve had your eye on and would like to test-drive is available to rent for $60 a day, you can decide to go for it if you’d like. Just be aware that you will be responsible for the difference between the daily limit set by your insurance company and the actual rental cost of the car you select, which in this scenario would be $10 a day.

Of course, once your vehicle is out of the shop or you’ve purchased a new one, your rental car reimbursement coverage benefits end, regardless of whether you’ve maxed out the spend or time limits.

Is rental car reimbursement insurance coverage expensive?

While the coverage limits and pricing typically vary by carrier, you may be able to access this coverage for as little as $5 per month. When you compare this minimal amount to the hundreds of dollars you might have to spend on renting a car if you don’t have rental car reimbursement coverage, it’s clear that getting this type of insurance could be a good long-term financial decision.

Do you really need rental car reimbursement insurance?

If you’ve recently stopped by your local auto body shop to see about getting some minor work done on your car, you probably already know there can be prolonged wait times for service and parts these days.

So, imagine if you bring in your dinged-up car for repairs after an accident. There could be huge delays in getting your car back on the road. The new and used vehicle markets don’t offer a great alternative either—it is more challenging than ever for car buyers to find the vehicle they want, or any car for that matter, at an affordable price.

If you’re renting a car during the extended period when either your car is in the shop or you’re on the hunt for a new vehicle, it could be a big drain on your bank account. While many drivers might be able to afford a few days of rental car payments, few of us would want to pay this unexpected expense for several weeks or longer.

You should absolutely consider getting rental car reimbursement coverage if you’d like peace of mind that your car insurance is going to help you cover the rental car costs as well as assist you in securing a vehicle to rent.

Gilbert can help you stay on the move after an accident and save you money

If you’re interested in learning more about rental car reimbursement insurance, don’t hesitate to reach out to one of our insurance professionals. We’ll be happy to discuss the benefits of adding this optional coverage to your specific policy and help you evaluate if it is a good fit with your driving behaviors and budget. In addition, we are glad to review other important, and potentially money-saving, auto insurance endorsements and discounts that you might be missing out on, including bundling home and auto, accident forgiveness, disappearing deductible, and loan/lease gap.