How Does Auto Rental Reimbursement Work on an Auto Insurance Policy?

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Auto rental reimbursement provides financial protection to a driver who needs a vehicle when his car is damaged in an accident or in the shop for mechanical repairs. Rental reimbursement is an additional feature that a driver may never need. However, it can save a driver some money if an accident or breakdown occurs.

Function

  • Rental reimbursement is an additional, optional rider attached to an automobile insurance policy. It covers a portion or all costs of a rental car, for a specified period of time, after the vehicle is involved in an accident and is either being repaired or replaced. Some policies also cover car rentals when an insured's vehicle undergoes mechanical repairs. Rental reimbursement is added to policies that include collision and comprehensive damage riders.

Costs

  • Automobile rental reimbursement coverage defrays the daily cost of a rental vehicle for a specific time period. The average cost is between $20 and $60 every six months. Some riders cost as little as $1 to $2 per month, according to the Insurance Information Institute website. However, that type of premium may not cover the entire daily cost of a rental car.

Benefits

  • A damaged car might take weeks to repair, leaving its owner without transportation. The cost to rent a vehicle, while a car is being repaired or replaced, could top $500 during that period. A money-saving option, according to Insure.com, is to purchase a lower daily limit on automobile reimbursement coverage. This will lower premiums and provide partial rental car coverage.

Considerations

  • A driver may never become involved in an accident yet pay hundreds of dollars over the lifetime of a policy, not utilizing any of its benefits. In addition, according to CarsDirect.com, many dealerships provide long-term loaner vehicles as an incentive to entice potential new car buyers.

Warning

  • Automobile rental reimbursement coverage may only apply to an accident and not for lost time due to mechanical breakdowns. Consulting an insurance agent, before purchasing an automobile policy, will clear up any confusion and avoid possible problems.

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References

  • Photo Credit Crash on the street. German auto model 2007. image by Dariusz Kopestynski from Fotolia.com
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