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You've just dropped your vehicle off at the shop after an accident. They said it'll take a couple of weeks to disassemble, get parts in and get your car back to you. No big deal, because your insurance covers a rental, right?
Maybe—if you added extra coverage when you got your policy. Your auto insurance only covers rental reimbursement if you specifically added it to your policy. In fact, many people think they have rental reimbursement coverage but actually don't.
If you're concerned about being able to pay for a rental car if your vehicle is out of commission, learn more about rental reimbursement coverage.
What Is Rental Car Reimbursement Coverage?
Rental car reimbursement coverage is a feature you can add to your auto insurance policy to help pay for a rental car if your vehicle is damaged or stolen. Policies will specify qualifying events under which you are entitled to rental reimbursement, but they do not typically include things like regular maintenance.
This is different from rental car insurance, which is coverage that applies to a car you rent. That may be covered under your regular auto policy, a rental car company's policy or even your credit card's perks. Rental car reimbursement coverage, on the other hand, must be added to your regular policy and is only about the cost of a rental vehicle.
Some rental car reimbursement policies may fall under a broader category of transportation expenses. Depending on the policy, these may cover:
- A set amount toward a rental car for a set amount of days
- Bus fare
- Train tickets
- Taxis
- Rides with Uber, Lyft or other services
A typical rental reimbursement policy covers around $30 to $40 per day for up to 30 days. Or it may be set up to cover a set amount, like $25 per day up to a total amount of $800. But amounts will vary depending on your individual policy and company.
How Much Does Rental Car Reimbursement Coverage Cost?
It generally costs between $2 and $15 a month to add rental reimbursement to your auto policy, but final costs are determined by an individual policy, the size of the vehicle and more. This is relatively inexpensive compared with out-of-pocket car rental costs, which average more than $130 per day.
Some quick math shows how advantageous holding a rental reimbursement policy can be in the event you need to rent a car while yours is repaired or replaced. Say you rent a vehicle for a week while your car is repaired: The average cost would be about $910.
If your auto policy's rental reimbursement coverage costs $5 per month, however, it would take 182 months—over 15 years—to reach your out-of-pocket costs. If you use the policy even once during that time frame, your rental reimbursement coverage could be well worth it.
Should I Get Rental Car Reimbursement Coverage?
Rental reimbursement insurance can be a good buy in general, but especially if you don't think you could afford one to two weeks of rental costs out of pocket on short notice. Particularly if you depend on your vehicle to get to work or transport your children to school, rental reimbursement insurance can help ensure you have a reliable mode of transport no matter what.
But if you're already feeling strapped with your bills, including auto insurance, justifying rental car reimbursement coverage may feel like a stretch. This may be complicated by the fact that many insurance companies require you to carry comprehensive and collision coverage to add rental reimbursement.
Work with your insurance company to customize your coverage and find a reimbursement premium which is affordable or search for more affordable auto insurance where an add-on like rental reimbursement fits within your budget.
How Much Coverage Do I Need?
Coverage for rental reimbursement typically lasts a month. When working with your insurance company to pick your coverage and add reimbursement to your policy, estimate how long you'd need reimbursement covered to figure out how much coverage you need. The average time it takes a car to be repaired after an accident is one to two weeks, so that may be sufficient coverage.
Something extra to consider when adding rental reimbursement coverage to your auto policy is that your coverage will typically allow for a basic, economy car from the rental company. If you have a specialty vehicle, like a work truck, you may need to pay more for a comparable car.
This even applies to things like minivans. Six- to eight-seat vehicles are not typically considered economy. If you have several children, discuss your rental reimbursement coverage options with your insurance agent or company. They may be able to offer something at a higher price to get you a bigger vehicle. Or you may be able to use your rental reimbursement for part of the cost.
The Bottom Line
If you don't want to pay for the cost of a rental out of pocket in the event of damage done to your vehicle, adding rental reimbursement to your insurance for a low monthly premium may be a good choice.
As you adjust your auto insurance policy, remember that some insurance companies might consider a credit-based insurance score when calculating your cost—so keep an eye on your credit with free credit monitoring from Experian and improve it if possible before you begin shopping for car insurance.