What if your car gets damaged or becomes unusable after an accident? Does your insurance policy cover the cost of a rental car? Rental reimbursement coverage is the solution to this problem. This insurance feature covers the cost of a rental car to continue your journey after accidents.

In this post, we’ll tell you what this coverage is, what it covers and doesn’t cover, how much it costs, and how to get it. Read to the end so you can understand why this coverage may be important to you.

What is Rental Reimbursement Coverage?

Rental reimbursement coverage is a type of auto insurance that covers the expense of a rental car in case your car is temporarily out of use due to an accident or other reasons. This coverage is available under your policy and helps you continue your daily routine without any interruption.

This coverage is primarily useful in situations when:

• Your car has gone for repairs after an accident.
• Your car has been stolen and you need alternative transportation.

Coverage usually has a daily and total limit on the cost of the rental car. If the rental cost exceeds the coverage limit, the additional expense is borne by you.

This coverage is ideal for people who depend on their car and want to avoid incidental transportation expenses.

What is Covered Under Rental Reimbursement?

Rental reimbursement coverage covers the cost of the rental car during your car’s unavailability. It mainly helps in case of post-accident repairs, car theft, or damage caused by natural disasters. As per your insurance policy, this coverage is designed to prevent disruption to your everyday activities and reduce the cost of alternative transportation.

Under What Circumstances is Cover Available?

Rental reimbursement coverage is intended to cover the cost of a rental car during the time your car is unavailable. This coverage is primarily available in the following circumstances:

1. Repair After Accident: If your car is damaged in an accident and needs repairs, this coverage helps you pay for the rental car.

2. When the Car is Stolen: In case your car is stolen, this coverage covers the cost of the rental car until your car is recovered or the claim from the insurance company is settled.

3. Damage Due to Natural Disasters: This coverage provides you with alternative transportation if your car is damaged due to flood, storm, or other natural disasters and becomes unusable.

4. Accidents Without Fault: If your car is involved in an accident which is not your fault and it is covered under your policy, you are given the facility of rental car.

What is Not Covered by Rental Reimbursement?

Rental reimbursement coverage does not apply in certain circumstances. This coverage does not cover the cost of the rental car if your car is in a workshop for routine maintenance, such as an oil change or general servicing. Damage caused due to careless driving, drunk driving, or violation of traffic rules is also not covered under this.

Additionally, it will not be applicable for rental costs exceeding the limit specified in the policy, rental car for a longer period, or if this coverage is not added to your policy. It is important to understand your policy terms.

Under What Circumstances Does Coverage Not Apply?

Rental reimbursement coverage, while part of your insurance policy, may not apply in certain circumstances. It is important that you understand these conditions to avoid inconvenience at the time of a claim.

1. Routine Maintenance or Repair: This coverage does not cover the cost of the rental car if your car is taken to a workshop for routine maintenance, such as an oil change, brake repair, or general servicing.

2. Damage Caused by Driver’s Mistake: If the damage is caused due to drunk driving, negligence, or violation of traffic rules, the rental car expenses will not be covered under this coverage.

3. Expenditure in Excess of Contracted Limit: If the cost of the rental car exceeds the limit specified in your policy, the additional expense will have to be borne by you.

4. Lack of Coverage in Insurance Policy: If your policy does not include rental reimbursement coverage, this benefit will not be available. It is necessary to add it as an additional option.

5. Long Term Rental Car: Insurance companies usually cover the cost of a rental car only for a limited period of time. This period is clearly mentioned in your policy.

Rental Reimbursement Coverage Limits

Rental reimbursement coverage typically includes daily and total limits. Insurance companies offer limits of $30-$50 per day and $900-$1500 total for a rental car.

Factors affecting the limit include type of policy, use of vehicle, and severity of the incident. It is important to understand the terms of your policy so that you can avoid additional expenses.

