Glossary
Rental reimbursement coverage, defined
An optional part of an auto policy that pays for a substitute vehicle while the insured car is being repaired after a covered collision or comprehensive loss. It has a daily limit and a total limit, and it pays only while the claim is open and the car is in the shop.
In practice
It responds to losses under the policyholder's own physical damage coverages; when another driver is at fault, their liability coverage should pay for the substitute vehicle instead, though that can take time to arrange and this coverage can bridge the gap. The daily limit decides what class of vehicle is affordable, and parts delays can exhaust the total before the repair is done. It does not apply to a breakdown, routine maintenance or a total loss once the settlement is offered. Choosing the limits to match what a comparable vehicle rents for in the area, plus a buffer for a long repair, is the whole decision. The cost is small against the rental bills it replaces.
A worked example
Suppose a policy pays $40 a day up to $1,200 and a driver's car is in the body shop for twenty-five days after a hailstorm. A comparable rental costs $55 a day. The carrier pays $1,000; the driver pays $15 a day, $375 in total. Had the shop taken forty days, the $1,200 cap would have run out on day thirty. Hypothetical figures.
Applies to: Auto Insurance