Do you have a reliable way to get around if your vehicle is in the shop for repairs? If you don’t, you aren’t alone. In fact, in a recent poll conducted at Elephant, we found 27% of participants didn’t have an alternate way to get to work if their car was out of commission. That’s where rental reimbursement can help.
Also referred to as “rental car coverage” or “transportation expense coverage,” rental reimbursement helps you pay for transportation expenses while your vehicle is being repaired in a covered insurance claim. It covers the cost of rental cars and/or alternate transportation such as bus fare, cab rides, or ridesharing costs.
So, is it worth adding rental reimbursement to your auto policy? To help illustrate the ins and outs of the add-on, we’ll answer some common questions about rental reimbursement coverage.
What is the advantage of rental reimbursement coverage?
First, let’s take a look at what has to happen leading up to the repairs process. Following an accident in which your car is deemed repairable, your insurance company will estimate its damage. After you’ve filed a claim, your insurer assigns an adjuster to perform this estimate, which can take up to five days. Then, once a quote is provided, it’s your responsibility as the owner to authorize a shop to perform the repairs.
Once you’ve got everything sorted, the mechanics can get started repairing your car. We asked one of our Claims agents, Mark Jenkins, to talk about what could happen next:
“You’ve been involved in an accident, and the amount or type of damage has left your car unable to be driven safely (or legally). Let’s say in this case, the car is repairable, but there’re significant body and mechanical issues that will take a week to fix.
When I say the repairs will take a week, I’m referring to the actual work on the car; it doesn’t include delays that can crop up such as the shipping time for parts, or the discovery of additional damage from the accident that wasn’t visible before the car was taken apart. Remember, most body shops also don’t work on weekends.
If you need a vehicle, but don’t have rental reimbursement coverage on your policy, you may need to rent a car out-of-pocket until the repair shop can get yours back on the road. A compact-class rental, which is generally the cheapest option, will usually cost around $30 a day (once you factor in taxes and fees). Allowing for two to three weeks of renting it total (assuming potential delays), this comes to around $420-$630! That’s a decent chunk of change out-of-pocket, especially on top of your deductible. Adding rental reimbursement to your policy means we’ll take care of that cost for you.”
Factors like these make it difficult to estimate how long the repair process will keep your car out of commission. That’s why rental reimbursement is so useful to have. It means not having to worry about getting around or having to calculate exactly how long you can afford a rental. Rental reimbursement means keeping your life moving as smoothly as possible, instead of having to budget for expensive alternatives to your car.
Does auto insurance cover a rental replacement car after an accident?
Yes, but a standard insurance policy will not automatically cover a rental replacement. First things first, most insurers (including Elephant) will only offer you this coverage if you have Comprehensive & Collision coverages on your policy. Rental reimbursement is an add-on (also known as an insurance rider) to your existing coverage. We always highly recommend our customers have these on their policies anyway, as they keep you covered from some of the most common forms of damage to your car. Plus, they’re usually required if you’re financing or leasing your vehicle anyway. Let’s quickly review what those are:
This is sometimes referred to as Other Than Collision coverage. For example, comprehensive insurance covers damage to your car if it’s stolen, or damaged by flood, fire, or animals. Or, another example might be if there’s a windstorm in your area and a tree branch lands on your windshield, Comprehensive Coverage will cover that cost.
This covers damage to your car when you collide with another vehicle or object. If you hit a car, a pole or another nonliving object, collision coverage will apply.
So, once you have those on your policy, you can add Rental Reimbursement Coverage (something we highly recommend) to make sure you’re able to get around while your car needs repairs.
How much does it cost?
To answer this question, let’s revisit our chat with Mark:
“Adding rental reimbursement to your policy isn’t free, of course, but it’s minimal compared to paying for a rental out-of-pocket. Instead of hundreds of dollars up front after an accident, you’ll only pay a few extra dollars a month on your insurance policy.
If you do add rental reimbursement to your coverages, you should consider the amount of coverage you’d like. Rental reimbursement is available in several different options; you’ll choose from a list of maximum amounts of coverage that can be provided (referred to as the ‘rental limit’). The longer repairs take on your car, the longer you’ll need a rental. Also, keep in mind that bigger cars cost more to rent. For example, a $900 limit will obviously give you more time and flexibility than a $600 limit. Depending on the state you live in, there may also be a maximum daily amount that can be paid, so it’s important to consider this when you’re choosing your level of coverage.
As an example, let’s think about the compact car example from before. Let’s say instead of a compact car, your lifestyle means you drive a mid-size SUV, and downsizing isn’t an option. If you choose rental reimbursement with a daily limit of $30, it’s unlikely you’ll be able to rent a vehicle similar to your own without contributing part of the cost out-of-pocket. So it’s a good idea to think about the kind of rental you would need.”
One last piece of advice from Mark? “Plenty of people regret not having rental reimbursement, but I’ve never met someone who regretted adding it to their policy!”
What is (and isn’t) covered with rental reimbursement?
To review, rental reimbursement is an add-on to existing auto coverage. You also can’t just buy it on its own — you must have an auto policy to add a rental reimbursement rider. When and how you use rental reimbursement, however, is often contingent on the specifics of your existing policy.
If you have collision coverage, for example, rental reimbursement generally helps pay for transportation expenses while your vehicle is being repaired. This is because accidents are a covered loss under collision—and rental reimbursement first requires a claim with your insurer. Similarly, if your vehicle undergoes hail or other weather damage, you’ll need comprehensive coverage to help cover the claim before you benefit from a rental reimbursement add-on.
It’s also important to know that rental reimbursement does not apply in situations where your car is in the shop for routine maintenance. (This also illustrates the importance of sticking to a schedule for routine maintenance on your vehicle, including oil changes, tire rotations, and more!) Similarly, rental reimbursement does not cover rental fees while you’re on vacation. In both these scenarios, the driver is responsible for all transportation costs.
Rental reimbursement is a worthwhile investment for those looking for a comprehensive insurance plan. Sometimes, paying a little extra premium upfront goes a long way in protecting your wallet. It’s similar to the argument for avoiding a minimum coverage plan, since doing so may end up costing you more in the long run. Instead, a robust insurance plan — one that includes collision and comprehensive coverage and rental reimbursement — is designed to get you back on the road as soon as possible.
Talk to one of our agents to discuss your rental reimbursement options in your home state (or sign in to your online account if you’re an existing customer). Or, if you need help assessing if rental reimbursement and other coverages are right for you, The Elephant Insurance Coverage Wizard tool can help make insurance more understandable — simply answer a few questions and learn what’s right for you.