Standard Coverage Limits

Rental reimbursement coverage usually works as per the limits specified in the insurance policy. These limitations mainly fall into two categories:

1. Daily limit: Insurance companies charge a certain amount for a rental car, such as $30-$50 per day.
2. Total Limit: Sets the maximum limit, such as $900-$1500, that the policy covers.

This coverage is valid only for a certain period of time or for the duration of the repair.

Factors Affecting Coverage Limits

1. Policy Type and Insurance Company: Different insurance companies offer different limit plans. Your coverage options depend on your policy.
2. Vehicle Type and Use: Larger or luxury vehicles may increase rental costs, which may exceed coverage limits.
3. Additional Coverage Options: Additional coverage can be added to increase the maximum limit.
4. Seriousness of the Incident: If repairs take too long, the limit may be exhausted.

Does Insurance Cover a Rental Car If My Car Breaks Down?

Typically, rental reimbursement coverage does not cover rental car expenses in the event your car breaks down. This coverage is mainly applicable in cases of accidents and damage to the car.

For car breakdown, such as engine failure, battery drain, or other mechanical problems, you may need separate emergency road service coverage or towing coverage. Car breakdowns and accidents are separate categories of insurance coverage.

It is important to understand the terms of your policy and add the necessary coverage.

Under What Circumstances is Car Damage Covered?

Rental reimbursement coverage usually does not work in case the car breaks down. This coverage mainly applies in the event of accidents and damage to the car.

However, some special insurance plans may provide cover against breakdown of your car such as engine failure or other mechanical problems. This may need to be added to the policy as an addition.

Make sure your policy covers:

• Towing Coverage
• Emergency Road Service Coverage

Difference Between Car Breakdown and Accident

Car breakdowns are caused by mechanical or electrical problems, such as:

• Engine Failure
• Battery Failure
• Break Down

Accidents are caused by external factors, such as:

• Confrontation
• Damage From Natural Disasters

Who Pays for a Rental Car After an Accident?

Rental car payments after an accident depend on who is at fault. If the other party is at fault, their insurance policy (Third-Party Liability Coverage) covers the cost of your rental car.

On the other hand, if you are at fault, your insurance pays out under rental reimbursement coverage, provided this coverage is included in your policy.

This usually covers $30-$50 per day. If this coverage is not available, you will have to cover the cost of the rental car yourself. It is important to understand the terms of your policy.

When the At-Fault Party Pays

If the other party is at fault in the accident, their insurance policy covers your rental car expenses. This is called third-party liability coverage. The process is as follows:

• After an accident, you have to claim your damages and the expenses of the rental car from the concerned insurance company.
• They cover the cost of the rental car during your repair period.
• The payment process depends on their policy limit.

Role of Your Own Insurance in Covering Rentals

If you are at fault in an accident or the other party’s insurance policy does not pay out, your insurance comes in handy:

• Rental reimbursement coverage covers the expenses of the rental car during your repairs.
• This works based on a limit specified in the policy, such as $30-$50 per day.
• If your policy does not include this coverage, you will need to purchase this additional coverage.

How Much Does Rental Reimbursement Coverage Cost?

Rental reimbursement coverage typically costs between $2 to $15 per month, depending on your coverage option and insurance provider. This coverage provides an affordable and convenient protection that helps cover the expenses of alternative transportation if your car is unavailable.

Factors Influencing Premium Costs

The premium for rental reimbursement coverage may vary depending on the following factors:

1. Coverage Limit: Higher daily limits ($50 per day) may increase premiums, while lower limits ($30 per day) are cheaper.
2. Vehicle Type: Coverage for luxury or expensive vehicles is more expensive.
3. Claim History: Customers with clean claims records receive coverage at lower premiums.
4. Place: Premiums may increase in areas where rental car costs are higher.
5. Insurance Company and Policy Options: Premium rates vary by different insurance companies.

Conclusion

Rental reimbursement coverage is an important insurance option that covers the cost of alternative transportation in case your car is involved in an accident or becomes unavailable.

This coverage depends on the limits and terms of your policy, providing you financial relief. Whether this coverage is included or not, it is important to understand and decide as per your policy.