Rental reimbursement during repairs

How rental reimbursement coverage works

The NAIC lists rental reimbursement among the optional coverages and notes that most policies set a dollar limit on rental payments. You have it only if you paid for it, so check your declarations page before you rent. The Texas Department of Insurance describes the usual terms: the coverage pays for you to rent a car if yours is stolen or being repaired after an accident, pays a set amount each day up to the policy's rental dollar limits, and pays only for the time the company believes is reasonable to repair or replace your car.

• Daily limit: the most the policy pays for one day, such as $30. A rental that costs more leaves you the difference every day.
• Total limit: the most it pays for one claim, such as $900. Once it is used up, you pay the full daily rate.
• Covered loss: the coverage usually follows a covered collision or comprehensive claim. If the damage isn't covered, the rental isn't either.
• Reasonable time: the insurer may limit days to what the repair should take, even if the shop is slow.

Rental reimbursement pays for a car while yours is out of service. It is not insurance on the rental car itself. Whether your liability and collision coverage follow you into a rental, and what the counter coverage adds, is a separate question covered in an accident in a rental car. TDI also notes the coverage pays when your car is stolen, not only when it is being repaired.

Worked example: a 14-day repair

Inputs: your car is in the shop for 14 days, the rental costs $45 a day, and your policy pays $30 a day up to $900 per claim.

In the 14-day case the daily cap is what costs you money: $15 a day for 14 days. In the 35-day case the total limit runs out after 30 days ($900 ÷ $30), and you pay the full $45 for the last 5 days on top of the $15 daily gap for the first 30. A rental that costs $30 a day or less would be fully paid for those first 30 days. The rental coverage calculator runs the same arithmetic with your own numbers.

When the other driver's insurer pays

If someone else caused the crash, the loss of your car is part of the damage they owe you. On a claim against their liability insurer, called loss of use, the insurer pays for a rental for the time it believes is reasonable for your car to be repaired, as TDI explains, and it might extend the rental if the shop had to order parts or found more damage. Your own policy's daily and total limits don't apply to that claim, and you pay no deductible.

Some states add teeth. In Louisiana, when you lose the use of your personal car for more than five business days, the insurer responsible must pay reasonable costs of other transportation, and an arbitrary refusal can carry a penalty. Louisiana also penalizes an insurer that arbitrarily fails to provide rental under your own rental coverage within three business days of your written request.

When the dispute is only about how much rental the insurer owes, a state program may help. In Connecticut, the Insurance Department runs an arbitration program for disputes over repair costs, a car's value, loss of use, rental and storage when coverage and fault are not in dispute. It is open to policyholders and to owners claiming against an at-fault driver's insurer, and each party pays a $20 fee.

When rental time ends

On a repair, rental ends when the car is ready. On a total loss, it ends soon after the insurer offers to settle, whether or not you agree, and state rules set how soon:

• New Hampshire: where you have rental coverage, it runs for the policy period or until 5 business days after the insurer makes its offer, whichever comes first. See the New Hampshire page.
• Utah: when the policy covers it, rental payments on a total loss continue until the insurer makes a reasonable settlement offer. See the Utah page.

Line up a replacement car before the offer arrives if you can. Our guide to total loss claims explains what the offer should include.

Keeping the rental inside your limits

1. Read your limits first. Find the daily and total rental limits on your declarations page before you pick a car.
2. Ask the insurer how it pays: whether it bills the rental company directly or reimburses you from receipts. Get the arrangement in writing.
3. Choose a car near the daily limit. Every dollar above it is yours to pay, each day.
4. Ask the shop for a repair schedule and tell the adjuster about any parts delay as soon as you hear of it, in writing.
5. Keep every receipt, including fuel and fees, and return the rental on the day the car is ready or the day the coverage ends.

Questions people ask