What is rental car reimbursement coverage and is it the same as insurance?

If you've ever been in a car accident, you have an idea how expensive repairs can be. And that doesn’t even include the inconvenience of being left without transportation while your car gets fixed. When this happens, you’re likely left with little to no option but to rent a car. And this can be an added burden to your finances.

That's where rental car reimbursement comes in.

Rental car reimbursement coverage is an insurance policy that helps pay for the cost of a rental car when your car is being repaired due to an accident. This type of coverage is not required by law, but it can be helpful if you are in an accident and need a rental car. There are a few things to keep in mind when considering this type of coverage.

What does rental car reimbursement typically cover?

Rental reimbursement is a type of insurance coverage that helps policyholders pay for a rental car while their vehicle is being repaired after an accident. Insurance companies may refer to this type of coverage using various names such as rental reimbursement, loss of use or rental coverage. 

Rental reimbursement is optional coverage and is usually a part of auto insurance, so you'll need to decide if it's worth the extra cost. Take into account that this is typically limited to a certain dollar amount per day and days per occurrence. Also, note that rental car reimbursement is usually reserved for accidents and may not cover you for other reasons such as routine car maintenance or going on a vacation. 

How does rental reimbursement insurance work?

There are a few things to keep in mind when it comes to rental reimbursement insurance. First, this type of insurance generally has a daily and/or monthly limit, so be sure to check your policy details to see how much coverage you have. Secondly, your auto insurance policy may already include some form of rental reimbursement coverage, so be sure to check before you purchase any additional coverage.

Lastly, keep in mind that rental reimbursement insurance is not always necessary. If you have a reliable source of transportation and can afford to pay for a rental car out-of-pocket, you may not need this type of coverage. However, if you frequently rely on your vehicle for work or other commitments, rental reimbursement insurance can provide peace of mind in case your car is unexpectedly out of commission.

In the unfortunate event that you get into an accident but have rental car reimbursement coverage, you’ll find that the claims process is almost similar to the standard process for any car insurance claim. Here’s a step by step guide to getting your transportation reimbursement:

  1. Call your insurance company as soon as possible after the accident.
  1. Tell the claims adjuster that you need a rental car.
  1. Ask the claims adjuster what type of coverage you have for rental cars.
  1. Find out how much money you'll be reimbursed for each day of rental car use.
  1. Get a list of approved rental car companies from the claims adjuster.
  1. Call different rental car companies to find the best deal.
  1. Make sure to get all the necessary paperwork from the rental car company before you sign anything.

How much should you pay for rental car reimbursement insurance?

The cost of rental car reimbursement coverage will vary depending on a few factors, including the amount of coverage you choose, the size of the vehicle, and the deductible you select. However, as a general rule, this type of coverage will add between 1% to 10% to your overall premium.

According to Experian, rental car reimbursement can cost between $2 to $15 a month, but this can be a cheaper option when you consider that getting a rental car can set you back an average of $130 daily. Even if you paid $5 per month for 10 years for rental car reimbursement coverage, for instance, it would only take you a single accident where you’d need to rent a vehicle for a week to actually recoup the amount you spent on the additional coverage.

Rental car reimbursement insurance is NOT damage or liability insurance

On a final note, once you’ve got a rental car, you should remember that rental car reimbursement insurance is NOT the same as rental car insurance. So if you damage a rental car in an accident, rental car reimbursement insurance will not cover the cost of repairs. This type of insurance is designed to reimburse you for the cost of a rental car while your vehicle is being repaired, not to pay for repairs to the rental car itself.

Rental car reimbursement insurance is also not liability insurance. If you're found at fault for an accident, this type of insurance will not cover the cost of damages to the other vehicle or property. It will only reimburse you for the cost of a rental car while your vehicle is being repaired. 

If you need rental car insurance, then check out Bonzah’s supplemental damage and liability insurance for affordable coverage.